Lotte and Hyundai Mo­tor Group have been jit­tery over the grow­ing un­cer­tain­ties sur­round­ing their busi­nesses in China, ahead of the 19th Na­tional Congress of the Chi­nese Com­mu­nist Party next Wed­nes­day.

The Korea Times - - FRONT PAGE - By Park Jae-hyuk jae­hyuk@ktimes.com

Lotte and Hyundai Mo­tor Group have been jit­tery over the grow­ing un­cer­tain­ties sur­round­ing their busi­nesses in China, ahead of the 19th Na­tional Congress of the Chi­nese Com­mu­nist Party next Wed­nes­day.

At the congress, the party del­e­gates will elect the top of­fi­cials for the Xi Jin­ping ad­min­is­tra­tion and de­cide on the poli­cies of the world’s most pop­u­lous coun­try.

The two con­glom­er­ates are hop­ing China will let up on its re­tal­ia­tory mea­sures against Korean com­pa­nies.

The Chi­nese gov­ern­ment has pushed ahead with eco­nomic re­tal­i­a­tion against Korea in re­sponse to Seoul’s de­ci­sion to de­ploy a U.S. anti-mis­sile Ter­mi­nal High Al­ti­tude Area De­fense (THAAD) bat­tery here.

But ob­servers point out both Lotte and Hyundai can only wait for the re­sults of the congress for now.

“They have no choice but to wait for pos­i­tive re­sults be­cause they can­not af­fect the meet­ing at all. They can only anx­iously cross their fin­gers now,” said an in­dus­try source who asked not to be named.

The for­mer has been en­dur­ing dif­fi­cul­ties in sell­ing its Lotte Mart out­lets in China.

Lotte said it has yet to sign a con­tract with any in­vestors, due to dif­fer­ent opin­ions about prices and other con­di­tions. More than five for­eign in­vestors, in­clud­ing the Thai-based Charoen Pokp­hand Group, have re­port­edly met Gold­man Sachs, the lead man­ager for the dis­posal.

The re­tail gi­ant de­cided re­cently to with­draw Lotte Mart from the Chi­nese mar­ket be­cause it has been un­able to op­er­ate the dis­count chain over the past seven months. Af­ter of­fer­ing its golf re­sort as a de­ploy­ment site for THAAD, Lotte has faced sus­pen­sion or­ders and a con­sumer boy­cott in China.

An­a­lysts ex­pect in­vestors will not take ac­tive mea­sures un­til the end of the congress.

They say Lotte will likely sign a deal af­ter the congress, in case the Chi­nese gov­ern­ment ad­dresses the mar­ket un­cer­tain­ties.

“Lotte is ex­pected to suc­cess­fully sell Lotte Mart, be­cause the Sino-Korean re­la­tion­ship will likely change af­ter the lead­er­ship transi- tion at the congress,” HI In­vest­ment & Se­cu­ri­ties an­a­lyst Lee Sang-hun said.

Hyundai has been wary of stricter en­vi­ron­men­tal reg­u­la­tions. Chi­nese au­thor­i­ties are con­trol­ling emis­sions in an at­tempt to show a clear sky over Bei­jing dur­ing the congress. One of Hyundai’s sub­con­trac­tors was or­dered to sus­pend its busi­ness last month over its ex­ces­sive emis­sions.

On top of the en­vi­ron­men­tal is­sue, Hyundai has suf­fered de­clin­ing sales in China and lo­cal sup­pli­ers refuse to pro­vide it prod­ucts for ve­hi­cles.

Some Chi­nese news out­lets even re­ported BAIC Mo­tor may dis­con­tinue its part­ner­ship with Hyundai. The two car­mak­ers have run the Bei­jing Hyundai joint ven­ture for 15 years.

If the Chi­nese gov­ern­ment eases its re­tal­ia­tory mea­sures af­ter the congress, Hyundai’s per­for­mance is ex­pected to re­cover this year.

It sold 85,000 ve­hi­cles in China last month, a record high for this year, fol­low­ing the open­ing of its plant in Chongqing. It also proved its firm re­la­tion­ship with BAIC, hold­ing an ex­ec­u­tives’ meet­ing last month.

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