CHINA HALTS OPS AT HER­SHEY-LOTTE PLANT

Fac­tory sus­pen­sion es­ca­lates eco­nomic re­tal­i­a­tion against S. Korean firms

New Straits Times - - Business -

LOTTE Shang­hai Foods, a joint ven­ture be­tween Her­shey Co and Lotte Group, has been or­dered to stop pro­duc­tion by Chi­nese au­thor­i­ties, es­ca­lat­ing China’s eco­nomic re­tal­i­a­tion for the de­ploy­ment of a United States mis­sile de­fence sys­tem in South Korea.

The sus­pen­sion or­der marks the first time that a US com­pany has been pulled into the fray of a sim­mer­ing po­lit­i­cal dis­pute be­tween China and South Korea. The fac­tory sus­pen­sion is the lat­est move by China against South Korean com­pa­nies.

Lotte and its af­fil­i­ates have in­curred the brunt of the re­cent Chi­nese ac­tions af­ter the South Korean con­glom­er­ate agreed to pro­vide a golf course that the US will use to de­ploy the Ter­mi­nal High Alti­tude Area De­fence mis­sile sys­tem to counter North Korea’s provo­ca­tions.

Chi­nese au­thor­i­ties or­dered the pro­duc­tion stop­page due to al­leged safety vi­o­la­tions, ac­cord­ing to a Lotte rep­re­sen­ta­tive.

The month-long halt could cost the joint ven­ture four bil­lion won (RM15.5 mil­lion) in lost sales. The fac­tory makes choco­lates and co­coa prod­ucts.

“Her­shey sus­pended pro­duc­tion at the fa­cil­ity to per­form main­te­nance ac­tiv­i­ties,” ac­cord­ing to a com­pany state­ment.

“This ac­tion is be­ing taken in con­nec­tion with a rou­tine in­spec­tion and we are work­ing closely with the govern­ment on these mat­ters,” said the com­pany.

Her­shey es­tab­lished the ven­ture with Lotte in 2007 and owns a 50 per cent con­trol­ling stake. The shut­down is the lat­est trouble for the choco­late giant in China.

BLOOMBERG PIC

The month-long pro­duc­tion sus­pen­sion at the Lotte Shang­hai Foods fac­tory in Shang­hai may cost the Her­shey-Lotte Group joint ven­ture four bil­lion won in lost sales.

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