CHINA HALTS OPS AT HERSHEY-LOTTE PLANT
Factory suspension escalates economic retaliation against S. Korean firms
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.