Local community in Hyundai factory town feeling the fallout
BEIJING: In the industrial outskirts of Beijing, a local community in the shadow of a giant Hyundai Motor Co manufacturing complex is feeling the fallout from a fierce diplomatic standoff between China and South Korea.
Workers said shifts at the cluster of Hyundai plants had been slashed as Hyundai struggles with plunging sales in China amid the year-long dispute. Suppliers, meanwhile, have been hit by falling orders.
Local entrepreneurs and officials said housing markets and businesses in the area, a suburban district in the northeast of the city called Migezhuang, had seen sharp drops in demand.
The slump for the minieconomies that have grown around the carmaker’s operations underscores how the hammering South Korean businesses have taken in China is affecting local interests too.
“Fewer people are coming to my store,” said Li Gonghe, who has been running a convenience shop in the area since 2004.
“Hyundai workers are getting too many days off and the whole village is paying for it.”
Hyundai’s four plants around China — three in the suburbs northeast of here — halted production last week after a supplier refused to provide parts due to non-payment. Production was restarted on Wednesday, but not before rattling investors and weighing on Hyundai’s shares.
The South Korean carmaker has seen sales in China, the world’s largest car market, tumble over 60 per cent in recent months, in large part because of a chill between China and South Korea over Seoul’s deployment of a United States anti-missile system.
South Korea says the Terminal High Altitude Area Defence system is needed to counter threats from North Korea. China says it poses a threat to its national security.
Workers at the local plants, operated by a joint venture between Hyundai and BAIC Motor Corp Ltd, said shifts and overtime had been significantly cut, hitting salaries.
“In May, June and July, we only worked one week per month,” said one worker, Liu Haipeng.
He said workers at a nearby South Korean factory supplying to Hyundai had recently protested against the cuts.
Hyundai cut production at its four factories in China earlier this year due to slumping sales. A fifth China factory was scheduled to start production last month.
Hyundai is not the only South Korean firm feeling the heat in China. The Lotte Group had around 90 of its Lotte Mart retail stores around the country closed over various safety violations earlier this year.
Chinese tourists to South Korea, traditionally a popular destination, have also plummeted, after bans on Chinese tour groups travelling to the country. Cruise operators have removed South Korean ports from itineraries and some flight routes have been cut.
Chinese tourist numbers to South Korea dropped 69.3 per cent in July, according to the latest figures from the Korea Tourism Organisation. Reuters