South Korea’s Hyundai Motor Co has suspended production at all of its four Chinese factories due to supply disruption, a spokeswoman said on Tuesday.Media reports said Beijing Hyundai, Hyundai’s Chinese joint venture with China’s BAIC Motor Corp Ltd, has been unable to pay suppliers after sales slumped following a diplomatic spat, leading to the supply disruption.
Last year, South Korea agreed to deploy a U.S. missile defense system to counter threats from North Korea. China objected that the system’s radar would be capable of penetrating its territory, sparking negative popular sentiment towards Korean goods and services.South Korea deployed two units of the Terminal High Altitude Area Defence (THAAD) system earlier this year and is expected to put in place the remaining four units in the coming weeks.
Hyundai Motor’s sales from its Chinese factories fell 64 percent to 105,000 vehicles in April-June alone.“We suspended all four of our Chinese factories one by one last week due to disruption of supplies from a parts maker,” the spokeswoman said, without elaborating.She said a fifth factory in China has not yet started production.
An official at South Korea’s association of car parts makers said Hyundai suppliers usually get paid two months after shipments, but some have not been paid for six months.The spokeswoman declined to comment on payments.