Korean firms in China feel fallout from Thaad
A majority of Korean companies in China say they have felt the economic impact of strained relations between Seoul and Beijing as the two governments continue to disagree over deployment of a U.S.-led missile shield in Korea.
In a joint study released Tuesday by the Korea Institute for Industrial Economics and Trade, the Korea Chamber of Commerce and Industry and the Korea Chamber of Commerce in China, 66 percent of 218 Korean companies said they could feel the negative effects of tense political relations between the two countries.
Two industries in particular felt the hit: 87 percent of retailers said their businesses had been heavily affected and 82 percent of automakers answered the same.
While ferocious competition from Chinese rivals was the biggest challenge that Korean companies faced, with 19.9 percent of firms indicating it was an issue, the second-largest challenge was shrinking demand from Chinese consumers, with 18.5 percent of respondents.
Double the number of Korean companies from last year said they have felt increasingly burdened by Chinese government regulations. In the fourth quarter, only 7.4 percent of those polled said they faced hardship from tighter regulations, but in the first quarter this year, that figure jumped to 15.6 percent.
“The companies are feeling directly the changed attitudes of the Chinese government since the Korean government decided to accept installation of Thaad,” said Min Sung-hwan, a researcher at the Korea Institute for Industrial Economics and Trade.
Korean chemical, automobile and retail firms especially said they have faced tougher regulations recently. Most of the companies complained the Chinese government was imposing more stringent environmental and safety rules on Korean companies. In the case of Lotte Mart, 80 locations across China, accounting for 80 percent of its operations there, were closed. While 63 of the stores have been suspended for various environmental and safety reasons, 17 were voluntarily closed by the Korean retail conglomerate.
Lotte is said to be the main target of Chinese government retaliation because the Korean retail giant accepted Seoul’s proposal to set up the Thaad missile shield on one of the company’s golf courses in Korea. Many Chinese consumers have boycotted Lotte, holding protests outside its stores and even damaging products at stores and posting the videos on social media.
Chinese government regulations barring the entry of Korean goods was also a concern in the survey, with 48 percent saying they were worried about import restrictions.
BY LEE HO-JEONG [email@example.com]