Firms losing patience on Thaad

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Firms losing patience on Thaad

Korean business groups hoped a meeting between President Moon Jae-in and Chinese leader Xi Jinping on the sidelines of the G-20 summit on Thursday in Berlin would resolve a diplomatic impasse over a missile defense system that has led to a stinging Chinese boycott of Korean goods.

Instead, Korea Inc. was left sorely disappointed, as the meeting between the two leaders, their first since Moon was elected, simply reaffirmed the irreconcilable gap between the two countries on the controversial missile defense system known as Thaad.

During the meeting, Moon acknowledged that economic, cultural and people-to-people exchange between the two countries had retreated due to “diverse reasons” recently without directly mentioning Thaad, a missile shield installed on Korean soil by the U.S. military which China believes threatens its security. Moon indirectly asked Xi to withdraw trade retaliation against Korean companies that are doing business in China.

Xi responded by asking Korea to eliminate obstacles so the two countries’ relationship can develop further.

In the past year, Korean companies, especially those heavily reliant on the Chinese market, have seen their sales plummet after Chinese consumers boycotted Korean retailers over Thaad and the Beijing government tightened inspections of Korean companies doing business in China.

“While the company expected a breakthrough solution from the summit, it is a big disappointment to see the Chinese government trying to coerce other countries using its global status to obtain what it wants,” a source at a Korean conglomerate said. “Korean companies cannot hold out any longer in a situation like this.”

Lotte Group, which offered one of its golf courses in Korea to host Thaad, was one of the most hurt companies. It had to close 90 percent of its supermarket locations in China and endure heavy backlash from local consumers. One video uploaded online showed a customer in China vandalizing shelves at a Lotte store, and in March, the Chinese government suspended production at Lotte Shanghai Food, a joint venture between Lotte and American chocolate company Hershey, for unclear “safety violation” reasons.

Hyundai Motor, which has been ambitiously expanding into China, experienced steep revenue decline in the past year. Its sales in China almost halved during the first half compared to the same period last year. According to the company and industry estimates, Hyundai Motor sold a total of 429,000 vehicles in China from January to June, a 47 percent year-on-year drop.

“It is hard to estimate the exact figure of economic loss generated from Thaad retaliation, but it is true that Korean companies are being strangled because of it,” said an official from the Korea International Trade Association. “It is a problem that needs to be solved on a political and government level.”

In an article about Thaad published in the Chinese state-run tabloid Global Times on Thursday, Da Zhigang, director of the Heilongjiang Provincial Academy of Social Sciences said that even though the relationship between Korea and China seems to be improving lately, it is “just a positive response from China for Moon’s positive will and attitude.”

“China will not back down on its tough stance of demanding Seoul to withdraw Thaad, so the problem still exists,” the director was quoted as saying.

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