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| Hyundai Motor and Kia Corp. headquarters in Seoul / Courtesy of Hyundai Motor |
By Kim Hyun-bin
Korean business conglomerates are busy selling off assets in China as a series of events there have negatively impacted their businesses over the past several years.
The pandemic and China’s economic retaliation against the deployment of a U.S. Terminal High Altitude Area Defense (THAAD) anti-missile system in Korea deployment controversy have led to declining sales and forced Korean companies to restructure their business portfolios in China, industry officials said, Sunday.
Hyundai Motor is seeking to sell its first Beijing plant. “Hyundai is in talks with the Beijing Shunyi district government to sell its plant,” an industry official said. The plant was established in 2002 with an annual production capacity of 300,000 vehicles. It was the start of Hyundai’s China endeavors and helped expand the company’s market share in the world’s largest car market.
However, reports said the South Korean carmaker is on track to sell its plant to a Chinese electric vehicle (EV) startup called Li Auto for 6 billion yuan ($942.8 million). Li Auto is among the top three EV startups in China, and it reportedly plans to operate the facility starting in 2023, while aiming to generate annual sales of 30 billion yuan by 2024.
Hyundai declined to comment.
The plant has been suspended after Hyundai suffered sluggish sales in China due to lingering tensions between Seoul and Beijing following the THAAD deployment in Korea in 2017. Beijing has opposed the THAAD deployment in Korea, claiming that its powerful radar could be used to spy on China’s airspace. Sales started to deteriorate swiftly after the THAAD deployment resulting in a total shutdown of the plant in April 2019.
Even with the sell-offs, Hyundai will have four other plants in operation in China ― two in Beijing, and one each in Changzhou and Chongqing. The company also operates plants in the U.S., the Czech Republic, Turkey, Russia, India and Brazil with a combined annual production capacity of 5.5 million vehicles.
SK Group also sold off its SK Beijing Tower recently to a local insurance company, Hexie Insurance, in a deal worth over 1 trillion won. The 35-floor tower is situated in the middle of Beijing’s commercial district and since 2009 has been utilized as SK Group’s China control tower.
“The sell-off is aimed at expanding the ESG sector within China and as a portfolio restructuring means, but it is irrelevant to claims of curtailing our Chinese operations,” an SK Group official said.
Last year, LG Group was the first to sell off its Beijing Twin Towers for 8 billion yuan. Local Chinese media outlets claim that Korean conglomerates are selling off their assets in China due to the effects of the COVID-19 pandemic, but many industry watchers point out that the THAAD deployment has worsened sales dramatically in the country, which led to the recent sell-offs.
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