Hyundai Beijing beset with more troubles due to partnership conflict

2017.09.08 13:23:47 | 2017.09.08 15:48:52

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Rubbing salt into multiple wounds of South Korea’s top automaker Hyundai Motor Co., its partner in China is said to be picking a fight out to shake the long-established joint-venture, which is the only means for a foreign entity to make and sell cars in China.

The Global Times, a tabloid run by China’s state-run People’s Daily, reported on Wednesday that Beijing Auto Industry Corp (BAIC) was fed up with its Korean partner Hyundai Motor’s “greed and arrogance” for insisting on its own supply chain and indicated the Chinese carmaker, which if not for the Beijing Hyundai entity, was “otherwise doing great”, could pull out of the 15-year-old partnership.

The paper brought up the spat after Beijing Hyundai had to suspend production at four different plants late last month and another one recently because of delayed payments to suppliers.

Sales of Beijing Hyundai Motor Co., a 50:50 joint venture between Hyundai Motor and BAIC established in 2002, sharply declined this year due to ongoing political row over installment of a U.S. antimissile shield in Korea. Hyundai and Kia that until last year together had been the third largest car seller in China saw sales nearly halved this year. Hyundai cars that sold fifth best in China slipped to 15th rank this year.

The news report said that BAIC proposed switching suppliers to local Chinese makers to cut costs as the current suppliers, mostly Koreans that are directly or indirectly tied to the Korean automaker - charge too much. But Hyundai Motor has stayed against the plan, citing quality issues.

It accused the Korea automaker has deprived BAIC of profits by procuring parts at higher costs from Hyundai Motor’s affiliates like Hyundai Mobis and Hyundai Wia. But the Korean automaker denied the accusation, arguing that both Chinese operations of Hyundai Mobis incurred losses in the first half.

BAIC, in the report by Global Times, also charged Hyundai Motor acted dominant despite their 50-50 joint partnership. It said there are two presidents, one each from Hyundai Motor and BAIC, but eight of the joint venture’s nine senior executive vice presidents are from Hyundai.

Shares of Hyundai Motor closed Friday at 135,500 won ($120.07), down 2,500 won or 1.81 percent from the previous session.

By Park Man-won and Lee Seung-hoon

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