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Hyundai's China Woes Continue as Plant Shut Again on Vendor Row

Hyundai's China Woes Continue as Plant Shut Again on Vendor Row”

A showroom in Seoul displays Hyundai vehicles.

[THE INVESTOR]Hyundai Motor Group on September 4 said it will allot 250 billion won (US$221 million) to its parts suppliers in China that have suffered sales slump as troubles continue in its largest market.

Hyundai declined to comment on the reason for the failure to pay suppliers.

Its factory in Cangzhou, Hebei province, stopped churning out cars earlier in the day as a German supplier stopped deliveries of air intake systems when Hyundai delayed payments, Hyundai Motor's spokesperson Cha Seon-jin said by phone. The joint venture's three other Chinese factories remain operational. BAIC, which takes care of finance for the joint venture, has still not paid the parts maker that was responsible for the previous stoppage, despite a decision by Hyundai headquarters to inject billions of cash into the ailing Chinese operation that has been hit hard by an unofficial boycott there.

"That is manageable. But if Hyundai's Chinese partner is refusing to make payments, that's a different story", he said, adding that the issue could occur time and time again.

It has just completed construction of a fifth plant with an additional production capacity of 300,000 units per year in Chongqing, but the start-up of operations here has been delayed due to the brand's sharp drop in sales in recent months.

The new China CEO, however, has a huge task in front of him if he is going to get Hyundai back on track in the world's biggest auto market - one that accounted for almost a quarter of Hyundai's revenue in the last financial year.

It published its smallest quarterly profit in 5 years for the quarter ending in June.

The latest shutdown came as China has grown angry over South Korea's decision to install a USA anti-missile system. China says the system poses a threat to its nationwide security.

Production stopped again on Tuesday at a Hyundai auto plant in Changzhou, China.

Hyundai shares fell 0.7 percent to 139,000 won as of 11:33 a.m.in Seoul.



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