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Hyundai faces financial woes in China, South Korea

By
Allen Cone
Workers assemble vehicles at Hyundai's automobile production plant in Beijing, China. Four Hyundai plants in China resumed production after a supplier restarted deliveries over delayed payments. File Photo by Stephen Shaver/UPI
Workers assemble vehicles at Hyundai's automobile production plant in Beijing, China. Four Hyundai plants in China resumed production after a supplier restarted deliveries over delayed payments. File Photo by Stephen Shaver/UPI | License Photo

Aug. 30 (UPI) -- Hyundai is dealing with financial problems, including a week-long suspension of production in China because of delayed payments and union talks that broke down in South Korea.

On Wednesday, the South Korea-based automaker said it resumed operations at all four factories in China when a fuel tanks vendor restarted deliveries.

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A spokesman said poor sales in China caused the automaker to delay payments and discussions are ongoing with that vendor. He didn't say whether other suppliers were involved.

Chinese partner BAIC Motor Corp., and Beijing Hyundai said the factories are operating normally. The plants have a total capacity to produce more than 1.6 million vehicles a year.

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From January to July, Beijing Hyundai Motor reported that sales plunged 40.8 percent from a year ago.

Lower sales have been attributed to consumer backlash after South Korea's plans to deploy a U.S. missile-defense system, a sedan-dominant lineup instead of SUVs and big discounts by other brands.

"Hyundai is facing a failure of strategy and weakened competitiveness," Lee Hang-koo, a senior research fellow at state-run Korea Institute for Industrial Economics & Trade in Sejong City, South Korea told Bloomberg. "There is a bigger problem than the THAAD fallout. Hyundai has to improve its brand value and product quality to boost sales in China."

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In Seoul, management and union talks broke down Wednesday after they failed to agree on salary increases next year. The want to increase basic monthly wages by $138 and pay 30 percent of net profit the company earns as bonuses.

"We could not accept the management's suggestion to raise basic monthly wage by 57,000 won [$50] and cut bonus by 20 percent from the previous year," Park Yu-ki, the union's leader, said in a statement.

The trade union decided to suspend talks until October after new leadership is elected.

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"We are worried that the possibility of further labor strikes and slow recovery from THAAD effect will weigh on the company's performances," said Lee Sang-hyun, an analyst at IBK Securities, told Nikkei Asian Review.

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