Shares in Hyundai Motor and its suppliers slid on Friday on fresh worries over its position in China after highly critical state newspaper comments - even as it managed to get a Chinese car plant restarted. Silvia Antonioli reports
New thinking - is certainly what Hyundai needs right now. Shares in the South Korean carmaker and its European suppliers taking a beating on fresh worries about its position in China after harsh criticism from a state-run newspaper. The company is at odds with its Chinese partner BAIC Motor who wants to replace long-standing European suppliers with cheaper Chinese peers. But strategy might not be the main issue. SOUNDBITE (English) JEREMY STRETCH, HEAD OF STRATEDY, CIBC "Clearly South Korean relations with China have been somewhat compromised as the South are intent on trying to enhance their own military capabilities because of the threat from from the north which of course is a key ally of China. In terms of he joint venture between high and the Chinese manufacturer. Clearly there has been problems in in that particular business business model. We've seen substantial reductions in sales of cars in China because of the rising political tension . " China's Global Times says BAIC is highly critical of Hyundai. And the mouth piece of the Chinese Communist Party also slams Seoul for deploying the U.S. anti-missile defense system THAAD. The newspaper calls THAAD "a malignant tumour" and blames the decision on the South Koreans eating too much kimchi! SOUNDBITE (English) JEREMY STRETCH, HEAD OF STRATEDY, CIBC "It does just underline that there are frictions here both from a political tension standpoint but also in terms of the maintenance of production supplies in order to keep the product cycle going." But while Hyundai could help itself by mending its relationship with the Chinese partner further evidence of the weight of the political empasse is the slump in shares of other South korean businesses. Among them comestic firm AmorePacific and Lotte Shopping, whose supermarket stores in China have been shut for months, in the wake of diplomatic tensions. All the can hope for is diplomacy to bring a new political dawn.