Large firms from South Korea having manufacturing units in China have reported a fall in sales after South Korea agreed to deploy the Terminal High Altitude Area Defense (THAAD) battery, an advanced U.S. missile defense system in 2016. Sales have fallen about 28% over the past four years due to the bilateral row over THAAD deployment and other reasons, including a fall in the competitiveness of Chinese manufacturing, as per CEO Score, a local corporate tracker.
In July 2016, South Korea and the United States agreed to deploy the THAAD battery, prompting Beijing to impose restrictions on tours to the neighboring country a month later.
About 320 Chinese production units of 113 large corporations posted 103.98 trillion won (US$93 billion) in combined sales in 2020, down 27.5 percent from four years earlier, wrote CEO Score on Wednesday.
Another key reason for the fall in sales is attributed to the Sino-American trade war, which has contributed to a decline in the competitiveness of production in China.
In the case of the automobile and parts industry, the sales of the 99 corporations last year had been down 59.2% since 2016.
The sales of the two Hyundai Motor Group subsidiaries decreased 65%, and the sales of 97 subsidiaries in the parts sector also decreased by 52.3%. Hyundai Motor also declined 65.9 percent from 20.12 trillion won to 6.8729 trillion won.
The sales of 59 corporations in the IT and electrical and electronics industry have been down 18.6% since 2016.
Samsung Electronics’ Tianjin and Suzhou subsidiaries, which recorded 6.96 trillion won and 12.97 trillion won in sales in 2016, respectively, stopped producing smartphones in China at the end of 2018 and 2019. Sales of Samsung Electronics’ Chinese subsidiary decreased the most.
LG Electronics’ Chinese subsidiary, which posted 2.96 trillion won in sales in 2016, is also in the process of suspending production due to the withdrawal of its smartphone business.
On the other hand, LG Energy Solution increased its battery production significantly from KRW 2.41 trillion to KRW 5,758.3 billion. SK Global Chemical and LG Chem also showed good growth.
Five industries, including petrochemicals, shipbuilding, machinery and equipment, steel, pharmaceuticals, and food and beverages, saw their sales increase.
Overall, Samsung Electronics, Hyundai Motor Company, Hyundai Mobis, and Kia saw sales decline.