(Repeats story from late Tuesday)
* S.Korean firms see sales hit by boycotts, cut output
* Workers, suppliers relying on carmaker Hyundai feel pinch
* S.Korean firms directly employ 700,000 Chinese -trade
* Retailer Lotte has closed 75 of its 99 outlets in China
By Muyu Xu and Adam Jourdan
BEIJING/SHANGHAI, April 11 South Korean
companies in China have been clobbered by Beijing's angry
response to Seoul's decision to deploy a U.S. anti-missile
system, but the boycotts and regulatory pressure on firms like
Hyundai and Lotte are rebounding on their Chinese workers and
South Korean businesses are a major employer in China, with
firms such as Hyundai Motor Co, smartphone
manufacturer Samsung Electronics Co, and retail
giant Lotte Group directly creating some 700,000 jobs in China,
according to a Korea trade promotion agency, and there are many
more down the supply chain.
Hyundai, which says its Chinese affiliates and suppliers
alone create a total of 90,000 jobs, has responded to falling
sales by cutting production.
In Beijing's industrial suburb of Shunyi, where Hyundai has
its biggest overseas manufacturing base, its suppliers, workers
and local retailers who depend on them are feeling the pinch.
"We haven't worked weekends since a month ago and don't know
when it will get back to normal," said a supplier of hub caps to
"We can do nothing but wait while losing money."
Hyundai's Beijing plants, which used to run 24 hours, seven
days a week, are now running just 8am to 5pm on a four-day week,
its workers say, and concerns of further output cuts are
unnerving those working in its supply chain and local stores.
Couriers complain deliveries to Hyundai's main plant have
dropped by between a half and two-thirds, while the owner of a
nearby convenience store said his business had been hit because
salaries at the plant were down.
The chief executive of a South Korean auto parts supplier
employing over 100 Chinese employees said his factory's
utilisation rate had dropped by 30 percent. He had not laid
anyone off yet, but said the future was uncertain.
"We have no choice but to reduce Chinese workers if the
situation is prolonged. There are no signs that the situation
would get better anytime soon," he said.
Hyundai itself said there was "no current impact on
employment in China", that it was fully committed to the Chinese
market, and would "continue to do our utmost to protect our
employees in the region".
The dispute over the THAAD missile defence system, which
South Korea and the United States say is needed to contain the
threat from North Korea, has prompted calls for boycotts in
Chinese media and increased regulatory scrutiny for South Korean
Lotte Group, which has suffered a local boycott of its
products since it agreed to provide land for the U.S. missile
defence system, closed 75 of its 99 hypermarkets in China in
recent weeks after regulatory inspections by authorities. It
said workers at affected stores were being paid in full as per
This could drop to 60-70 percent in the second month of
closure, but the firm would "pay the most it can", a Lotte Mart
spokesman said. Lotte Group employs 20,000 people in China.
Reuters spoke to five Lotte employees in stores around China
who said they were still being paid and that workers were still
coming into closed stores to check expiry dates and handle
Corporate risk analysts said China was willing to accept
some "tolerable collateral damage", and it was being strategic
in the areas it targeted, avoiding, for now, big employers like
tech giant Samsung.
"They've pretty carefully targeted Lotte in terms of what
the government has orchestrated, as well as tourism, flights and
duty free," said Andrew Gilholm, director of analysis for China
and North Asia at risk consultancy Control Risks.
He said the stand-off could go on at least until South Korea
has new leadership, following the impeachment last month that
ended the presidency of Park Geun-hye.
"Beijing is likely to keep the pressure on until the new
government is set up in Seoul and has made its position (on
THAAD) clear," he said.
For now, Korean firms are keeping their heads down waiting
for the row to blow over.
But workers and dealers remain anxious, with sales showing
no signs of recovery and no idea when things might return to
"The recent slide has been very serious. Normally we sell
more than 100 vehicles in a month. Now we can only shift 30,"
said a Hyundai dealer in Beijing.
"Anti-Korean sentiment has soared, and lots of consumers
aren't willing to buy South Korean cars," he said.
(Reporting by Muyu Xu in BEIJING, Adam Jourdan in SHANGHAI;
Additional reporting by Hyunjoo Jin, Joyce Lee, Suyeong Lee and
Heekyong Yang in SEOUL, SHANGHAI and BEIJING newsrooms; Editing
by Will Waterman)