South Korean firms are being squeezed in China, in suspected retaliation for Seoul’s deployment of a U.S. missile defence system, highlighting the tools China can deploy to hit back at the corporate interests of trade partners it disagrees with.
The chill facing Korea Inc, from cosmetics and supermarket chains to autos and tourism, points to a potential risk for American companies, amid a more confrontational stance taken by new U.S. President Donald Trump In China, state media and grassroots political groups have led angry calls to boycott popular Korean products.
Photos on social media and local news websites showed crowds vandalising a Hyundai Motor Co car, and some Chinese tourism firms moved to cancel Korean tours.
Beijing is furious over a joint plan by South Korea and the United States to set up the Terminal High Altitude Area Defence (THAAD) missile system in South Korea. Seoul and Washington say it will defend against nuclear-armed North Korean missiles. But Beijing says its far-reaching radar is targeted at China.
The furore echoes protests in 2012 against Japanese firms during a row with Tokyo over disputed islands in the East China Sea. The dispute flared on Monday when Lotte approved a land-swap deal that moved the THAAD system closer to deployment.
On Thursday, Lotte Duty Free, an affiliate of Korean conglomerate Lotte Group, said it had been the target of a suspected Chinese cyber attack.
“What’s happening to Korean companies now is a pretty good playbook for what might happen to U.S. firms over the next year,” said Andrew Gilholm, director of analysis for China and North Asia at risk consultancy Control Risks.
“Rather than the big dramatic trade war, everything goes to hell scenario under Trump, it’s probably more likely to be manifested as regulatory harassment of companies – one of the lower intensity tools for China.”
Korean stocks plunged on Friday, hitting cosmetics giant Amorepacific Corp, carmaker Hyundai, and airlines Jeju Air Co Ltd, Korean Air Lines Co Ltd and Asiana Airlines Inc.
