South Korean automaker Hyundai has fallen on tough times in China. It’s in the news now because its factories in China ceased production for a week because of a payment dispute with a supplier. That dispute has been successfully negotiated down, the Financial Times reports (paywall), and production has resumed — but its problems run much, much deeper.
- Hyundai posted its smallest quarterly profit in five years recently, Reuters notes.
- The small profits were partially the result of an ongoing, unofficial Chinese boycott of South Korean goods. China-South Korea relations have been especially tense in the past year, as China’s small northeastern neighbor announced it would host a U.S. missile defense system — but tensions between the two countries go far beyond that.
- Hyundai itself also faces a branding problem in China. An analyst quoted in the Wall Street Journal says (paywall) that the company never resolved its “fundamental issue with product positioning and brand equity,” and an analyst in the Financial Times report cited above noted that Hyundai’s “cars continue to lose their appeal to Chinese consumers as local Chinese rivals catch up fast.”
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