China is vast, but the whole nation can still be swept by trends — especially if politics enters the frame. When the products of a business are shunned, the consequences can be painful. South Korea, formerly beloved by Chinese consumers for its K-pop and cosmetics, is in the sin bin for agreeing to host a missile defence system for the US. South Korean companies are getting caught in the cross hairs of Chinese disapproval. But the trend may not last long.
Hyundai Motor and affiliate Kia Motors are the latest to feel the chill. Yesterday, shares in the carmakers dipped in response to reports they have slashed production in China, where combined unit sales halved year on year in March. While neither splits out China revenues, this will drag down Asia’s contribution, around one-third of Hyundai’s total. The group’s Chinese plant sells around one-fifth of total volumes. Kia has similar metrics.
These are not the only South Korean consumer names with significant exposure to China. AmorePacific, purveyor of cosmetics, and Samsung Electronics earn around 20 per cent of revenues there. Abashed South Korean groups should learn from compatriot Lotte. The group, which has given over a golf course for the missile site, was the first to be blacklisted. Following official inspections, most of its 100 or more stores in China have been forced to close. But on Monday the company said it will continue to invest there.