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Business

Chinese fire back at South Korea with their wallets

Hyundai's Chinese sales plunge 50% in March as missile shield backlash spreads

A Hyundai dealership in China. The South Korean automaker's sales there have skidded.

BEIJING/DALIAN -- Chinese boycotts of South Korean products and tourism are spreading in a backlash to the planned deployment of a U.S. missile defense system, prompting store closures and changes to travel routes.  

On a recent day in Beijing, a salesman at a Hyundai Motor dealership could be heard offering a 20,000 yuan ($2,900) discount in hushed tones. The South Korean automaker's new-car sales in China crashed 52.2% on the year in March, down to 72,032 units.

Not since 2009 have Hyundai's Chinese monthly sales fallen near the 70,000 mark. Customers at the dealership are down to 20% to 30% what they were in peak times, the salesman reported. The sudden drop in sales may even affect the timetable for starting Hyundai's newly completed factory in Chongqing in southwestern China.

Hyundai's share of the Chinese car market is about 7.7%, putting it third behind Volkswagen and General Motors, according to British research firm IHS Automotive. In March, Hyundai's sales trailed those at lower-ranked Japanese rivals Nissan MotorHonda Motor and Toyota Motor.

Anti-South Korean sentiment has worsened in China after a decision last July to deploy the U.S. Terminal High Altitude Area Defense missile shield on land provided by South Korean conglomerate Lotte. The reaction shows signs of being a concerted effort by China's government and private sector to punish South Korea.

Lotte, the most prominent target of the backlash, has suspended business at 87 of its 99 supermarkets in China, according to Chinese media. Authorities have ordered some locations to halt business, claiming fire safety and other violations. Lotte has closed others because they have been cut off by Chinese suppliers.

In Dalian, Liaoning Province, near the Korean Peninsula, there have been cases of South Korean companies being suddenly told to vacate their offices, and imports being stopped at customs. Online posts calling for boycotts of South Korean products have become a common sight on the Chinese internet.

The boycotts have also spread to South Korea's tourism industry, which could suffer a severe shock since half its foreign visitors are Chinese. The China National Tourism Administration has verbally told travel agencies to suspend group tours headed for South Korea, according to people familiar with the matter. Individual Chinese travelers also have been advised to avoid the country.

State-owned China Southern Airlines has suspended a third of its South Korea-bound flights. The airline had been running 30 flights a day to South Korea but has decreased the number to 20 as Chinese travelers increasingly have stayed away. Royal Caribbean Cruises, the world's second-largest cruise company, discontinued routes stopping at Busan and Jeju Island and rerouted them to Nagasaki and Kumamoto in Japan.

China has a history of boycotting companies from countries with which it has had diplomatic spats. In 2008, Chinese consumers organized a boycott of Carrefour, a French multinational retailer, after relations between the countries soured. In 2012, Japanese car dealerships were vandalized and major Japanese automakers' monthly sales dropped by half after anti-Japan protests spread throughout China over an island dispute.

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