China suspends LG Household plant

By Lee Hyo-sik

China has suspended operations of LG’s cosmetics plant there, making Korea’s fourth-largest conglomerate the latest victim in Beijing’s escalating retaliation against the country’s decision to deploy a U.S. anti-missile system here, according to company officials Friday.

This indicates that Beijing, which has so far been targeting corporate interests of Lotte Group, is moving to undermine LG and other Korean companies operating in China as Seoul and Washington are speeding up the installation of a Terminal High Altitude Area Defense (THAAD) battery.

LG Household & Health Care said Friday that Chinese government officials recently inspected its cosmetics plant in Hangzhou allegedly to check the facility’s fire protection system.

“It is true that our Hangzhou plant underwent a state inspection,” a company official said. “As far as we know, it has not received any official document from the Chinese authorities, ordering it to suspend production. We cannot confirm whether it was told verbally to do so.”

The official then said its second plant in Beijing, which makes toothpaste and other household items, has not been subject to any inspection.

According to industry analysts familiar with the matter, the Hangzhou factory, which produces mostly low-priced skincare products, was verbally ordered March 6 to close for a month due to a violation of China’s rules concerning industrial fire protection systems.

They also said multiple business sites run by other LG units in China have and will be subject to a range of administrative inspections, largely designed to disrupt their operations.

“As expected, China’s THAAD retaliation has begun spreading beyond Lotte as Korea and the United States are moving quickly to deploy the missile defense system,” said an executive at one of Korea’s major businesses associations, who declined to be named.

“I think LG Household & Health Care is only the beginning. China will target more Korean consumer goods makers running plants there, as a means of expressing its displeasure,” the executive said.

Early this week, Beijing ordered Lotte Shanghai Foods, a 50-50 joint venture between Lotte Confectionary and U.S. confectionary giant, Hershey Chocolate, to close for a month, citing its “inadequate” fire protection system.

Chinese authorities have continued to shut down more Lotte Mart outlets there, with 55 out of its 99 stores forced to close for various reasons.

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