[Exclusive] Stalled Car Industry... 'SOS' to Chinese Government

Government and Hyundai Motor Request Early Operation of Parts Factory to Shandong Provincial Government and Others

As the supply of Chinese-made parts has been halted, some lines at Hyundai Motor's factory have gone on shutdown. On the 4th, workers were leaving the Myungchon main gate of Hyundai Motor's Ulsan plant. (Photo by Yonhap News)

[Asia Economy Reporter Kim Hyewon, Beijing=Correspondent Park Sunmi] The government and Hyundai Motor Group have officially requested the Shandong provincial government in China to selectively resume early operations of automobile parts factories, including wiring harnesses. This is part of a public-private joint response to the suspension of domestic and overseas factory operations caused by the disruption of Chinese parts supply due to the novel coronavirus infection (Wuhan pneumonia) outbreak.

According to the Ministry of Foreign Affairs, the Ministry of Trade, Industry and Energy, and industry sources on the 6th, the Ministry of Foreign Affairs recently confirmed that it delivered a cooperation document regarding the operation of automobile parts factories to the Shandong provincial government and municipal governments in Shandong, such as Yantai and Qingdao, through diplomatic missions in China. The Ministry of Trade, Industry and Energy is reviewing whether to send an additional cooperation letter under the minister's name. ▶Related article page 5

A government official said, "We requested the Chinese government to operate some automobile parts factories as early as today, or at the latest around the 9th," adding, "The Shandong provincial government gave positive feedback on the approval, but the responses from municipal governments vary, so we need to wait and see the results."

Hyundai Motor Group conducted a full survey of about 40 partner companies located in Shandong that produce wiring harnesses, the electrical components that caused the factory shutdown, and graded each company to select those with excellent hygiene management to submit to both governments. They also supported partner companies to meet the conditions such as factory quarantine measures proposed by the Chinese side.

Although the public and private sectors have jointly taken proactive measures considering the prolonged novel coronavirus situation, many hurdles remain. The first is that to obtain approval from the Chinese government for factory operation, partner companies must fulfill prerequisites and actively apply for permission, but they are showing a passive attitude. This is because the application process is complicated, and they cannot ignore the possibility of strong penalties such as factory closure if problems arise.

The second is that even if approval is obtained, operating wiring harness factories, which are labor-intensive, requires about a thousand workers, but employees are reluctant to voluntarily return due to fears of novel coronavirus infection. There is also a tendency for Shandong and municipal governments to shift responsibility. A local source in China said, "The municipal governments say they will follow the Shandong provincial government's decision, and the Shandong government says the municipal governments where the factories are located should decide," adding, "It is unclear how the conclusion will be reached, but if the novel coronavirus situation enters a resolution phase, it is currently best for the government and private sector to take proactive measures so that China cannot help but consider Korea first."

Meanwhile, as Hyundai Motor's entire factories have sequentially decided to close until the 11th due to the novel coronavirus, Kia Motors, which had been holding out by securing parts inventory until the last moment, has also entered the countdown to suspension. Kia's labor and management will hold consultations this afternoon regarding the suspension of domestic factory operations due to disruptions in Chinese parts supply. A shutdown of 2 to 3 days is expected until parts supply stabilizes again. Korea GM will also decide today whether to reduce production or suspend operations at its factories next week.

This content was produced with the assistance of AI translation services.