Hyundai resumes operations of China plant after three-day suspension

Hyundai Motor Co today said one of its plants in China resumed operations after a three-day suspension following a German company's refusal to supply auto parts due to payment problems, according to the South Korean carmaker. (See: Supply disruption forces Hyundai Motor to suspend production at China facility )

Operations at the company's plant, in Cangzhou, Hebei District, were suspended as the supplier stopped delivering air intake components due to delayed payments.

"We persuaded the German company to resume supplying parts to the No 4 plant (in China). We are in talks to resolve the payment issue," a company spokesman said over the phone.

On 30 August, Hyundai's four plants in China resumed operations following a weeklong suspension over parts supply issues.

A Chinese company halted supplying plastic fuel tanks to the plants, one in Cangzhou and three in Beijing, after it reportedly did not receive 18.9 billion won ($17 million) from Hyundai.

The four plants boast of a combined capacity of 1.35 million vehicles. A recently built fifth plant in Chongqing China has a capacity of 300,000 units and is currently undergoing test production.

Hyundai sales in China are on the decline due to an escalation of a diplomatic row between Seoul and Beijing over the deployment of an advanced US missile defence system, called THAAD, in South Korea.

A standoff with partner BAIC, over supplier strategy, has also not helped the South Korean automaker. Reuters cited sources as saying the rift appeared to be at the root of problems over some of its European suppliers not being paid on time, which caused plant stoppages.

BAIC wanted to shift to cheaper Chinese suppliers to cut costs amid intensifying competition in the world's biggest auto market, while Hyundai wanted to protect its current supply chain, according to sources.

Hyundai said in a statement that a cooperative relationship with its partner would continue and "the two companies plan to continue various dialogue to strengthen competitiveness in the Chinese market."