South Korea's SsangYong Motor is reviewing plans to build a vehicle production plant in China as the political fall-out between the two countries continues to damage South Korean corporate interests in the country.
Since the South Korean government agreed to deploy the US' THAAD anti-missile defence system earlier this year, South Korean companies such as Hyundai, Kia and Lotte, have seen their business volumes plummet in China as "anti-Korean" sentiment has been ramped up.
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China has denied any knowledge of trade-restrictive measures against South Korean companies after the South Korean government raised the issue to the World Trade Organization.
SsangYong's President and CEO Choi Johng-sik told local reporters that plans to build a new plant in partnership with China's Shaanxi Automobile Group have made little progress since the diplomatic row flared up earlier this year, adding that the company is looking for a "Plan B".
The automaker, which is owned by India's Mahindra&Mahindra, had previously signed a letter of intent with Shaanxi Automobile Group to build a new vehicle assembly plant and an engine R&D centre in the Xi'an Economic and Technological Development Zone in Xi'an city of Shaanxi province.
The two companies had agreed to complete construction of a 150,000 unit/year SUV plant by 2019, with SsangYong also interested in expanding capacity to 300,000 units per year at a later stage – to produce SUVs, MPVs and pickup trucks.
Given that SsangYong produced a total of 156,000 vehicles globally (mainly SUVs in South Korea) last year and has a total production capacity of 250,000 units per year, China is a major part of the company's future – including its plans to expand into the US market from 2019 and launch a range of electric vehicles for global markets from 2020.
