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South Korean firms breath sigh of relief amid thaw in China ties

Spat over deployment of US-developed missile shield led to freeze in relations between two countries and a boycott by some Chinese consumers of South Korean goods

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South Korean carmaker Hyundai saw its sales plunge in China in the second quarter of this year. Photo: Reuters

For many companies caught in the middle of a year-long political dispute between China and South Korea, the detente announced on Tuesday formalises a thaw that has been in the making for months.

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From airlines to retailers, industries have been moving towards a reconciliation as tensions eased. While Hyundai Motor and Lotte Group are among companies that are still working through the damage from Seoul’s decision to deploy a US-developed missile shield, some have seen business return to former levels.

“Thanks to today’s announcement, a thawing season will come earlier than expected,” Han Jae-jin, an economist at Hyundai Research Institute, said. He had projected 8.5 trillion won (US$7.6 billion) worth of damage to businesses ranging from tourism, entertainment and cosmetics to cars and retail due to the fallout from the missile shield THAAD, which stands for Terminal High Altitude Area Defence system.

The dispute had prompted Beijing to retaliate economically, suspending sales of package tours and hindering the operations of South Korean companies operating in China. The government also heightened customs scrutiny of South Korean goods and excluded cars with South Korean batteries from government subsidies.

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The agreement to restore relations paves the way for closer ties between two of Asia’s biggest economies.
The Lotte Corp World Tower in Seoul. The firm is selling its supermarkets in China. Photo: Bloomberg
The Lotte Corp World Tower in Seoul. The firm is selling its supermarkets in China. Photo: Bloomberg
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