China blacklists 24 Korean food and cosmetics firms

The Korea Herald/ANN

The Chinese government recently blacklisted 24 South Korean manufacturers and exporters of foods and cosmetics, restricting sales of their products on the mainland.

The measures add woes to Korean firms whose businesses are already hurt by Beijing’s apparent economic retaliation against Seoul’s deployment of a US missile defense system on the Korean Peninsula.

China’s General Administration of Quality Supervision, Inspection and Quarantine this week released a list of 211 foreign exporters, 203 foreign manufacturers and 217 Chinese importers that received a warning notice from the Chinese authorities. The 24 Korean firms were among them, including Dongwon Industries, Namyang Dairy Product and Orion.

The Chinese authorities said on its website that the blacklisted firms have been either denied customs clearance at least once or were found to have brought in low quality products into the country more than once in the past three years.

To resell their products, the firms are required to submit certificates of quality inspection to the Chinese authorities and receive an approval.

The news of the blacklisting immediately pulled down the stock prices of Korean cosmetics firms on Friday. Tonymoly shed 1.22 per cent to trade at 20,300 won (US$17.90) and Cosmax fell 1.72 per cent to 114,500 won (US$100.96) as of 1 pm. LG Household & Health Care declined 0.1 per cent to 975,000 won (US$859.72).

China’s reprisal against Korean firms escalated in April when Beijing banned imports of dozens of Korean food and cosmetics firms, as relations between Korea and China soured as the deployment process began for the Terminal High Altitude Area Defense system in Seongju, North Gyeongsang Province, in March.

Among the 466 cosmetics and food products that were banned in April in China, 61 came from South Korea.

Beijing regards THAAD as a security threat, while Seoul and the US say the missile defense system is there to protect against North Korean missiles.

The anti-Korean sentiment and harsh safety inspections in China led retailer Lotte Mart to temporarily close 99 stores in recent months.

Lotte Mart’s rival E-Mart, operated by Shinsegae Group, decided to withdraw its business from China late last month after 20 years of operation, due to continued losses.

However, China’s hard-line stance against the THAAD seemed to have softened since the election of new liberal President Moon Jae-in, who ordered on June 7 to halt the deployment of the system until environmental assessment on the system is completed, an official at the Korea International Trade Association said.

“We used to take complaints from Korean firms about their difficulties in trade with China but we haven’t had any such complaints since May,” the official said.