April 25, 2024

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[THE INVESTOR] LG Household and Health Care denied media reports on March 10 that operations at its factory in Hangzhou have been suspended following fire safety inspections. 

LG H&H’s Su:m37 store in Hangzhou, China

Although the official notification has not been issued, a one-month ban is likely to be imposed, according to industry watchers. Other affiliated companies in Beijing are also reported to be undergoing inspections. 

The South Korean beauty and lifestyle giant acknowledged that the factory has been undergoing inspections recently but refuted the report that it has shut down. Its other factory in Beijing was not subject to the inspections, said the company. 

LG H&H has two factories in China: the one in Hangzhou mainly produces middle and lower-priced skincare products posting an approximate 10 billion won (US$8.65 million) yearly revenue and Beijing plant manufactures health care products such as toothpaste. 

The Hangzhou factory was established in 1995, having passed inspections then, but it needs improvements in line with the reinforced fire safety regulations. The local authorities have ignored it so far, but in recent inspections suddenly pointed it out, an LG official told Yonhap News Agency.

The revenue from Chinese branch accounts for 10 percent of its total revenue. As the factory is small in size and manufactures lower-priced goods, it will not severely hurt the company, but the move itself is worrisome, said an industry source. 

By Hwang You-mee (glamazon@heraldcorp.com)