Source: Business Korea
South Korean companies are achieving concrete results in “Post China” strategy, turning the crisis caused by the U.S. Terminal High Altitude Area Defense (THAAD) missile system into opportunity. They were heavily dependent on the Chinese market in the past but they are now getting a fruitful outcome in India and Brazil which have a great growth potential and potential purchasing power.
According to industry sources on October 24, Hanwha Chemical Corp. sent its sales team in charge of chlorinated polyvinyl chloride (CPVC), a high value-added chemical product, to Mumbai, India, in January this year. The team, which has stayed in India for 10 months now, is consisted of four members including veteran sales executive director and researchers who developed CPVC. The CPVC sales team has obtained performance certification from the Indian government and is aggressively seeking to sales outlets.
Hanwha Chemical has been putting efforts into the Indian market largely due to China. In November last year, the Chinese Ministry of Commerce launched an anti-dumping investigation on polysilicon imports from Hanwha Chemical. The company exports 70 percent of its polysilicon production to China. The Chinese government will decide whether or not to allow Hanwha Chemical to continuously export products to the country depending on the investigation result to be announced next month. The company thought it should no longer risk its life on China so it headed to India right away with its new CPVC product.
Yoon Chang-hyun, a professor of finance at the University of Seoul, said, “Paradoxically, domestic firms gained an opportunity for their high value added products to succeed in the new markets due to the THAAD issue. China’s retaliation also gave a lesson that they can face such risks anytime so they should make a preemptive investment.”
Hyundai Steel Co., which supplies automotive steel sheets to Hyundai Motor Co., also increased automotive steel sheet exports to India and Brazil after the THAAD crisis. As Hyundai Motor’s sub-compact SUV model “Creta” has gained popularity, Hyundai Steel has also put up a good show in these countries. As of the end of the third quarter this year, Hyundai Steel saw its exports of cold rolled coil, which is a raw material of automotive steel sheets, to Southwest Asia increase 25.6 percent to 98,000 tons from 78,000 tons a year earlier and that to Central and South America grow 31.4 percent to 46,000 tons from 35,000 tons.
An official from Hyundai Steel said, “After China has been boycotting Hyundai Motor products, our exports to China have been on the decline from the third quarter last year. The U.S. government also raised its anti-dumping tariff rates on our products, but we had good results by seeking to increase our exports to other countries. We are planning to build an additional automotive steel sheet processing center in India.”
LG Chem Ltd. is focusing on the European market. The company plans to set up a new plant with an annual production capacity of 100,000 units of electric vehicle (EV) batteries in Poland and start operation from 2018. LG Chem has failed to receive subsidies on its EV batteries manufactured in the Nanjing plant as part of the Chinese government’s retaliatory measures over the THAAD deployment. The operation rate of the Nanjing plant plunged last year but it has started operation again early this year and re-exported products to South Korea. The rate of LG Chem’s battery production plant operation rose from 59.5 percent last year to 65 percent as of the first half of this year.
Lee Kyung-sang, director of economic research at the Korea Chamber of Commerce and Industry, said, “South Korean companies had had a portfolio excessively focused on China but they have been carrying out strategies to diversify exporting countries after the THAAD issue. With the latest issue, the industry, which was too complacent to brace for “Post China,” has raised its ability to a higher level.”