LS Cable & System Asia (LSCS), which emerged as No. 1 cable manufacturer in Vietnam 20 years after foraying into the market, will set up a joint production facility in Myanmar with its subsidiary Gaon Cable. LSCS and Gaon Cable have decided to establish LS-Gaon Cable Myanmar (LSGM) to roll out low voltage cables and overhead wires with investment of US$18 million each. Payment of investment is set to take place on May 31, 2017 in view of Myanmar’s market conditions and other reasons.
LSGM plans to produce LV cables and overhead wires which are used for power transmission towers. Some Southeast Asian countries including Vietnam seek to replace transmission towers with underground cables. Myanmar still relies heavily on transmission towers for the supply of electricity.
LS-Gaon Cable Myanmar will be based in the Thilawa Special Economic Zone, which accounts for 85% of Myanmar’s exports and imports. The Thilawa Special Economic Zone, located on the outskirts of Yangon, is one of three special economic zones in Myanmar, and had become fully operational in September 2015. Inside Thilawa SEZ, (where) both (the) hard and soft infrastructure - from roads and utilities to supporting services such as maintenance - are developed up to the international standard. It is located at around 20 km south-east of Yangon, the biggest commercial city of Myanmar. Many Japanese enterprises like Mitsubishi and Sumitomo set up facilities in Thilawa SEZ.
Some Korean companies including CJ Foods are also based in the SEZ. Groundbreaking of LSGM’s manufacturing facility is expected to take place in October this year, as it is virtually impossible to implement construction work in the rainy season from May through September
LS Cable & System President & CEO Shin Yong-hyun said that the company supplies overhead wires, which are mainly used for transmission towers, while Gaon Cable holds competitive advantages in LV cable-oriented retail market. “This is the reason that synergy effect is expected from the joint venture of the two companies,” said CEO Shin. He said the projected LS-Gaon Myanmar will expand investment gradually to expand its product line. “We are determined to grow LSGM up to the level of our Vietnam’s subsidiaries which have achieved 240-fold growth in a span of just two decades,” stressed CEO Shin.
Gaon Cable President & CEO Yoon Jae-in was also optimistic about the prospect of business in Myanmar. “As Myanmar continues to record high economic growth today, the power cable market is anticipated to enjoy annual growth averaging over 10%,” he observed. Stressing that Myanmar imports more than 50% of its power cable requirements, CEO Yoon forecast that the LS-Gaon Myanmar will achieve a large market share soon.
LS Cable, according to the company, is considered No. 1 cable manufacturer in Vietnam.
LS Cable has emerged as No. 1 cable manufacturer in Vietnam based on rapid growth of its two subsidiaries set up in the country. LS-VINA, based in Haiphong, rolls out various types of overhead conductors, low voltage cables, medium voltage cables, high voltage underground cables, building wires, bare conductor of aluminum and copper and high current capacity conductors. LS Cable & System Vietnam(LSCV), located in Hochiminh, southern Vietnam, manufactures a range of telecommunication cables including UTPs (unshielded twisted pair wires), optical fiber cables and LVs.
LS C&S Asia is a holding company established in Korea in 2015 as the vehicle for listing its two Vietnamese subsidiaries (LS-VINA and LSCV) on the Korea Exchange. LS C&S Asia will be the first overseas subsidiary of a domestic company to be listed on the Korean stock exchange.
LS Cable recorded 1.9 billion won of sales in Vietnam in 1996, the first year of operations in the country. In 2015, 20 years after, combined sales of its two Vietnamese subsidiaries reached 490 billion won, an increase of more than 240 times. LS-VINA and LSCV now account for 30% of Vietnam’s cable market.
LS Cable & System President & CEO Shin Yong-hyun recalled that when he visited Haiphong in 1996, there were no direct flights from Seoul to Hanoi. He said he had to fly to Hanoi aboard a military plane from Hochiminh City. There were no hotels in service at that time, with frequent blackouts reported. In 1996, VINA-LC Cable, predecessor of LS-VINA, was established in a joint venture with Vietnam’s largest cable manufacturer, HEWMAC, to produce MV and LV cables, UTPs and optical fiber cables.
Thanks to its high economic growth, Vietnam’s annual demand for power transmission cables is expected to rise up to 50 billion won. LS-VINA will likely see its market share climb to over 40%. As a result, LS Cable may see early recovery of investment capital from Vietnam.
Of late, Vietnam is busy building a number of massive industrial plants including power plants and oil refineries. Cable suppliers for these facilities are selected based on their product quality, supply results and global recognition in order to lessen massive damages on power cables. LS Cable & System Asia is well ahead of local cable companies in terms of technology. LS Cable & System Asia’s technology could be advanced for 10 years compared to local firms.