Korea-US economic alliance reinforced

By Yoon Chul-min
Director of International Cooperation Team, KCCI

Both large and medium company leaders, who accompanied President Moon Jae-in on his trip to the U.S. in late June, have reaped noteworthy results in various fields, particularly investments in production facilities.

Director Yoon Chul-min of International Cooperation Team, KCCI

A total of 52 large and small enterprises have pledged to invest US$12.8 billion (about 14.600 trillion Korean Won) in the U.S. over the next five years (2017-2021), according to the announcement of the Korean Chamber of Commerce and Industry (Chairman Park Yongmaan). The planned investments will be focused on construction and expansion of production plants, R&D investment geared for development of future-oriented industrial technologies and M&As.

In addition, the corporate representatives pledged to buy $22.4 billion worth of American goods and services, including LNG, LPG and aircraft needed for route expansion of domestic carriers, over the next five years. MOUs and contracts have also been signed for joint R&D and technological advancement in the fields of home appliances, financial services and energy.

Unlike the previous business delegations, the recent business mission was led by the Korean Chamber of Commerce and Industry, and as a result, was considered a private mission. Also noteworthy is the fact that almost same numbers of large and small/medium enterprises were represented in the recent delegation. Evidently, the mission provided a strong momentum for advance into the U.S. market by small but strong firms as well as large companies.

As mentioned earlier, large, medium and small enterprises have recorded significant results in the fields of investments, procurements and business agreements. It is evident that the outcome will significantly contribute to strengthening the Korea-U.S. economic alliance, amid the East Asia security crisis.

Samsung & LG plan to build premium home appliance factories in the U.S. market

Samsung Electronics will invest $380 million in a new home appliances factory in South Carolina. Yoon Boo-keun, CEO of Samsung’s consumer electronics division, signed a letter of intent to build a new factory in Newberry, South Carolina at a hotel in Washington on June 28. It will be Samsung’s first home appliance plant which will be built by taking advantaging of new investment opportunities which will arise from the U.S. manufacturing revival policy.

The Samsung factory will likely enable Korean manufacturers to sustain growth in the North American washing machine market and sharpen their competitive strengths. Samsung Electronics also plans to invest about $1.5 billion in its semiconductor plant in Austin, Texas by 2020.

LG Electronics will invest $250 million to build a washing machine factory in Tennessee by 2019. The facility, to be built on a 300-acre plot of land in Clarksville, will begin making washing machines for sale in the U.S. by the first half of 2019.The plant will be able to produce at least a million units of both front- and top-loading machines a year. LG Group also plans to invest $300 million to build a new office building in New Jersey by 2019. About 1,000 employees of LG subsidiaries including LG Electronics, LG Households & Health Care and LG CNS will work in the new building.

Both Samsung Electronics and LG Electronics are expected to accelerate their localization efforts by building their home appliance plants where the demand exists. As a consequence, Korean products will likely improve their competitive power in the growing premium home appliance market in North America.

SK Group has earmarked up to $4.4 billion in investments in the energy field over the next five years. Currently, SK is engaged in exploration of shale gas and LNG in Oklahoma and Texas. On June 28, the group also signed an MOU with GE and Continental Resources in connection with investments in shale gas projects.

Hyundai Motor will spend $3.1 billion in the U.S. developing new cars like eco-friendly and driverless cars. Hyundai intends to increase investments to enhance its competitive power in the U.S. auto market.

Doosan Group will invest $770 million in its U.S. subsidiaries Bobcat and Doosan Fuel Cell America. The firms will push for expansion of production facilities, development of next-generation products and promotion of R&D on fuel cells and energy storage systems. Doosan signed two agreements for acquisition of U.S. gas turbine service provider ACT and an agreement which will enable a U.S. firm to buy Doosan’s fuel cells and lease them to the power purchase agreements (PPA) contractors.

CJ Group plans to put $1.05 billion into food and bio projects. The group will strive for expansion of food and bio plants and acquisitions of U.S. firms by its subsidiaries including CJ Korea Express and CJ CGV. CJ plans to step up its PR activities for the promotion of Korean food (K-food) brand, “Bibigo.”

LS Group wants to invest $320 million, including a $40-million car electronic parts plant in southern U.S. Superior Essex, the group’s U.S. subsidiary which manufactures wire and cable, is planning to increase its facility and R&D investments to extend its reach into the North American market.

GS E&C, a subsidiary of GS Group, plans to invest $10 million in a housing rebuilding project in Silicon Valley, while Hanjin Group will invest $7 million for refurbishing its LA cargo terminal.

SMEs to increase in investments on high-tech industrial sector

CrucialTec, which exports fingerprint recognition modules to the U.S. market, plans to invest $65 million to develop a Biometric Access Control System. Datastreams, a manufacturer of system software, will spend $37 million for establishment of a subsidiary and expansion of existing businesses in the U.S.

Exicon, which specializes in manufacturing of semiconductor testing equipment and multilayer ceramic boards, will invest $60 million to build a R&D center and production facility with regard to ceramic and miniature sensors.

Of note, biomedical firms will seek to expand the production facilities in the U.S. Nutribioech, which produces functional foods and natural health products in Dallas, Texas, will invest $100 million for expansion of production facility. Osstem Implant will spend $30 million for expansion of production facility and strengthening of marketing organization.

Daewha, which turns out various high-quality fuel pumps, will invest $70 million for development of core components for next-generation compact electric cars. Hyolim Industrial, which manufactures motor vehicle parts and accessories, will spend $23 million for operation of a manufacturing plant in the U.S.

Korea’s leading medium-size firms are expected to sharpen their competitive strengths in the U.S. market, backed by the expansion of production facilities there.

Planning to buy $22.4 billion worth of U.S. products like LNG and passenger planes

Starting in 2020, SK will import LNG and LPG valued at $1.8 billion and $3.5 billion from the U.S. GS Caltex plans to buy 2.4 million barrel of crude oil valued at $118 million from America his year. The firm also imported crude oil from the U.S. last year. GS EPS, a subsidiary of GS Group, will import 600,000 tons (valued at $220 million) of shale gas a year starting 2019.

LS Cable & System plans to buy $3.35 billion worth of copper concentrate, a major ingredient of electrolytic copper cathode. This will allow Korea to diversify its energy import sources, which had been concentrated in the Middle East, while complying with the government’s clean energy expansion policy. The diversification of energy import sources will also enable Korea to reinforce its energy security and secure favorable positions in energy price negotiations.

Korean Air wants to buy 50 more Boeing passenger planes worth $10.2 billion between 2017 and 2o23 to bolster its fleet.

Korean companies also signed agreements for expansion of partnerships for energy and infrastructure projects. Korea Gas Corporations signed MOUs for joint R&D activities in related to three LNG and infrastructure projects. KOGAS intends to carry on joint feasibility studies related to Alaskan infrastructure projects with AGDC (Alaska Gasline Development Corp), while conducting feasibility studies on Lake Charles LNG projects with Energy Transfer, a Texas-based natural gas and propane company. KOGAS is also interested in shale gas-related projects in North America with ExxonMobil.

Hyolim Industrial signed an MOU with Benie &Associates for establishment of a firm incorporated in America. Daliworks also inked an MOU with Freewave on technological cooperation and expansion of smart factory market. Furthermore, Shinsung E&G, which exports high-efficiency solar cells to the American market, will work to expand its business line to solar energy projects. Bluebird will relocate its U.S. corporation in the latter part of this year and push for development of new I0T sensor devices.

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