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Large South Korean Companies Withdrawing from China

74 points by libpcap 3y ago

aurareturn 3y ago
The two examples given in the article are SK petrochemicals no longer profitable/competitive in China and Hyundai downsizing from 5 to 3 plants due to China's rapid transition to EVs.
- alephnerd 3y ago
  Not exactly. It's mostly because of the aftermath of the anti-Korea boycott that happened from 2016-Present along with the slowdown due to COVID. That boycott almost pushed South Korea into recession and made them pivot to Vietnam, and Lotte was functionally banned in China.
noobermin 3y ago
My contribution: this doesn't sound related to their recent real estate woes (evergrande)
- alephnerd 3y ago
  Yep. South Korea and China have been in the midst of a trade war since 2016.
alephnerd 3y ago
This started in 2016 when SK installed THAAD systems against North Korea [0], which had extended radar capabilities into the Chinese mainland, though rumblings already began by 2014-15 leading to SK creating a (imo one sided) FTA with Vietnam This lead to a massive trade war against SK, which almost destroyed Lotte (the chaebol who's land was purchased by the Korean government to install the THAAD system). Lotte and other Korean chaebols began a MASSIVE decoupling to Vietnam and India during that time period, and are are single-handedly responsible for Vietnam's then surprisingly high GDP growth rate. Everything, and I mean everything, is basically Chaebol owned in Vietnam because of this pivot from China, and just about every Korean company has plans to have the ability to cease operations in China by 2030 at the latest based on my conversations in Saigon. Japanese corporations did the same thing in 2012 during the Senkaku Diaoyu Standoff leading to a massive repivoting to India and Thailand, and initiating the Quad and the Blue Dot Network. [0] - https://www.hbs.edu/faculty/Pages/item.aspx?num=53632 https://www.hbs.edu/faculty/Pages/item.aspx?num=53632
- MichaelZuo 3y ago
  The top 10 companies in Vietnam by revenue, except for Samsung Vietnam, are all state owned. So definitely not controlled by Korean chaebols in any way whatsoever. What are you talking about?
  - alephnerd 3y ago
    Most chaebols such as Lotte and Samsung make multiple entities for each of their groups within VN (and those entities in turn try to hide taxes like crazy) So in Lotte's case, Lotte Shopping Vietnam JSC is different from Lotte Hotels Vietnam JSC is different from Lotte Cinemas Vietnam JSC. And I'm using Lotte as the most notable example. Samsung does the same thing as well - Samsung Electronics VN (Samsung Galaxy) is a separate entity from Samsung SDI VN (Samsung batteries). Most notably, Lotte Property & Development - not VinGroup (!!!) - owns the land in An Khanh Ward in District 2 of HCMC and is building Saigon's version of Pudong [0]. If you've ever been to Saigon you'll know this piece of land is easily the most expensive piece of undeveloped property in all of Vietnam as it's right across from Saigon's District 1 - the traditional CBD and Consulate quarter - and right next to the VIP neighborhood of Thao Dien. It's called the Lotte Eco Smart City. And this is just Saigon. If you go to Da Lat, Da Nang, Nha Trang, Cam Ranh, etc it's the same story. > The top 10 companies in Vietnam by revenue, except for Samsung Vietnam Where are you getting this data? The only somewhat reputable source is from one the VN trade ministries in 2018, which is towards the beginning of the Korean move to VN from China. Also, the fact that Samsung Electronics VN was able to outcompete every single petrochemical and military owned company by revenue in 2018 [1] in a country who's economy has been built on ONG extraction (the VN claim in the South China Sea has oil reserves the size of Prudhoue Bay and Natural Gas reserves roughly the size of Urengoy Gas Fields) and VPA ownership of industries (eg. Viettel, VinGroup's founder is from Vietnamese Air Force royalty) is massive Edit: There is a VN500 list but participation is optional. The only Korean chaebol divions that seemed to have participated were Samsung Electronics and CJ Agribusiness (part of CJ Group - the same chaebol that makes Bibigo food and produces Kdramas like Marry My Husband and movies like Parasite) [0] - https://mycasagroup.com/lotte-eco-smart-city/ https://mycasagroup.com/lotte-eco-smart-city/ [1] - https://mof.gov.vn/webcenter/portal/tttpen/pages_r/l/detail?dDocName=MOFUCM120380 https://mof.gov.vn/webcenter/portal/tttpen/pages_r/l/detail?...
russli1993 3y ago
TLDR: - Trade war because of SK following US directive to install THAAD, which at surface is aimed at NK, but the real target, at least from US perspective, is at China. - Increasing competition from Chinese firms - US waging sanctions and trade ban tech war, and the SK firms following US trade restrictions voluntarily or involuntarily. This has made nearly all Chinese sectors examine their supply chain for tech and goods that might be banned by a stroke of pen from Washington and switching to more reliable alternatives. This has the surprising effect of improving competitiveness of many Chinese firms, especially in the areas SK firms are good at. Leading to more number 2

74 points by libpcap 3y ago

The two examples given in the article are SK petrochemicals no longer profitable/competitive in China and Hyundai downsizing from 5 to 3 plants due to China's rapid transition to EVs.

alephnerd 3y ago
Not exactly. It's mostly because of the aftermath of the anti-Korea boycott that happened from 2016-Present along with the slowdown due to COVID. That boycott almost pushed South Korea into recession and made them pivot to Vietnam, and Lotte was functionally banned in China.

noobermin 3y ago

My contribution: this doesn't sound related to their recent real estate woes (evergrande)

alephnerd 3y ago
Yep. South Korea and China have been in the midst of a trade war since 2016.

alephnerd 3y ago

This started in 2016 when SK installed THAAD systems against North Korea [0], which had extended radar capabilities into the Chinese mainland, though rumblings already began by 2014-15 leading to SK creating a (imo one sided) FTA with Vietnam This lead to a massive trade war against SK, which almost destroyed Lotte (the chaebol who's land was purchased by the Korean government to install the THAAD system). Lotte and other Korean chaebols began a MASSIVE decoupling to Vietnam and India during that time period, and are are single-handedly responsible for Vietnam's then surprisingly high GDP growth rate. Everything, and I mean everything, is basically Chaebol owned in Vietnam because of this pivot from China, and just about every Korean company has plans to have the ability to cease operations in China by 2030 at the latest based on my conversations in Saigon. Japanese corporations did the same thing in 2012 during the Senkaku Diaoyu Standoff leading to a massive repivoting to India and Thailand, and initiating the Quad and the Blue Dot Network. [0] - https://www.hbs.edu/faculty/Pages/item.aspx?num=53632 https://www.hbs.edu/faculty/Pages/item.aspx?num=53632

MichaelZuo 3y ago
The top 10 companies in Vietnam by revenue, except for Samsung Vietnam, are all state owned. So definitely not controlled by Korean chaebols in any way whatsoever. What are you talking about?
- alephnerd 3y ago
  Most chaebols such as Lotte and Samsung make multiple entities for each of their groups within VN (and those entities in turn try to hide taxes like crazy) So in Lotte's case, Lotte Shopping Vietnam JSC is different from Lotte Hotels Vietnam JSC is different from Lotte Cinemas Vietnam JSC. And I'm using Lotte as the most notable example. Samsung does the same thing as well - Samsung Electronics VN (Samsung Galaxy) is a separate entity from Samsung SDI VN (Samsung batteries). Most notably, Lotte Property & Development - not VinGroup (!!!) - owns the land in An Khanh Ward in District 2 of HCMC and is building Saigon's version of Pudong [0]. If you've ever been to Saigon you'll know this piece of land is easily the most expensive piece of undeveloped property in all of Vietnam as it's right across from Saigon's District 1 - the traditional CBD and Consulate quarter - and right next to the VIP neighborhood of Thao Dien. It's called the Lotte Eco Smart City. And this is just Saigon. If you go to Da Lat, Da Nang, Nha Trang, Cam Ranh, etc it's the same story. > The top 10 companies in Vietnam by revenue, except for Samsung Vietnam Where are you getting this data? The only somewhat reputable source is from one the VN trade ministries in 2018, which is towards the beginning of the Korean move to VN from China. Also, the fact that Samsung Electronics VN was able to outcompete every single petrochemical and military owned company by revenue in 2018 [1] in a country who's economy has been built on ONG extraction (the VN claim in the South China Sea has oil reserves the size of Prudhoue Bay and Natural Gas reserves roughly the size of Urengoy Gas Fields) and VPA ownership of industries (eg. Viettel, VinGroup's founder is from Vietnamese Air Force royalty) is massive Edit: There is a VN500 list but participation is optional. The only Korean chaebol divions that seemed to have participated were Samsung Electronics and CJ Agribusiness (part of CJ Group - the same chaebol that makes Bibigo food and produces Kdramas like Marry My Husband and movies like Parasite) [0] - https://mycasagroup.com/lotte-eco-smart-city/ https://mycasagroup.com/lotte-eco-smart-city/ [1] - https://mof.gov.vn/webcenter/portal/tttpen/pages_r/l/detail?dDocName=MOFUCM120380 https://mof.gov.vn/webcenter/portal/tttpen/pages_r/l/detail?...

russli1993 3y ago

TLDR: - Trade war because of SK following US directive to install THAAD, which at surface is aimed at NK, but the real target, at least from US perspective, is at China. - Increasing competition from Chinese firms - US waging sanctions and trade ban tech war, and the SK firms following US trade restrictions voluntarily or involuntarily. This has made nearly all Chinese sectors examine their supply chain for tech and goods that might be banned by a stroke of pen from Washington and switching to more reliable alternatives. This has the surprising effect of improving competitiveness of many Chinese firms, especially in the areas SK firms are good at. Leading to more number 2