STX Shipbuilding, CJ Group expand in China

More Korean companies are announcing expansion into China.
STX Shipbuilding Co., the world’s seventh-largest shipbuilder, held a groundbreaking ceremony yesterday for the first Korean shipyard in China, in Dalian.
The company hopes to post $3 billion (2.8 trillion won) in sales in 2012 to match the scale of its shipyard in Jinhae, South Gyeongsang province.
At the event, Kang Duck-soo, chairman of the STX Group, said the $500 million project to build the shipyard by the end of 2008 will help the firm emerge as a global shipbuilder.
“This shipyard will increase our productivity and price competitiveness by maximizing cheaper labor and land,” Kang said.
STX Shipbuilding and its affiliate, STX Corp., will build the yard to assemble bulk carriers and smaller chemical vessels. The shipbuilder has already won $1.1 billion in deals to build bulk carriers and other ships in China.
Separately, STX Shipbuilding and its affiliate, STX Heavy Industries Co., plan to spend another $500 million to build a China-based plant to produce 250,000 tons of ship structures. STX Shipbuilding also aims to receive $4.5 billion worth of new orders this year, or 13 percent more than last year.
Korean shipyards are going abroad to lower costs and increase capacity in order to meet rising demand for vessels. Korea is home to seven of the world’s top 10 shipyards and won the most orders ever last year due to high demand for crude carriers and offshore exploration equipment amid lofty oil prices.
In a different sector, the CJ group announced on Friday that it will create a joint venture with the Ershang Group Co. The joint venture, 51 percent owned by CJ, will produce and sell processed soybean products such as tofu and soy milk. The products include a leading tofu brand that currently enjoys a 70 percent share of the Beijing market. The venture’s assets will be about $11 million, and CJ will be in charge of management.
“Packaged tofu demand in Beijing is on the rise, so the growth potential of the business is immense,” said Bae Jae-min, head of Ershang CJ. “We also expect that the Chinese food market will rapidly grow with the Olympics next year.”

By Wohn Dong-hee Staff Writer [wohn@joongang.co.kr]