Korean firms hustle to keep pace in the global market
The construction site of the Burj Dubai (Dubai Tower) last month in Dubai, United Arab Emirates. It is being built by Samsung Engineering and Construction. When completed in 2008, it will be one of the five tallest structures in the world. Provided by the company
Of course, not all foreign investments are successful. The Korea Trade Investment Promotion Agency noted that many companies ―especially smaller ones ― made investments in China and other developing countries without fully understanding local laws or culture. They sometimes ended up in bankruptcy.
The latest trend in Korean companies’ global expansion is increasing development of natural resources and localizing business.
Major conglomerates like Doosan, Hanwha, Ssangyong, Samsung, Daewoo, SK and LG are now creating strategies on a global level. The companies are also aggressively pursuing mergers and acquisitions in addition to making equity investments.
While drilling for oil in Indonesia and Vietnam, SK Corp. is also increasing its shares in foreign petroleum companies. Doosan Heavy Industries and Construction acquired Britain's Mitsuibabcock last year and plans to spend 1.5 trillion won ($1.6 billion) this year for mergers and acquisitions, and construction of foreign production plants. The company is currently working on a $1.14 billion generator construction project in the United Arab Emirates, a $208 million generator in Jordan and a $140 million generator in Pakistan.
Steelmaker Posco’s global expansion began in the 1970s, when it participated in the development of mines in Australia and Canada. Since then, Posco has expanded its foreign operations to China, Vietnam, Burma and Brazil, restructuring its global business along the way. In October this year, Posco will establish an automobile steel plate plant in Mexico.
Overseas construction is booming as Koreans take on bigger projects and help cities set up infrastructure ― from basics like electrical wiring and water pipes to electronic government systems and building skyscrapers.
In the production sector, Korean companies are inevitably going global because of diversifying markets. Products such as cellular phones, automobiles, and semiconductors may have a Korean brand, but the bulk are not made in Korea.
Although China is a popular site for firms to set up production lines, factory expansion is also being implemented in Eastern Europe and the United States.
Hyundai Motor, for example, has a major plant in Montgomery, Alabama, and completed its Brazilian plant early this year. It began building another factory in Czechoslovakia last month and is expanding its plant in Turkey as well. Samsung Electronics has a semiconductor facility in Texas in addition to several factories in China.
In the case of Samsung Electronics, about 85 percent of its annual revenue comes from outside Korea. As of late 2005, the company had 97 foreign operations.
Doosan Heavy derives more than half of its sales from abroad.
Digital product exports are increasingly important.
Samsung and LG Electronics are two of the top five cell phone firms in the world. Pantech, now in debt work-out, is still providing phones overseas. SK Telecom began mobile services in the United States.
Firms such as SK Communications have foreign subsidiaries to begin online service in China, Taiwan, Japan and the United States. NHN Corp., Neowiz and Webzen are expanding foreign online gaming services from Asia to Europe and North America.
By Wohn Dong-hee Staff Writer [wohn@joongang.co.kr]
with the Korea JoongAng Daily
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