‘Brexit’ effects here may vary by industry

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‘Brexit’ effects here may vary by industry

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[AP/NEWSIS]

As the so-called Brexit becomes a reality, companies based in London may flee elsewhere looking for better business opportunities when Britain is no longer in the EU market. Samsung Electronics, with its European headquarters in Chertsey, England, is reviewing plans to move to a European country still a member of the union.

Sales in Europe have declined because of the sluggish economies in Europe; Samsung, LG Electronics and others fear further slowdowns.

“We are most worried about the decline in consumer sentiment in Europe,” one official of a large electronics company said. “The increasing variability of exchange rates may also have an impact on our sales overseas in the long term.”

But Korean automakers expect benefits from Brexit because they have production bases in Eastern Europe, while Japanese automakers such as Toyota, Honda and Nissan have manufacturing plants in the U.K.

Japanese automakers may have a competitive edge against Korean companies in domestic British sales, but will be hit by tariffs when exporting cars from the U.K. to EU member markets. Advantage: Korea.

Hyundai Motor and Kia Motors have together sold 402,000 cars in Europe this year through May. About 20 percent of those sales, 78,000 units, were in the United Kingdom.

“It [Brexit] gives us price competitiveness over Japanese automakers that are in heavy competition with Korean automakers in the region,” a Hyundai Motor Group spokesman said.

Because Nissan and Toyota have been exporting as much as 80 percent of their cars manufactured in the U.K. to other European Union member countries, industry insiders say those automakers will have to review their business strategies in the European market, including moving their manufacturing base to other EU countries.

Italy’s largest carmaker, Fiat Chrysler Automobiles, which moved its headquarters to London in 2014, has begun discussions for again moving its head office to another EU country.

The aircraft manufacturer Airbus had announced before the British referendum that it might transfer its manufacturing plant in Wales to France if Brexit became a reality. It also warned that if Britain left the EU, it would probably cut its investments in U.K. operations.

The impending tariff wall between Britain and the continent could result in major commercial and industrial shifts, as companies move headquarters, plants or both, or cut workers in British plants that are suddenly uncompetitive in the EU.

The global industrial map could be reshaped drastically.

“Britain’s choice to retreat into what some critics of the vote suggest is a ‘Little England’ status is just one among many loosely linked developments suggesting the potential for a reordering of power, economic relationships, borders and ideologies around the globe,” The New York Times wrote on Sunday.

In finance, for example, markets once centered in two strong hubs, New York and London, may now be dispersing to other business centers such as Hong Kong, Shanghai, Frankfurt and Tokyo.


BY KIM KI-HWAN, KIM JEE-HEE [kim.jeehee@joongang.co.kr]
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