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China to Hunt Korean Companies Actively

Posted December. 01, 2004 22:52,   


China’s direct investment in Korea during the period of January~ September sharply expanded by 10 times more than last year, which indicates that China started a full-scale hunting of Korean companies.

The Chinese government is encouraging its companies to invest in Korean industries such as automobiles, electronics, and chemical companies. This strategy of hunting Korean companies is expected to be increased more and more in the future.

Experts stressed that local industries should take measures to protect our core technologies in order not to be drained into China, while they agreed that China’s direct investments are highly recommended for the adjustment of the local industry structure.

According to the report by the Ministry of Commerce, Industry, and Energy (MOCIE), the direct investments from China in Korea during the period of January to September this year accounted for 447 cases, which was equivalent to $584 million (approximately 613.2 billion won). These figures of China’s direct investment are ten times bigger than that of last year ($50.2 million).

The number of investments has decreased from last year (522 cases), however a larger scale of investments has caused the amount of direct investment to increase sharply.

In September this year, a Chinese government-owned oil company, Cinochem, signed an agreement to take over the domestic oil company Incheon Oil at 500 million dollars.

According to the Korea Industrial Institute, the Commerce Department of China recently announced an “industrial map index of 67 foreign investment countries.”

This marks the first time that Chinese government unveiled the guide related to international direct investment. According to the investment index, Korea is designated to be prospective in terms of three manufacturing industries, including automobiles.

The recent M&As of large companies such as Shanghai Motors’ takeover of Ssangyong Motors and Cinochem’s takeover of Incheon Oil are in line with Chinese government’s strategy, experts analyzed.

“The Chinese government is planning to promote foreign investment in order to ensure state-of-the-art technology and to avoid the pressure of depreciation of the Chinese currency,” a researcher in the Korea Industry Institute Kim Hwa-sub said. “We need to make a strategy to enhance the Korean industries’ competitiveness by building a structure that combines Chinese capital with Korean technology.”

Yong Park parky@donga.com