Samsung to Advance into Steel Processing, Distribution

Samsung Corporation has announced that it plans to set up a large-scale coil center corporation which would establish a steel processing and distribution network in China.

Samsung Corporation revealed yesterday it made the decision in order to efficiently tap into China’s steel market where demand has been surging.

The company explained, “If we set up several coil centers and establish a network in China, we can maximize profits by efficiently responding to orders and balancing supply and demand.”

Samsung Corporation plans to build a steel processing and distribution network along the eastern coast of China, where demand for steel is concentrated. By combining three existing coil centers in Suzhou, Dongguan and Shunde, the company aims to maximize steel processing and distribution efficiencies.

In light of its focus on China’s eastern seaboard, the firm is trying to determine other potential locations along the coast such as Qingdao, Tianjin and Dalian.

A Samsung Corporation source said, “We have yet to decide where to build the branch. Once we have more than 10 branches, we can establish an efficient network. We will either build new coil centers or acquire existing ones.”

After establishing its own network along China’s eastern coast, Samsung Corporation plans to expand inland. Since the Chinese government has made an aggressive effort to develop the inland region, demand for steel is also expected to increase there.

Samsung Corporation acquired Romania’s state-owned steelmaker Otelinox in December 1997. It even acquired Japan’s fifth-largest steel maker Myodo Metal early this year. Since it believes that a general international trading firm has its limits, the Korean firm has acquired global steelmakers whose prospects are bright.

The firm is considering plans to sell stainless steel products manufactured by two steel makers via its coil centers in China. In short, it wants to set up a global steel network linking Romania, Japan and China, whereby it can control manufacturing volume and inventory based on demand.

Some steel experts predict that Samsung Corporation will set up a stainless steel factory in China and use the nation as one of three major stainless steel production bases along with Romania and Japan.

In China, demand for stainless steel has been gradually increasing. Experts believe that Samsung has no choice but to set up its own factories in China if it hopes to smoothly operate its burgeoning steel processing and distribution network. Given that, Samsung Corporation’s moves are expected draw more attention going forward.

jinhup@donga.com cha@donga.com