What’s been happening in South Korea recently, and what does this mean for UK companies? Since the 1970s, South Korea has been involved in overseas heavy construction contracts, mainly in the Middle East. That tradition continues, but now in the 21st century, the good news is that Korea has even more partner countries and diverse projects. Looking at deals that have been announced recently, I’ve spotlighted a few which show healthy activity in the Korean market and the great potential here for UK companies, from anything to renewable energy to shipbuilding and high tech.
Hyundai Motors, the world’s fifth-largest auto maker, recently announced that it is in the process of completing another large expansion into the lucrative Indian market. Since India’s auto market growth was second only to China in 2010, Hyundai’s decision came as no surprise. It plans to build a diesel engine factory in Chennai in southern India in order to advance into India’s small diesel-power vehicle market and also sell into Europe. This boost to bilateral trade follows on Korea and India agreeing to upgrade their CEPA (Comprehensive Economic Partnership Agreement) free trade pact.
Hyundai Motor’s sister company, Hyundai Heavy Industry has won a deal to build two drill ships from the US contract driller for Noble Drilling. Another giant in the shipbuilding industry, STX Pan Ocean, has decided to spend USD $320 million on nine bulk carriers this year. Not to be outdone the Daewoo Shipbuilding & Marine Engineering Co. has completed the world’s largest offshore facility in southern Korea.
Shipbuilding and the auto industry have always been at the centre of South Korea’s economy. But recently, the country has started to tap into the natural resources sector. According to a government survey released this month, Korean companies are expected to invest a total of USD $7.8 billion this year in oil and gas fields overseas, up 29% from 2010. Korea Gas Corporation (KOGAS), the nation’s state-owned gas organisation, announced that it would buy a 20% stake in a gas reserve currently owned by the Canadian MGM Energy for $30 million. KOGAS hopes to secure LNG from this deal and start producing gas from 2020.
In addition to the resources sector, renewable energy is another area where South Korea is investing heavily. The government’s budget has allocated USD S890 million for renewable energy projects, an increase of 24.1% from last year. This will help develop solar battery and offshore wind technologies. The government will also fund greenhome projects and equipment installation. The Korean business community is also going greener. Hankuk Paper, a printing paper-specialised manufacturer, is committed to having a ‘zero’ carbon emissions factory. Steam for the factory will come from a nearby facility. The company hopes to reduce 63,700 tonnes of CO2 annually.
On the policy initiatives front, President Lee has redoubled efforts to prepare for the so-called Smart Era. His comments came at a gathering of the nation’s top broadcasting and telecommunications organizations. Local industry noted that media '"big bangs" and "smart revolutions" are now changing the world.
All in all - lots of opportunities for British companies to work with Korean companies in both their domestic and global projects. And needless to say UKTI is happy to help you find the right partner, acquire market intelligence, or introduce you to local contacts. For more information, please contact me - details below.
Soomee Moon
UKTI South Korea
soomee.moon@fco.gov.uk