Auto Parts
Chinese capital will be invested in the Daegu-Gyeongbuk Free Economic Zone (DGFEZ) for the first time.
Two Chinese auto parts manufacturers and one the ADA Corporation, a Korean company, are to invest US$24 million (27.16 billion won) in the Part and Material Complex of Yeongcheon Industrial Complex at the DGFEZ from 2015 to 2017.
The heads of the three companies, Gyeongbuk Governor Kim Gwan-yong, Yeongcheon City Mayor Kim Young-suk, and DGFEZA Commissioner Do Gun-woo, signed a memorandum of understanding (MOU) at the DGFEZA at 4 p.m. on July 13.
Under the agreement, auto parts using ultra high strength steel sheets will be produced. These sheets are becoming more important in an auto industry that is trying to improve fuel efficiency through weight reduction and increase passenger safety. It is a sector expecting continuous investment and growth.
Founded in 1941, one of the Chinese companies, located in Dalian, China, is a state-run heavy and chemical industry facility with capital of 39 billion won (US$34.36 million) and sales of 266 billion won (US$235.02 million). The other company, which is also located in Dalian City, is an auto parts company that designs the body and the mold of vehicles.
The MOU with Chinese companies is meaningful, since it is the first fruit of DGFEZ’s efforts to attract Chinese companies as its first priority goal amid the global economic recession, the weak yen, and sluggish investment from Japanese companies due to the worsening relationship between Korea and Japan.
Considering the fact that Chinese companies invested US$130 million (147.13 billion won) in Korea’s manufacturing sector in 2014 alone, and have invested only US$100 million (113.18 billion won) in Daegu-Gyeongbuk for 15 years since 2000, the MOU is more meaningful.
With the MOU, Yeongcheon Industrial Complex has attracted foreign investment worth US$154 million (174.3 billion won) from six companies from four countries. Fifty-four domestic companies have already moved into the complex. Recording the industrial land sales rate of 85.2 percent, the complex has already completed sales except for reservation areas for foreign investment companies.
Gyeongbuk Governor Kim Gwan-yong said, “With the settlement of the Korea-China FTA, many Chinese companies are showing interest in Korea, and the MOU will be the start of it. We will also provide the best follow-up services, including one-stop services and improvement in settlement conditions, so that the companies in the complex will not be inconvenienced.”