SK Group's "China Insider" strategy is reeling due to continuing project abortions. SK, having shown close ties with China, became helpless in the awake of diplomatic frictions between South Korea and China over Korea’s plan to deploy the THAAD System on the Korean peninsula.
SK Group affiliates are turning their attention to investment and mergers and acquisitions (M&As) in other countries such as the United States as its Chinese business hit a snag,
In fact, SK Innovation planned to take over BP's 50% stake in Shanghai Secco, a Chinese chemical maker in Shanghai, but is facing rough going as Ineos, a Swiss company, was picked out as the preferred bidder.
The SK Group’s project to build a joint venture plant for electric car battery cells in China is also remaining sluggish. In the first place, SK Innovation planned to start a joint-venture factory by the end of last year. But as the Chinese government showed a move to put away foreign battery manufactures off the table, SK Innovation is putting the project on hold.
In November of last year, SK Global Chemical canceled the establishment of a butanediol joint venture in China. It is said that the SK Group’s negotiations on the acquisition of a stake in a Chinese livestock company by SK Corp., will be hardly approved by local governments.
Chey Tae-won, chairman of the SK Group, introduced the management philosophy of "China Insider" to build SK in China in 2006. Since returning to management with a special pardon in honor of Liberation Day in 2015, Chey had met various senior Chinese officials until last year. But this year, Chey lost the chance to contact Chinese people such as the Davos Forum and Boao Forum because the Special Prosecution Team’s overseas travel ban on Chey.
SK says that its successive M&A abortions in China are blamed for local market conditions and do not cut across the THAAD issue. However, industry watchers believe that Chinese government's pressure has played a major role in the M&A abortions.
The SK Group is turning its attention to other places. This year, the SK Group took over LG Siltron, a Korean semiconductor material company, and the ethylene acrylic acid (EAA) business from the Dow Chemical, a US chemical company and will acquire a stake in the memory business that Toshiba will spin off.