Different Step
More South Korean companies are choosing to leave China and take their businesses with them due to lingering political tension between Korea and China over the deployment of the THAAD antimissile system. However, SK Group Chairman Chey Tai-won is seeking to expand business in China by strengthening his networks with China’s top officials and making more investments in the chemical, semiconductor and bio sectors, attracting attention.
According to SK Group on July 9, Chey met with 10 high-ranking local government officials including Li Hongzhong, Tianjin Communist Party secretary, and Wang Dongfeng, Tianjin mayor, at a reception hall in Tianjin, China, on July 7 to develop future investment and business models that can create a mutual synergy. In particular, Chey had a meeting with Li for two and a half hours to discuss investment and partnership opportunities in the petrochemical, information and communication and semiconductor, eco-friendly energy and bio and healthcare sectors.
At the meeting, Li said, “Tianjin, which in the process of high tech-centered industrial structure transformation, and we are asking for SK to help Tianjin to upgrade its industrial structure further. We are also asking to participate in ongoing project to develop the capital region of China in terms of the information and communication, eco-friendly energy and construction sectors.” China currently pushes ahead with the project developing Beijing, Tianjin and Hebei dubbed “Jing-Jin-Ji Project.”
In this regard, Chey said, “As SK has competitiveness in artificial intelligence (AI), semiconductors, batteries, liquefied natural gas (LNG) and renewable energy, we hope to create business opportunities that could be a booster for both SK and Tianjin. We will come up with a measure to create another success story after SK Hynix’s plant in Wuxi and”
Li has had a strong tie with Chey as he served as Hubei Communist Party secretary in 2014 at the moment when SK established a joint venture with China’s state-run chemical firm Sinopec, Sinopec-SK Wuhan Petrochemical which is considered a successful case of global partnerships between South Korea and China, and started commercial operation. Chey met Li when he visited Hubei in August 2015 and Li visited Sinopec-SK Wuhan Petrochemical, which made the highest profits among Sinopec’s plants in China, and benchmarked keys to success last year.
Chey is making an aggressive move to strengthen the partnership with China, though the fluctuations in the relationship between the two countries caused by North Korea’s nuclear arms and the deployment of the THAAD system can be a burden on South Korean companies. This is because SK Group believes that it cannot pursue its future strategy without China. In fact, Chinese firms are the biggest customers of SK Group’s main businesses including oil, petrochemical, energy and semiconductor, and the group should compete and cooperate with Chinese companies in the AI, Internet of Things and autonomous vehicle sectors, which are considered its new growth engines.
Therefore, Chey has visited China several times to seek for new business opportunities after his overseas travel ban was lifted earlier this year. In May, he attended the Shanghai Forum 2017 to meet deputy mayor of Shanghai, director at the People's Bank of China and president of Fudan University. He also met with Jerry Wu, new CEO of SK China, to discuss new strategies for business in China.
An official from the business industry said, “SK Group mainly supplies intermediary products. So, its business hasn’t been greatly adversely affected by China’s consumer goods-centered trade retaliation unlike other conglomerates. Under the current situation, Chey’s move to boost mutual growth with China can be helpful in terms of non-governmental diplomacy.”