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China’s Double Star Applies for Approval of Kumho Tire Acquisition
Against Selling-off
China’s Double Star Applies for Approval of Kumho Tire Acquisition
  • By Jung Min-hee
  • August 17, 2017, 04:00
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Kumho Tire union and Gwangju mayor Yoon Jang-hyun among other people are shouting slogans in a press conference on blocking the improper overseas sell-off of Kumho Tire on August 16.
Kumho Tire union and Gwangju mayor Yoon Jang-hyun among other people are shouting slogans in a press conference on blocking the improper overseas sell-off of Kumho Tire on August 16.

 

The Korean corporation of Chinese Double Star filed an application to the Korean Ministry of Trade, Industry and Energy to acquire Kumho Tire on August 16.

"Xingwei Korea, the Korean corporation of Double Star, submitted an application for the takeover of Kumho Tire in the morning of August 16,” said an official of the Korean Ministry of Trade, Industry and Energy. “We will make a judgment in consultation with the Defense Acquisition Program Administration among others."

Under the Foreign Investment Promotion Act, foreign companies must obtain approval from the minister of trade, industry and energy to acquire a Korean company that produces defense products. However, in this case, because the Korean corporation of Double Star is the subject of the application for acquisition approval, the government will decide whether or not to approve the sell-off of the Korean tire manufacturer pursuant to the Defense Business Act.

The Korean Ministry of Trade, Industry and Energy is planning to conclude by reviewing whether or not the application may cause disruptions to production of defense industry goods. Kumho Tire supplies truck and fighter tires to the Korean military, so is classified as a defense company.

In this regard, some say that if Kumho Tire is finally sold off to a Chinese company, its core defense technology will be leaked.

Meanwhile, in the afternoon of August 16, the labor union of Kumho Tire held a press conference at the Gwangju City Council and said, "We will take up a struggle to prevent the improper overseas sell-off of the company by organizing an extensive regional countermeasure committee."

"We asked the government and the Korea Development Bank (KDB) to devise a supplementary measure in order to prevent a second Ssangyong Motors Incident from playing out, but the KDB refused to accept it," the union said.

The labor urged the government to propose measures to normalize Kumho Tire, not to sell off the company improperly. "If the government respects the clearing of deep-rooted evils and the public opinions in the Jeolla region, the government should punish those responsible for the problematic management of Kumho Tire and bring a halt to the improper sell-off of the company,” The union said. “The government has to devise measures to normalize Kumho Tire with local residents and the labor union.”