South Korean steelmakers in China are restructuring their business to enhance their profitability amid a global recession and a decline in product price.
For example, Hyundai Steel is planning to integrate its Beijing and Tianjin Steel Service Centers with each other for personnel reduction and apply the same measure to its offices in Shanghai and Suzhou. The company is currently running nine places of business in China and the number is scheduled to be reduced to seven in the interest of business efficiency.
Its sluggish business in China has to do with that of Hyundai Motor Group in the same market. Hyundai Motor’s wholesale volume in China fell 17.7 percent to 650,000 units in 2019 and Kia Motors’ fell 17.1 percent to 296,000 units during the same period.
Dongkuk Steel, which is posting a net loss in China, is going to sell some of the shares of its local corporation. The net loss totaled 7.5 billion won for the first three quarters of 2019 and the company is planning to carry out financial restructuring with a local steelmaker as an investor. Dongkuk Steel’s manufacturing facilities in China are located in Jiangyin and Wuxi and the ongoing color steel plate market stagnation that has continued for years has adversely affected its business.
POSCO, in the meantime, sold POSCO Guangdong Coated Steel last year. Established in 1997, the electroplated steel sheet factory posted a net loss of 7.9 billion won, 21 billion won, 2.4 billion won and 11 billion won in 2012 to 2015, respectively.
The sales and operating profits of SeAH Special Steel, which has factories in Nantong and Tianjin, are falling together with the Chinese automotive industry shrinking. The company has tried to deal with the situation by client diversification since 2014.