Korean Business Groups Concerned over Ties with China
Samsung, Hyundai Motor, LG and SK Groups announced large-scale U.S. investment plans during the recent summit between U.S. President Joe Biden and South Korean President Moon Jae-in. The groups’ concerns are mounting over their relationship with China with U.S.-China rivalry intensifying and China still being their most important client.
China is dominating the raw material side of the electric vehicle (EV) battery industry, where South Korea and the United States will work much more closely with each other. Although the materials including cobalt and lithium are available in Australia and Latin America as well as China, the refinement process is extremely dependent on China. China's predominance amounts to over 80 percent in the industrial rare earth element market.
Hyundai Motor Group is watching China's response very closely in that it already failed once in China and any geopolitical risk between the United States and China will make it twice. According to the China Association of Automobile Manufactures, the group's share in China stood at 2.6 in the first four months of this year, down 1.6 percentage points from a year ago. For reference, the share was 4.8 percent in 2017.
Meanwhile, major South Korean semiconductor companies, that is, Samsung Electronics and SK Hynix are relatively freer in that they are dominant when it comes to the memory chip market, the global semiconductor industry value chain has a very complex structure formed by a number of countries, and China is keeping a highly pragmatic approach in this field.