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(News Focus) S. Korean companies unveil US$12.8 bln investment plan during Moon's U.S. visit

2017/06/29 15:23

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By Kang Yoon-seung

SEOUL, June 29 (Yonhap) -- South Korea's big businesses unveiled major investments planned for the United States during President Moon Jae-in's first trip to Washington, in a bid to proactively cope with growing protectionist trends in the world's largest economy, observers in Seoul said Thursday.

The business delegation accompanying Moon and made up of top executives from 52 South Korean companies announced it will pour US$12.8 billion into the U.S. economy in the next five years.

The delegation includes senior decision-makers from Samsung Electronics Co., LG Electronics Inc., SK Group and Doosan Group, said the Korea Chamber of Commerce and Industry (KCCI), which played a leading role in the businessmen's trip.

The investment projects announced cover the construction of new production facilities and research centers, as well as mergers and acquisitions. In addition to the proposed investments, South Korean companies will also spend an additional $22.4 billion to purchase aircraft and other American products and resources.

Taking the lead, Samsung Electronics Co. said Wednesday it will invest $380 million to establish a new production line for home appliances in Newberry County, South Carolina. Yoon Boo-keun, who heads Samsung's home appliance business, met Gov. Henry McMaster of South Carolina to sign a letter of intent for the project, which is estimated to generate some 950 jobs in the region.

The new facility is expected to start production of washers early next year, although detailed plans are not yet known. The products made will be sold in the United States and Canada.

Yoon Boo-keun (L), who heads Samsung Electronics Co.'s home appliance business, signs a letter of intent with Gov. Henry McMaster of South Carolina in a Washington-based hotel in this photo released by the company on June 28, 2017. Samsung plans to build a new production line for home appliance products in South Carolina. (Yonhap) Yoon Boo-keun (L), who heads Samsung Electronics Co.'s home appliance business, signs a letter of intent with Gov. Henry McMaster of South Carolina in a Washington-based hotel in this photo released by the company on June 28, 2017. Samsung plans to build a new production line for home appliance products in South Carolina. (Yonhap)

Samsung has been shipping washers from Vietnam and other Southeast Asian facilities to the North American market.

"As the demand for the products is rising globally, the establishment of a new U.S. production line will not lead to the supply decline from factories of other regions," a Samsung Electronics official said.

While Samsung took up around 17.3 percent of the U.S. market for electronic appliances last year, according to the data compiled by industry tracker Traqline, industry watchers said the company aims to further solidify its lead with the new production facility.

LG Electronics Inc. also plans to invest $250 million through 2019 in Tennessee to build a home appliance factory that produces washers. The company said it will inject $300 million to build a new corporate headquarters building in New Jersey that can house 1,000 employees.

SK Group, a South Korean energy and telecom conglomerate, said it plans to strengthen business ties and expand investment in the U.S. shale gas business. Chey Tae-won, chairman of SK Group, attended a ceremony in Washington on Wednesday (local time) to sign a memorandum of understanding with General Electric and Continental Resources to form a strategic alliance for the shale gas project.

Under the deal, SK and General Electric will work together to develop shale gas fields in the U.S. and promote the sale of U.S. LNG and LPG in Asia, South America and Africa. SK Group also aims to cooperate closely with Continental Resources to jointly develop shale gas fields.

SK Group head Chey Tae-won (C) poses with GE Vice Chairman John Rice (L) and Continental Resources head Harold Hamm at a hotel in Washington in this photo released by SK Group on June 29, 2017. (Yonhap) SK Group head Chey Tae-won (C) poses with GE Vice Chairman John Rice (L) and Continental Resources head Harold Hamm at a hotel in Washington in this photo released by SK Group on June 29, 2017. (Yonhap)

Doosan Group, a major South Korean power equipment conglomerate, said it too will strengthen ties with U.S. counterparts to expand its presence in the U.S. power equipment market.

Doosan Heavy Industries Co., South Korea's top power equipment maker, signed a memorandum of understanding in the U.S. earlier in the day to buy ACT, a Houston-based gas and steam turbine repair service provider, for an undisclosed amount. Should the deal go smoothly, Doosan Heavy will be able to secure a foothold in the U.S.'s 16 GW gas turbine market.

South Korea's top automaker Hyundai Motor Co. announced a plan to invest $3.1 billion over the next five years in the country to carry out the latest technology research, including self-driving automobiles.

Hanjin Group, which is the parent company of Korean Air Lines Co., pledged to spend $10.2 billion through 2023 to buy 50 aircrafts from Boeing Co.

Industry watchers said the latest investment projects are significant as U.S. President Donald Trump has been pushing toward protectionism, which centers on generating jobs inside the U.S. This stance has been viewed as a major source of concern for South Korean firms seeking business opportunities there.

Trump has, moreover, repeatedly vowed to bring changes to the Seoul-Washington Free Trade Agreement (FTA), claiming the U.S. did not benefit from the deal.

"One of the key goals of the business delegation's visit is to highlight that the bilateral partnership that spans decades benefits the U.S., as well as South Korea," a corporate insider said.

The investment plans announced during the South Korean president's trip can lay the foundation for the future strengthening of ties that have been bolstered by the free trade agreement and other business tie-ups over the years, he said.

colin@yna.co.kr

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