Korean automobile and tire industry are being reorganized into `domestic companies`. Kumho Tires will be sold offshore in three domestic tire tie-ups consisting of Korea, Kumho and Nexen tires. Hyundai Motor Company and Kia Motors are the only pure domestic companies among Korean automakers. There is a concern that labor disputes such as `withdrawal of business` or `mass dismissal` can occur at any time if the foreign capital that leads the profitability thoroughly enters the domestic automobile and tire industries as it comes out.

Kumho Tire`s labor and management agreed to normalize management and collective bargaining at a factory in Gwangju, South Jeolla Province on the 2nd, and finally reached an agreement on the sale of its overseas business and its own settlement. On the same day, creditors such as KDB and KDB will sign an MOU with Kumho Tire and plan to sign the contract during this week. Once the deal is concluded, China Double Star will invest KRW 30 billion in contracts and purchase 45% of the shares from the rights offering for about KRW 640 billion to become Kumho Tires` largest shareholder.

Meanwhile, Hankook Tire and Kumho Tires have been leading the domestic tire market thanks to the rapid expansion of domestic automobiles and exports in the 1980s when the Gyeongin Expressway and the Gyeongbu Expressway were opened. In 1999, Nexen Tire changed its name to Woosung Tire and added it to the tire market. Since then, the domestic tire industry has maintained the `three-company system` for nearly 20 years.

Kumho Tires was once rated as having excellent production capacity to win the No. 1 spot in Chinese tire production. R & D investment was also high in the global tire industry. However, Kumho Asiana Group, the parent company of Kumho Tire, bought aggressive business by building overseas factories such as China after purchasing Daewoo E & C in 2006 with more than 6 trillion won. However, after the financial crisis in 2008, Kumho Tires, which suffered from a liquidity crisis, eventually applied for a workout in 2009. He graduated from workout in 2014, but still has a lack of self-sufficiency and has entered into an autonomous agreement with the creditors again.

The local automobile industry, which suffered from its management difficulties, has already become a "prey" of foreign capital in the early 2000s. In 2000 Renault Samsung Motors established Renault Renault Samsung Motors, which acquired Samsung Motors assets. In 2002, Daewoo Motor was transferred to General Motors Corp. (GM). India Mahindra bought Ssangyong Motor in 2010. Hyundai and Kia Motors are the only remaining domestic companies.

Daewoo Motor, in the past, has been ranked among the best in the world for the development of light vehicles. Currently, GM Korea is the core business for GM`s global light vehicle development, but its position has shrunk as profitability has fallen compared to other models. GM Korea is experiencing serious labor disputes following the decision to shut down its headquarters in Gunsan, and it is expected to hit a critical mass in April in the company`s retirement or retirement.

Some of the companies that oppose the sale of Kumho Tires overseas are still considering the possibility that Double Star will absorb the technology of Kumho Tire and recapture the funds by restructuring the workers and shut down domestic plants. Double Star said it will remain the largest shareholder by the end of the year, but it means that it can leave Korea five years later. Kim Ji-chan, a professor of business administration at the Catholic University, said, "We cannot exclude the possibility that the Chinese capital, which has cost competitiveness, will take steps to capture and withdraw technology only in the future."

By Kim Yang Hyuk mj@


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