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Chinese firms make push into South Korea

By: Steve Toloken

April 16, 2013

SEOUL, SOUTH KOREA — China's plastics machinery industry is making a push into South Korea, one of Asia's largest markets, with the Chinese taking on a much bigger presence at Korea's national plastics exhibition and some reporting rapidly growing sales.

Officials of China's largest plastics equipment maker, Haitian International Holdings Ltd., for example, said in an interview at the recent Koplas fair in Seoul that the firm sold 150 presses in Korea last year, up from 90 in 2010, and it expects to top 200 this year.

Several of China's biggest injection molding machinery makers either made their first appearance at Korea's national Koplas show, held March 12-16, or had much larger booths than previous years, and said they were targeting the market.

It's a change for Koplas, which typically has attracted European, Japanese and American machinery suppliers, in addition to the domestic Korean ones. Those firms remained, but the rising Chinese presence, with each company putting several machines on the show floor, drew the attention of Korean competitors.

"Haitian's strategy to enter the Korean market is very aggressive," said Andrew Kim, a sales executive at Woojin Plaimm Inc., one of Korea's largest press makers. "Of course we are concerned about [the increased presence generally of Chinese firms] because their price is cheap. They are potentially big competitors."

Korea's market is technically sophisticated, driven by requirements from its multinationals in the consumer electronics and car industries, such as Samsung, LG, Hyundai and Kia.

While some executives wondered if the Korean expansion was motivated by a desire to find alternative markets as China's domestic economy slows, the Chinese said they were drawn by bargain-hunting among some Korean manufacturers and by a desire for a foothold in Korea's domestic market. Also, the Chinese said they hope they can boost sales at factories that are part of the global supply chain of Korea's conglomerates.

"We know this market is very big," said Kevin Wang, a regional sales manager for Hong Kong-based Cosmos Machinery Ltd., in an interview at the company's Koplas booth. "It's not only the local market, but also the Korean companies in other countries."

Outside of Haitian, Chinese efforts were just beginning, and it was hard to tell if they would succeed. Guangdong Yizumi Precision Machinery Co. Ltd. in Foshan, China, for example, last year got its machines certified to meet South Korea's safety standards, and signed a local agent.

"For Korea, the customer base has a high level of requirements, for quality, for features and for safety," said Michelle Chen, regional sales manager in the firm's global development department. Chen said safety was particularly important for Korean companies.

James Zhang, Yizumi's deputy general manager, said his company sees an opening in the market because Korean firms are looking for more cost-effective machinery, and he said Chinese quality is getting better.

Lainus Lee, president of Haitian Korea Co. Ltd., said Korean firms are changing their perceptions since he first started selling Chinese equipment in 2004.

"Many Korean customers have changed their minds," Lee said. "Before, 'Made in China' meant it was not good. Now, they've changed."

Another large South Korean press maker, LS Cable & System Ltd. of Anyang, said it has noticed more Chinese firms in the market.

Others in Korea said they did not see the Chinese as much of an issue for them, and said the Chinese would likely target lower-end molding like housewares.

Still, the Chinese were not the only ones expanding in Korea. Austria's Engel Holdings GmbH used the show to hold an opening ceremony for the doubling of capacity at its Pyeongtaek, South Korea, factory, an investment of 8 million euros ($10.4 million).