Firms brace for post-pandemic era
Conglomerates resume overseas plant operations
Major Korean conglomerates such as Samsung and LG Electronics are speeding up their moves to resume overseas plant operations in a bid to prepare for a pick-up in demand and put themselves on better footing in the post COVID-19 era. Industry watchers believe there could be large M&A deals to strengthen their market presence and a major expansion of plant production capacity to meet an expected rise in future demand.
Korean firms have also been alerted over renewed tension between the U.S. and China, which could lead to a second trade war that could impact Korean firms operating in both markets.
Samsung and LG Electronics have resumed operations at their India plants.
On May 7, Samsung resumed its smartphone plant in Noida and its home appliance factory in Chennai on May 14.
“The India plants are partially in operation, but with the recent resumption most of our overseas plants are in operation, except the Mexico plant which is currently under negotiation with the Mexican government,” a Samsung Electronics official said.
LG Electronics quickly followed suit, restarting its home appliance factories in Pune and Noida, India, on May 17 and 21, respectively.
India imposed one of the strictest lockdowns due to the coronavirus but through negotiations eased the restrictions in the past few weeks, creating leeway for Korean conglomerates to normalize plant operations there.
Deployment of key personnel to China has increased as the Chinese government also agreed to ease visa entry procedures for local conglomerates starting May 1.
The Chinese government exempted Korean employees from a mandatory 14-day self-quarantine after they test negative for COVID-19 after entering the country.
Major semiconductor, display and battery plants have been operating in China and most are under construction to increase production capacity.
Since the easing of regulations, around 1,000 personnel in total from Samsung Electronics, Samsung Display, Samsung SDI, LG Chem, LG Display and SK Innovation have been dispatched to their plants in
China.
Major battery giants have dispatched their personnel to extend production capacity at their factories to better meet the rising global demand for electric vehicle (EV) batteries in which the market is expected surge in the coming years.
LG Chem, Samsung SDI, and SK Innovation have dispatched technicians to swiftly construct new plants or to expand their factories in China.
LG Chem, the world’s leading battery firm, deployed 120 engineers to Nanjing on May 3 and is reviewing whether to send a second group later this month.
Last year, the company announced a plan to spend 1.2 trillion won to build the Nanjing battery plant within this year.
SK Innovation also deployed 120 engineers to Yancheng to complete the construction of two battery factories within in this year. The company has partnered with China’s EVE Energy to construct a 20 gigawatt-hour (GWh) to 25 gigawatt-hour battery plant.
Since April, Samsung Electronics has dispatched a total of 500 employees to its semiconductor plants in China.