For South Korea, trade tensions with Japan came at an inopportune time after South Korea`s Supreme Court ruled in 2018 in compensation lawsuits against some of the largest companies, including Mitsubishi Heavy Industries Ltd. and Nippon Steel and Sumitomo Metal Corp. These cases date back to Japan`s colonial rule on the Korean Peninsula more than seven decades ago. The two countries have always disagreed on the remuneration of two groups of Koreans: (a) those who were conscripted (or used as slave laborers) in the factories and mines that supplied Japan`s imperial war machine, and (b) women who were forced to work in military brothels, euphemistically called «comfort women.» Thus, the historic discord turned into a trade dispute in no time after Japan unilaterally tightened restrictions on the export of semiconductors and computer screens used in smartphones and chips to South Korea. [5] This has led to serious disruptions in the global supply chain of some South Korean electronics companies, including Samsung. Source: Author`s source using data from UN Comtrade 15. Among the Korean companies that invested in India, Hyundai Motor Group, Samsung Electronics and LG Group were the leaders. Hyundai Motors has built a car factory in Tamil Nadu with a capacity of more than 650,000 cars per year. Hyundai Motors India Ltd, an Indian subsidiary of Hyundai Motors, would receive the next tranche of $1.05 billion investment to expand Sriperumbudur`s unit to manufacture electric vehicles. Kia Motors, a sister company of Hyundai Group, announced a $1.6 billion investment in two phases to build two manufacturing plants in Ananthapur, Andhra Pradesh. The units will have a capacity of 300,000 cars and production is expected to begin in 2019. Samsung Electronics has two factories – one in Noida and one in Sriperumbudur (TN) and five R&D centers.
Samsung has announced a $780 million investment to expand its Noida plant for the manufacture of smartphones and consumer electronics. This Noida plant is the world`s largest mobile production unit, doubling its current capacity from 68 million to 120 million mobile units by 2020. LG Electronics operates two factories in India, one in Noida and one in Pune, with an R&D center in Bangalore. LG Group, in collaboration with Vedanta Group, will build India`s first LCD production unit in Maharashtra. POSCO has completed the construction of its first steel plant in Maharashtra and has established another joint venture with the Uttam Galva Group. The first involved a total investment of $240 million in galvanized sheet metal equipment, the production of which would meet the high-end galvanizing needs of automakers in Pune and the surrounding area, in addition to those of home appliance manufacturers. Youngone Corporation, one of Korea`s leading investors – the largest investor in Bangladesh – has signed an agreement with the Telangana government to build a $300 million factory in Warangal with a capacity of 10,000 jobs. Hyosung Corporation, the world`s leading supplier of elastane, announced plans to invest $450 million in a new elastane manufacturing plant in Aurangabad Industrial City, Maharashtra, with an initial capacity to create 1,000 jobs. Lotte Confectionary has further expanded through the acquisition of Havmor, a Gujrat-based entity, alongside its first investment in Chennai and more recently rohtak. 16. Technological Cooperation: On 21 April 2017, an intergovernmental Memorandum of Understanding was signed between the Ministry of Defence Production, the Indian Ministry of Defence and the Procurement Programme Administration of the Ministry of Defence of the Republic of Korea to enter into a partnership in the construction of warships.
The state-owned Hindustan Shipyard Ltd. (HSL) merges with Hyundai Heavy Industries Co. Ltd. of the Republic of Korea for defence production under the «Make in India» programme. In addition, a contract was signed between L&T of India and M/s Hanwha Techwin of the Republic of Korea for the production of one hundred pieces of self-propelled 155 mm/52 «K-9 Vajra» artillery for the Indian Armed Forces.17 Korean Investment Model: According to the Korea Business Investment Promotion Agency (KOTRA), about 88% of all Korean subsidiaries based in India are wholly owned by a hundred, while about 11.3% are joint ventures. Joint ventures usually take place between Korean companies themselves, and joint ventures with Indian companies are rare. This is mainly due to the indifferent experience of Korean SMEs in the mid-1990s when they attempted to enter India through joint ventures with Indian companies. Korean companies, including Hyundai Motors, LG and Samsung, decided to have wholly-owned subsidiaries with significant investments that allowed them to operate on economies of scale, establish their brand image at an early stage and gain bargaining power with the local government.
The Korean investment model, in which wholly-owned subsidiaries are operated, contrasts with the Japanese model, which followed the typical process of technical ties, minority shareholder participation and subsequent share expansion. 18. According to statistics from KOTRA and Korean Exim Bank, Korean investment in India is mainly concentrated in manufacturing with a share of 83.8%, wholesale and retail trade with 5.9%, financial and insurance activities with 1.9% and electricity, gas, steam and water supply with 1.5%. The main investment centers are NCR (Delhi, Noida, Gurgaon), Chennai, Mumbai/Pune. The United States remains Korea`s top investment destination, totaling $102.9 billion (cumulative through September 2018); and China is its main target in Asia with a total investment of about US$62.7 billion (source: Exim Bank Korea). Korea`s cumulative global investments amounted to $437.8 billion in September 2018. Korea`s other main investment targets are: Hong Kong -$25.2 billion and Vietnam — $19.8 billion. The average investment in India over the last four years (2014-2017) was $370.8 million per year. .