Korea's biggest are going big in Asean with investment and deals

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Korea's biggest are going big in Asean with investment and deals

Hyundai Motor’s production plant that assembles electric vehicles in Cikarang, Indonesia. The plant is located 40 kilometers from the country’s capital of Jakarta. [YONHAP]

Hyundai Motor’s production plant that assembles electric vehicles in Cikarang, Indonesia. The plant is located 40 kilometers from the country’s capital of Jakarta. [YONHAP]

Asean countries have become major destinations for investment and dealmaking for Korea's largest chaebol, a step up from their traditional role as target markets for Korean-made goods.  

 
Hyundai Motor has long had a limited presence in the region.
 
The carmaker opened an Ioniq 5 production plant in Indonesia in March, its first production plant in Asean.
 
The automaker is investing nearly 2 trillion won ($1.6 billion) in the electric vehicle plant, which has the annual capacity to produce 150,000 units. Hyundai Motor plans to increase that production to 250,000 units annually in the future.
 
Hyundai Motor Group Chairman Euisun Chung declared Indonesia as a key to the company's future strategy.
 
"Indonesia is a key hub for Hyundai Motor's future mobility strategy. This plant will play a key role in the automotive industry and specifically in the field of electric vehicles," Chung said in a statement released by the car company.
 
"Moreover, Hyundai will keep contributing to the establishment of the electric vehicle ecosystem in Indonesia through the battery cell plant currently under construction."
 
Ahead of the EV production plant, Hyundai Motor is working with LG Energy Solution on a battery plant in Indonesia, which will be completed in the first half of 2023.
 
The factory, which will be located in the Karawang Regency, Indonesia, will have an annual production capacity of 10 gigawatt-hour (GWh) or enough for approximately 150,000 EVs.
 
In April, an LG Energy Solution-led consortium announced 11 trillion won of investment in an EV battery mine-to-manufacturing project. The consortium includes LG Chem, LX International and Posco Holdings.
 
The project will develop an "end-to-end value chain for EV batteries, including procuring raw materials, producing key components, such as cathodes, and manufacturing battery cells," LG Energy Solution said in a statement.  
 
Indonesia has the world's biggest reserves of nickel, which is essential in making batteries. It is estimated that Indonesia has a 21 million tons of nickel.
 
The carmaker has also set its sights on Singapore.
 
It is building an innovation lab in the country, which is tasked with developing new mobility technologies and business opportunities. The lab is due to open at the end of the year.
 
Samsung Electronics is one of the early pioneers that ventured into the Asean market, as the electronics company invested heavily in Vietnam.
 
In Vietnam, Samsung Electronics has invested $17.7 billion over 24 years, according to Korea International Trade Association. Of that, 29 percent of the investments was made in the last five years.
 
Samsung Electronics has eight locations, both manufacturing plants and research centers, in the country, including smartphone production plants in Bac Ninh and Thai Nguyen.
 
Half of all smartphones from Samsung Electronics are made in Vietnam.
 
LG Electronics and LG Display run manufacturing plants in Haiphong, Vietnam, with the display company recently investing $1.4 billion there to expand the capacity of the existing plant.
 
Vietnam is also a major production site for Hyosung Chemical. The chemical company recently fired up a second polypropylene plant in Vietnam, with an annual capacity of 600,000 tons. Polypropylene is used in the making of automobiles, medical syringes and fibers.
 
GS Caltex is entering Indonesia jointly with Posco International in establishing a palm-oil based biodiesel plant.
 
The Korean refinery is also investing in start-ups in the Asean market, as it recently invested 2 billion won on a Vietnamese carwash start-up.
 
Others are looking to make equity investments into local companies with promising technologies, especially regarding environment and waste management.
 
SK ecoplant last week announced that it acquired a 30 percent stake in Malaysia's Cenviro, the biggest state-owned integrated environmental waste management solution provider. The business portfolio includes waste disposal and renewable energy generation.
 
The builder in February bought TES Envirocorp, a Singapore-based electronics waste management solution provider, for $1 billion. The company specializes in recycling and disposing of electric components extracted from used IT electronics goods, including computers and batteries.
 
In 2020, KB Kookmin Bank acquired 70 percent of Prasac Microfinance, a Cambodia-based microfinance institution, for 700 billion won. The bank acquired the remaining stake last year.  
 
Prasac Micronfinance had 45 percent of Cambodia's microfinance market as of 2021, according to the bank.
 
In 2018, The bank became the second-biggest shareholder of Bank Bukopin of Indonesia after acquiring 22 percent stake.
 
In 2020, the bank increased its stake to 67 percent, becoming the biggest shareholder. That year, KB Kookmin Bank was approved by the Myanmar government to establish a local corporation.
 
It entered Vietnam with the opening of a local branch in Ho Chi Minh City in 2011. A Hanoi branch was opened in 2019.  
 
Shinhan Financial Group, which has long been in the Asean market and now has operations in Vietnam, Cambodia and Indonesia, has recently been investing in IT companies.
 
Shinhan Financial Group this year became the third-largest shareholder of TIKI, Vietnam's biggest e-commerce company. Shinhan Financial Group owns 10 percent of TIKI's shares.
 
Hana Financial Group operates branches and has bought shares of financial institutions in the Philippines, Vietnam, Indonesia, Myanmar and Singapore.
 
Hana Financial Investment, a brokerage company, purchased 35 percent of the securities unit of the Bank for Investment and Development of Vietnam earlier this year.
 
Woori Financial Group, which also has operations in Indonesia, Vietnam, Cambodia, the Philippines and Myanmar, has been expanding its services.
 
Tech companies without manufacturing facilities focus on providing their content and network services in the region.
 
LG U+ signed a contract with AIS, a telecom operator in Thailand, to export $11 million worth of 5G network technology and augmented reality and virtual reality content. The carrier clinched similar deals in Malaysia and Singapore.
 
Kakao Entertainment has been expanding its reach into the Asean market with the recent introduction of Kakao Webtoon services in Thailand, Taiwan and Indonesia. As of March, over 2,500 webtoons are offered to overseas readers.
 
Naver is also selling webtoons in the region. The company is carrying out various webtoon-related projects in Thailand, Taiwan and Indonesia, such as nurturing local talent through education programs. In 2018, it invested $150 million in Grab, the biggest delivery and transportation company in Southeast Asia, through a joint fund with Mirae Asset.
 
Game publisher Netmarble entered Thailand's market early with Netmarble Thailand in 2010. The company offers Korean mobile games for customers in Southeast Asia.
 
NCSoft has been providing games to Southeast Asian players through NC Taiwan, which was established in 2003.
 
The Korea Economic Research Institute study found that until 2019, Korean have been lowering their exposure to China and increasing investment in Asean.
 
For Korean manufacturers, 43.2 percent of their overseas investment was to China between 2001 and 2010. That figure dropped to 31 percent between 2011 and 2019. During the same period, investment to Asean countries increased from 13.4 percent to 21.4 percent of the total.

BY LEE HO-JEONG, PARK EUN-JEE, JIN MIN-JI, YOON SO-YEON, CHEA SARAH [lee.hojeong@joongang.co.kr]
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