South Korean conglomerates are expected to offer know-how and technological expertise in exchange for investment and market access from a Chinese business delegation that is scheduled for a meeting with them on Friday.
The 200-plus group includes Chinese President Xi Jin-ping. In total, more than 400 high profile business people will be gathering at Hotel Shilla where a forum hosted by the Korea Chamber of Commerce and Industry will take place.
“South Korean firms have the technological prowess, but they don’t have the kind of market that China has, and given the current domestic market situation, it’s critical that they have the chance to expand their businesses in China,” said Chung Sun-sup, the head of Chaebul.com, a website devoted to conglomerate information.
Samsung Electronics, for instance, holds patents to core smartphone technology that Chinese firms are anxious to copy, but it will need a quid pro quo to part with it.
China is hot on Korea’s heels in terms of smartphones, with its Huawei Technologies ranked as the world’s third-largest smartphone maker, following Samsung Electronics and Apple Inc.
Just ahead of the forum, about a dozen top local business moguls including Hyundai Motor Group Chairman Chung Mong-koo, LG Group Chairman Koo Bon-moo and Lotte Group Chairman Shin Dong-bin are to hold a separate closed-door meeting with Xi. Samsung heir Lee Jay-yong will be giving a tour of Samsung products for the delegation at a special exhibition set up at the hotel owned by the conglomerate.
The agenda for the South Korean conglomerates involve mostly business expansion in China.
Hyundai Motor, for instance, is looking to add a fourth plant in China but needs Beijing’s authorization. LG Electronics will be soon producing its G3 smartphones from its Yantai plant, while LG Display is building its eighth generation LCD panel plant in Guangzhou. LG Chem, meanwhile, has signed up to provide batteries for several Chinese carmakers, meaning most of LG’s flagship units need Beijing’s cooperation. The situation is the same for Lotte, which operates five department stores and over 100 retailers in China.
Despite the fanfare, some industry watchers were pessimistic about the meetings producing any tangible results.
At the most, they said, was that the firms may sign a few agreements on future business cooperation.
Friday’s meeting was originally planned to be open to more members of the media, but in the end, it was decided that only Cheong Wa Dae reporters would be given partial access, hinting that some heavy duty negotiations are expected, according to those close to the matter.
Meanwhile, the summit yielded some mutual economic deals, including an agreement to conclude bilateral free trade negotiations by the end of this year.
Opening a won-yuan direct trading market was also agreed upon, along with a deal allowing Korea to set up an offshore renminbi trading center in Seoul to enable clearance and settlement of trade between the two countries in Chinese currency, while Korean institutional investors have been given an 80 billion yuan quota to use Chinese money for mainland equity purchases.
By Seo Ji-yeon, Park Hyong-ki and Lee Ji-yoon
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