Hyundai Steel, South Korea’s second-largest steelmaker, said Thursday that it would sell its Beijing unit, Hyundai Steel Beijing Process, after years of sluggish sales compounded by the shrunken market share of Hyundai Motor and Kia cars in China.

Hyundai Steel will still keep its Tianjin unit for its business in China, the company added.

"(Hyundai Steel) has completed signing a memorandum of understanding with a potential buyer for the Beijing plant. The company will soon engage in pre-acquisition due diligence and finish selling its Beijing unit during the first half," an official from Hyundai Steel said.

The combined assets of Hyundai Steel's Beijing unit are currently estimated at around 464.8 billion won ($355 million). Of the total, the company's real estate assets are valued at some 382.3 billion won, according to the company's regulatory filing.

The size of the actual deal has not yet been determined as the due diligence process has not started, the official noted.

Hyundai Steel Beijing Process was built in 2002 near car manufacturing facilities owned by Hyundai Motor and Kia. The steel service center provided steel products to Hyundai Motor Group’s car plants.

Hyundai Steel’s Beijing unit was able to post annual operating profits of between 10 billion and 20 billion won until 2016. But, after China’s economic retaliation over South Korea’s deployment of the US' THAAD anti-missile system, the steelmaker’s performance began dwindling along with decreases in sales for Hyundai Motor and Kia.

In 2018, Hyundai Motor’s share of the Chinese car market reached 3.59 percent. But, the figure dropped to 3.43 percent in 2019, 2.34 percent in 2020 and 1.82 percent in 2021. Last year, the market share further dropped to 1.21 percent.

The market share of Kia also fell from 1.68 percent in 2018 to 0.43 percent in 2022.

Due to the declining sales, the Hyundai Steel Beijing unit’s sales and profits also plunged. Between 2017 and 2021, the unit posted a net loss of 105.8 billion won.

In 2021 alone, the net loss reached 49.6 billion won, forcing the steelmaker to shut down the Beijing center and start looking for buyers.

Meanwhile, other Korean steelmakers that operate facilities in China faced similar difficulties and withdrew from China.

Dongkuk Steel Mill, South Korea's third-largest steelmaker, sold its 90 percent share in Dongkuk Steel China to the Chinese government in June 2022.