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Globalization of Korean Auto Industry


Jay Hyun

on 6 February 2013

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Transcript of Globalization of Korean Auto Industry

UWKS Seminar
2/6/2013 Understanding the globalization of the Korean automobile industry and the implications for post-crisis growth of the Korean economy Automotive industry contributes; 5.7% firms 10.2% employees 10.7% production 10.25% added value of manufacturing sector Hankuk University of Foreign Studies Jae Hoon Hyun Globalization of Automotive Industry Strategic Transition after the Crisis Post-Crisis Recovery of Korean Economy Rapid recovery in GDP and employment global production sites What Happened? Close look at the Korean Automotive Industry Implications and Questions Rapid Recovery of Crisis

Shades of Globalization? 1990s
Initial Failure (Bromont, Quebec)
Crisis and Restructuring CHINA

Kia 500,000
Hyundai 774,000 INDIA

Hyundai 620,000 Europe

Kia 300,000
Hyundai 251,000 RUSSIA

Hyundai 139,000 Rapid Recovery from Crisis;

Crisis as Opportunity: Emerging Markets and Foreign Exchange

Strong Manufacturing Capabilities and Active Globalization of Manufacturing Implications China and India

Strong Korean Currency Exogenous Motives Passenger Car Production Passenger Car Sales Hollowing?: Effects of Globalization Overseas Production (2002) *Manufacturing Cost = Manufacturing Labor Cost /Total Value Added Manufacturing Cost (2001)* FX vs. FDI 1990s
Over investment and Crisis
Industrial Restructuring
Crisis Enhanced Price Competitiveness

oil price hike
Stagnated domestic sales Export IMF, 2007 GDP per capita ADB, 2008 GDP Growth IMF, 2007 Real GDP Growth ADB, 2008 Unemployment Automotive FDI FX and Revenue FX and Price Competitiveness 11.44% Korean Automotive Industry after Crisis Weak US Dollar
Quantitative Easing 1, 2, 3 by Asset Buying
Low interest
Auto trade imbalance trade conflict
local needs competition
value of currency china and india US

KIA 300,000
HYUNDAI 338,000 2000s
Restructuring completed
FX effects 1960 logistics
1970 production cost
1980 trade conflict
1990 fall of communist regimes
2000 emerging economies Exogenous Motives

Endogenous Motives Brief History of
Automotive Globalization Turkey

HYUNDAI 90,000 Increased Domestic Manufacturing Cost

Product Competitiveness Endogenous Motives Questions for Discussion Shades of Globalization?

Management Risk
Hollowing Effect Global 500 (Korean) What if Korean currency become strong?
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