S. Korean Firms Expected to Benefit from China's State Subsidy Cuts | Be Korea-savvy

S. Korean Firms Expected to Benefit from China’s State Subsidy Cuts

(image: SK Innovation)

(image: SK Innovation)

SEOUL, Sept. 3 (Korea Bizwire)South Korean manufacturers of car batteries are anticipated to benefit from Beijing’s latest move to cut subsidies provided to Chinese companies, industry watchers said Monday.

Chinese-based electric car battery maker OptimumNano Energy recently announced that it will suspend its production line for six months citing financial problems. BYD, China’s No. 2 player, also said in its regulatory filing that its operating profit for the first half plunged 72.2 percent on-year.

Industry watchers said the latest financial crisis of Chinese firms came as Beijing is seeking to suspend its subsidy program provided for battery makers.

The Chinese government has been carrying out a project to support domestic energy and battery firms since 2012, which was planned to run through 2020.

In line with the upcoming deadline, the government has been cutting the amount of subsidies, while setting tougher requirements for businesses to receive the support.

Industry watchers said South Korean companies, including Samsung SDI Co., LG Chem Ltd. and SK Innovation Co., may benefit from the trend as they are more competitive in terms of technologies compared with the Chinese players, which have effectively been sustained by government-led subsidies.

South Korean firms, however, still need to be cautious as Beijing may come up with new measures to regulate foreign companies, they added.

“Due to the financial challenges of Chinese battery firms, the price of lithium, the key material for batteries, also has been sharply losing ground recently,” an industry insider said. “South Korean companies should take the situation as an opportunity to beef up their technology competitiveness and expand their foothold around the world.”


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