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EMO MILANO 2021 Extends Opportunities To Korean Exhibitors

EMO MILANO 2021 Extends Opportunities To Korean Exhibitors

A Press Conference for the South Korean public was held to present EMO MILANO 2021, the world exhibition of reference for the metalworking machine tool manufacturing industry, scheduled to take place at fieramilano in October 2021.

The speakers of the meeting, which was web-streamed, were Mr Luigi Galdabini, General Commissioner of EMO MILANO 2021, Mr So-Ahn Kang, Director General at KOMMA, Korea Machine Tool Manufacturers’ Association, and Mr Vincenzo Calì, Italian Trade Commissioner – Italian Trade Agency Seoul – Korea.

Promoted by CECIMO, the European Association of Machine Tool Industries, EMO MILANO 2021 will take place at fieramilano Rho from 4 to 9 October, when the recovery of investment should already have started.

Indeed, according to the forecasts processed by Oxford Economics, after a 23.4 percent fall registered in 2020, the year 2021 should bring about a recovery in machine tool consumption worldwide, expected to grow by +18.4 percent to 61 billion euro, (Asia 33 billion euro, +15.6 percent; Europe 17 billion euro, +23.5 percent; Americas 12 billion euro, +19.7 percent).

If we observe the single countries, all of them should experience a demand recovery, likely to continue also in 2022 and in 2023. Focusing on Europe, in 2021 both Italy (3.1 billion euro, + 38.2 percent) and Germany (5.7 billion euro, +20.9 percent) should again see a plus sign with regard to investment in production technologies. The growth trend is confirmed for both countries also in the two-year period 2022-2023.

Italian Government set up special fiscal incentives, which consists on tax credit up to 50 percent, for Italian companies investing, in 2021 and 2022, in new machine tools, robots, automation systems, 4.0 and digital technologies. This is a great business opportunity for all the exhibitors (from all over the world), and, in particular, for Korean machine tools builders, as South Korea is third in Italian machine tool import ranking.

South Korea has always been well represented at the world machine tool exhibition, as proven by the attendance data referred to the last edition of EMO MILANO (2015). In 2015, 45 Korean exhibitors participated in EMO MILANO. According to these data, South Korea ranked eighth by number of exhibitors, and in sixth place by exhibit surface. With 2.112 units, 2.6 percent of the total, South Korea came in fourth by number of visitors among Asian countries.

Luigi Galdabini added: “With specific reference to the Italian marketplace, Korean manufacturers should be aware that, for the two-year period 2021-2022, the Italian Government authorities have established a full package of incentive measures for purchasing new, traditional and digital production systems, i.e. related to the issue of smart manufacturing integration”.

“Exhibiting at EMO MILANO 2021 will thus be an excellent opportunity to identify and fulfil Italian demand, supported by these measures, as well as the demand expressed by foreign operators, who have always attended the world machine tool exhibition” concluded the General Commissioner.

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US-China Trade War Continues To Negatively Impact Global Manufacturing

US-China Trade War Continues To Negatively Impact Global Manufacturing

The Trade War is continuing to impact the global manufacturing sector as Malaysian manufacturing slowed to its weakest pace of expansion since the IHS Markit survey began in 2012, and Taiwan’s manufacturing sector fell to its lowest growth since September 2015. While South Korea’s industry, which is heavily focused on tech production, also witnessed a shrinkage in manufacturing activities due to the impact of the US-China Trade War on chip and smartphone orders. Meanwhile, official economic data from Singapore showed that the country’s gross domestic product grew more slowly than forecast in the fourth quarter as the city-state’s manufacturing contracted on a quarterly basis.

In China, the Caixin/IHS Markit PMI slipped into the contraction territory for the first time in 19 months and manufacturing activity in Europe witnessed a stagnating growth towards the end of 2018, with Italy, France, Germany, Spain and Britain experiencing contractions. For Britain, factories are ramping up on stockpiling as possible border delays may occur following Britain’s exit from the EU in three months time. Although the US has experienced a decreased growth, the manufacturing sector is still expanding and this signals that China is suffering more from the Trade War than the US.

Overall, 2019 saw world shares start on a downbeat note with oil prices and bond yields experiencing a downturn as the factory survey data confirmed the picture of a global economic slowdown. In a key annual conference last December, China’s top leaders have mentioned that the government will support the Chinese economy in 2019 through cutting taxes and keeping liquidity ample, as they continue with their negotiations with Washington.

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Vietnam And South Korea To Increase Bilateral Trade To US$100 Billion By 2020

Vietnam And South Korea To Increase Bilateral Trade To US$100 Billion By 2020

Vietnam’s Minister of Industry and Trade, Tran Tuan Anh, has signed a memorandum of understanding (MoU) with South Korea’s Minister of Trade, Industry and Energy, Sung Yunmo. Under this MoU, both countries will embark on an action plan to increase bilateral trade to US$100 billion by 2020. Additionally, this document will function as an added legal documentation between both leaders with regards to the broad agreements that were discussed at the Asia-Pacific Economic Cooperation (APEC) meetings in Da Nang in November 2017.

Based on the MoU, from now on till 2020, South Korea would support Vietnamese enterprises by enhancing their competitiveness in areas that include accessories and parts, automobile and electronics.

Bilateral trade between Vietnam and South Korea reached US$61.5 billion in 2017 which is an increment of 41.3 percent year-on-year. Within this figure, Vietnam’s exports to South Korea made up US$14.8 billion, which was an increment of 30 percent while the country’s imports to South Korea was worth US$46.7 billion. This was an increment of 45.3 percent year-on-year.

In the January – November period, South Korea remained Vietnam’s second largest import market with turnover of US$43.5 billion. This was an increment of 1.7 percent year-on-year and South Korea was only behind China by US$ 59.7 billion.

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Vietnam To Welcome More South Korean Investments

Vietnam To Welcome More South Korean Investments

South Korea has emerged as the top investor in Vietnam with US$60 billion worth of investments in the country as of 2018. This can be attributed to investments from mega companies such as Samsung, LG, Hyundai Motor, SK, Lotte, POSCO, CJ, Hanwha, LH Corp, Shinhan, Kumho, and Hyosung. To top this off, South Korean firms are continually seeking to expand investments in Vietnam due to the improvement in business conditions and implementation of effective policies over the past years.
In fact, during a meeting between South Korea officials and executives and the Vietnamese Deputy Prime Minister Trinh Dinh Dung, it has been elaborated that conducive business policies, have translated into better macroeconomic indicators which in turn allow for other sectors and FDI to grow. Kim Tae Soo, Head of the Economic Development Cooperation Fund (EDCF) has also added that, South Korean investors are interested in the infrastructure, logistics, manufacturing, automobile, agriculture, and food processing sectors within Vietnam. And the EDCF will work to speed up the disbursement of soft loans to help Vietnamese firms conduct projects under a public-private partnership (PPP).
To add to this, the South Korean government also considers Vietnam as the key pillar in its “Look South” policy and South Korea’s linkage to Southeast Asia, Europe, and the Americas.

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Vietnam’s First Aircraft Engine Component Factory Has Began Operations

Vietnam’s First Aircraft Engine Component Factory Has Began Operations

Vietnam’s first aircraft engine parts factory has began operations. The factory which is an the investment of South Korea’s Hanwha Aerospace company is located at the Hoa Lac Hi-tech Park in Hanoi and will reach its full scale operation capabilities in January 2019.

Currently, Hanwha is the only aircraft engine maker in South Korea and is recognised as one of the world’s top 10 most technologically advanced aerospace companies. Thus, it is expected that the company’s investment in Vietnam will facilitate the development of Vietnam’s aviation and precision mechanical industries. Additionally, it is projected that by 2024, the factory in the Hoa Lac Hi-tech Park would have around 900 employees with an investment capital of US$370 million, symbolising a strong technological transfer between South Korean and Vietnamese enterprises and enabling an advancement towards the development of high technology capabilities within Vietnam.

In addition to its main facility currently in Changwon, South Korea, Hanwha Aero Engines is the second production base of Hanwha Aerospace.  Therefore, this factory is a major part of the South Korean engine marker’s plans in terms of increasing its market share of civil aircraft engine parts to about US$ 879 million and leading the aircraft parts processing industry by 2025.

According to Minister of Science and Technology, Chu Ngoc Anh, the Hoa Lac Hi-tech Park has 87 investment projects as of now and possesses a registered capital of US$3.34 billion. However, the Hanwha brand name would lay the foundation for Hoa Lac to attract more hi-technology companies from other countries which would contribute significantly to Vietnam’s science-technology capabilities.

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South Korea Boosts R&D Investment For Industry 4.0 Technologies

South Korea Boosts R&D Investment For Industry 4.0 Technologies

South Korea: South Korea is set to ramp up its investment in research and development (R&D) for technologies that can facilitate acceleration of the fourth industrial revolution—like self-driven car and Internet of Things (IoT) platforms.

The Ministry of Trade, Industry and Energy had announced an increased in R&D spending on five burgeoning industries—autonomous car, biohealth, IoT-fitted electronics, renewable energy, and semiconductor and display—to 50 percent of the nation’s total R&D budget by 2022 from the current 30 percent.

This year, the government has allocated approximately 900 billion won (about US$844 million) to the above five sectors out of its total 3.16 trillion won R&D budget.

Correspondingly, the ministry is seeking to cultivate development of original technologies, related core technologies, and the growth of new industries using these new technologies via efficient commercialisation.

Private firms will also be supported in adopting technologies developed by external talents. Along with this revision, companies are required to foot only 30 percent of the total cost in cash while acquiring technologies from external sources—with the rest in non-cash asset. Currently, businesses have to pay about 50 percent of such costs in cash.

A new review system will also be implemented by the ministry—run by a group of industry professionals—to assess the feasibility of innovative technologies and development proposals.

Infrastructure & Rail Developments For Indonesia Totalling US$1.9B

Indonesia: South Korea and Indonesia have recently signed five memorandums of understanding (MOUs) that are worth a total of US$1.9 billion.

Covering both public transportation and infrastructure, the signing was attended by South Korean Minister of Land, Infrastructure and Transport Kim Hyun-mi, Indonesian Minister of Transportation Budi Karya Sumadi and Indonesian Minister of Public Works and Public Housing Basuki Hadimuljono.

Korea Rail Network Authority is to be in charge of the second phase of Indonesia’s light rail transit project for reducing traffic congestion in the capital of Jakarta. In addition, the two countries plan to launch a water supply project in Karian, while cooperating for similar future projects and the completion of the hydroelectric power generation project in Bongka.

Furthermore, Hanwha Engineering & Construction is slated to participate in Indonesia’s public housing projects worth US$230 million. Regarding the first phase of the new city development project in Lido, POSCO Engineering & Construction and Indonesian MNC Group will be cooperating with each other.

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An Upcoming Worldwide Competitor: South Korea’s Machine Tool Industry

An Upcoming Worldwide Competitor: South Korea’s Machine Tool Industry

An uncertain world stage and political issues in South Korea saw the nation go through a record-high recession in 2016 which affected machine tool exports. Does 2017 spell better news for the country? By Jonathan Chou

Over the past few decades, South Korea has risen to be a globally competitive manufacturing economy with tight integration into global markets.

With a highly developed manufacturing economy, South Korea’s rank placed seventh overall in the “Manufacturing Technology Top Markets Report” released by the International Trade Administration in the US.

Business-Savvy

The South Korean market is generally quite open and transparent, and in 2015 it was ranked fourth out of 189 in the World Bank’s “Ease of Doing Business” economic rankings.

According to Gardner’s world machine tool survey, the country is also the world’s fifth-largest producer of machine tools. Two large conglomerates, the Samsung Group and the Hyundai Motor Group, are leading manufacturers of machine tools through strategic acquisitions. Other major players include Doosan, Hwacheon and Hankook.

2016 Woes

In 2016 however, the Korea Machine Tools Manufacturers Association (Komma) reported that the machine tool industry in Korea was faced with a major crisis.

Chaos caused by Brexit, low growth in major countries such as the US and China, depressed investments in main industries such as automobile and shipbuilding industries coupled with recent political upheaval giving rise to economic struggles. As a result, a record-high recession in Korea continued in January through November 2016.

Machine tool exports in March 2017 also recorded US$156 million, a decrease of 19.9 percent from the same month in 2016, according to Komma. Previous year exports in March were US$176 million (2014), US$183 million (2015) and US$195 million (2016). Exports in the January-March 2017 period decreased 20.9 percent year-on-year to US$400 million.

Silver Lining

However, the global economy has gathered pace in 2017 with better conditions for international trade. According to Statistics Korea, the equipment investment index in March increased by 12.9 percent from the previous month and 22.8 percent year-on-year.

Accordingly, Komma reported that machine tool orders in March 2017 amounted to 265.5 billion won (US$ 231.1 million), up 23.1 percent compared with the same month of 2016. Previous year orders in March were US$283.8 million in 2014, US$247.4 million in 2015 and US$190.2 million in 2016, and orders from January to March decreased 1.1 percent year-on-year to US$585.4 million.

Higher Value Automotive Exports

South Korea’s automotive industry is also the fifth-largest in the world by both automobile unit production and export volume, according the International Organisation of Motor Vehicle Manufacturers.

Korean automobile production reached 1.42 million cars during January to April this year, a thin 1.1 percent increase compared with the same period in 2016.

The tally, released by the Ministry of Trade, Industry And Energy (MOTIE), also pinpointed Korean automobile exports amounted to US$14 billion during the year’s first four months, a 5.2 percent expansion over the year earlier. The increase rate contrasted with a two percent drop in terms of export volume, an indication of high-value car exports of Korean car assemblers.

The export of eco-friendly cars such as Hyundai’s Ioniq and Kia’s Niro steadily expanded and the export of large-sized cars also grew. By region, Korea chalked up increases in exports to all regions except for North America and Asia.

Government Support

Efforts are also being made by the South Korean government to make its mark in the world stage of Industry 4.0 while revitalising the economy.

Announced by MOTIE this year, the “Fourth Basic Plan for Development Of Materials And Parts Industries (2017-2021)” is a series of policies and funds totalling US$36 million being set aside to support the 4th Industrial revolution.

Through the plan, the government will receive feedback through five representative organisations, with Korea Institute of Materials Science for metals, and the Korea Automotive Technology Institute for machinery and automobiles. It will also provide comprehensive services linking related centres, resolve corporate difficulties on a one-stop basis, and respond to the technology convergence trends seen in Industry 4.0.

In addition, the government also plans to expand support to 12 new industries, including the system industry (electrical and autonomous cars) as well as the materials and parts industry (high-tech new materials, augmented reality and virtual reality).

A Grain Of Salt

However, nothing is for certain. Economic recovery in major industries in Korea such as shipbuilding and steel remains unclear. In addition, with recent political upheaval, shrinking consumption is prevalent, further delaying business improvement; Komma said it would be difficult to expect a high rate of recovery in 2017.

However, the economies of developed countries including the US and Europe are starting to recover. In-demand industries such as semiconductors, display, information technology equipment and general machines are engaging in active investment in facilities.

Coupled with the previous year’s base effect of underperformance, the association concludes that machine tool manufacturing in South Korea is generally expected to increase.

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