Posted by: rbbadger | January 11, 2009

Will SsangYong Motor Company survive?

The smallest of Korea’s auto manufacturers is SsangYong Motor Company (쌍용자동차, 雙龍自動車).  They have now been placed into recievership.  Their largest shareholder, Shanghai Automotive Industry Corporation has allowed them to go into recievership and will likely be trying to divest themselves of their holdings.  Most of their business takes place in Pyeongtaek, Gyeonggi-do.  If they do fold, the economy of my province, Gyeonggi-do will suffer.  But the economy of Pyeongtaek will be really hard hit, what with 90% of the people who work for SsangYong living in Pyeongtaek.  The Chinese owners seem not think that there is really any future to SsangYong.  Thus, they decided to sacrifice some 600 billion won ($437 million US) and not make any further investment in the company.

Hyundai and Kia will most probably weather the financial crisis well.  Daewoo is owned by GM and heaven only knows what will happen there.  Samsung Renault has slowed production.  They could survive if Samsung decides to continue to support them.  But I am not sure that SsangYong will survive this.  By being placed in recievership, they leave to the bankruptcy court the decision as to whether or not they can survive or whether they would best be served by being liquidated.

The economic crisis has come here and the government is getting extremely jumpy.  They arrested a blogger who posted amazingly accurate depictions of the state of the Korean economy on his blog.  He has since been arrested on the charge of spreading malicious rumours. 

Korea has truly been battered by economic storms of late.  First there was the Asian Financial Crisis of 1997 which necessitated Korea getting a hefty loan from the IMF, a crisis which negatively affected nearly every country in Asia.  The problem of economic crises is that when recovery does begin, it takes an awful long time for the results to trickle down to the general population.  Hong Kong suffered the effects if the 1997 crisis for years after.  Now they are in a recession again.  Korea has yet to declare itself in a recession, but owing to recent economic data, along with the Bank of Korea lowering the interest rates down to 2.5%, Korea will most definitely enter a recession this year.

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