Hyundai Acquisition of DSME Problematic Due To Trade War

Hyundai Heavy Industries Ship Sailing

The Japanese government may soon put Hyundai’s acquisition of Daewoo Shipbuilding & Marine Engineering (DSME) under a microscope due to the growing tension between the two nations.

Daewoo Shipbuilding & Marine Engineering (DSME) and Hyundai Heavy Industries are two of the largest shipbuilders worldwide. Their status makes the merger highly scrutinized due to its possible effects on the maritime industry worldwide. Although Japan has not yet released its statement on the merger, Hyundai seems to want to take the safe path going forward. Hyundai Heavy Industries has reportedly delayed their application for an antitrust review with Japan’s Fair Trade Commission.

Besides Japan, Hyundai also plans to apply for reviews from antitrust authorities from the European Union, Korea, China, and Kazakhstan. Antitrust reviews are subject to rulings by countries that the acquisition will affect. Failure to apply for such judgments may put the company into a disadvantageous position when dealing and negotiating with shippers and vessel buyers.

Hyundai’s spokesperson said, “We have been in negotiations with antitrust officials at the EU over the timeframe for the application since April, but have yet to start talks with the Japanese authorities.”

Japan’s shipbuilding industry has been historically dissimilar with that of South Korea’s. Japan focuses on bulk carries, while South Korea is more on LNG and container vessels. Reports, however, show that the latter may be taking steps to get the upper hand over the other.

Japan has recently filed a complaint questioning the subsidy the World Trade Organization has provided DSME. A move that may challenges Korea shipbuilding industry as the state-run financial institution.

Officials in Japan have likewise expressed their discontent with the merger.

“The birth of this overwhelming shipbuilding group is a threat,” said Tamotsu Saito, chairman of the Shipbuilders’ Association of Japan. “The antitrust regulators of each country will not just idly watch this,” he continued.

During a separate press conference, Saito also asked for the Japanese government’s intervention on the merger. According to him, “national efforts are required to protect the nation’s shipbuilders.”

The current South Korea-Japan trade war has been gaining steam during the past few weeks. Japan has recently pushed through with its threat to remove South Korea from its “whitelist” of trusted trade partners.  Analysts expect the move to escalate the feud between the two countries even more.

Featured image grabbed from Hyundai Heavy Industries website.

About KoreaTechToday Editor

KOREATECH TODAY, A NEWS PLATFORM FOR KOREAN TECH WITH A FOCUS ON INDUSTRY NEWS AND PROMISING PROJECTS.

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