Finance, Forex and Investments

S Korean Companies Struggle from Winning Overseas Plant Construction

Summary: Competition is heating up between South Korean companies and European rivals for the shipbuilding and plant construction orders which are regarded as the South Korea s key export industries Except for Samsung Engineering Co winning one order out of six projects for building the utilities and offsite facilities for the gas development project in Shah the remaining construction orders for five projects were awarded by European companies and local companies In fact the rest went to southern European companies three projects to Italy Saipem and one to Spain s TR South Korean companies struggle with difficulties due to the falling South Korean currency Until the latter half of last year the Korean won was traded at 1 800 won against the euro but fell to 1 437 won as of May 12 The value of euro fell against the Korean won nearly 20 In such situations South Korean companies will not be able to make much profit from overseas plant construction orders It is assumed that the European companies who participated in the bid process might have offered the unexpectedly low prices in Shah Project European companies making best use of their firm network in the engineering sector they had dominated for decades are striving to enhance their influences for winning plant construction orders behind the scene Taking these circumstances into consideration Daewoo Shipbuilding Marine Engineering DSME who have accomplished the outstanding feat of winning cruise construction orders in the beginning of this year faces difficulties in finalizing the contract The contract with European ship owner expected to be finalized without delay as of the beginning of 2010 is stalled before the final contract as the pressure from the European companies intensifies The Community of European Shipyard s Association CESA released joint declaration last month that says the EU must demonstrate its ability to jointly address the challenges of the shipbuilding sector in order to protect the European shipbuilding companies South Korean companies are facing mounting critical reports from local media which depict them as cheap competitors With respect to Greek shipping company Attica Group s order of two coastal passenger ships worth $140 million approximately $217 billion placed at DSME media reports assumed that DSME was able to win the order because it suggested prices below market value They also linked the South Korean government s support to the winning of the order at the low prices Such reports started to emerge amid a rising sense of alarm against South Korean companies which with their advanced technologies continuously make inroads into the cruise ship market previously dominated by Europeans companies One of the world s major cruise ship manufacturers Aker Yards ASA currently STX Europe AS has already been taken over by STX Furthermore as Samsung Heavy Industries and DSME have set out to win cruise ship orders concerns over losing more orders have grown South Korean construction companies bring worries that they are facing similar situations Though they have initially held the upper hand in the competition for winning orders conclusions have gone back to square one or are being delayed due to pressures from European companies Relevant industries in South Korea are bothered not only by European companies but also because of their support for Chinese and Indian companies Italy s Sipem for instance is a prominent leading company which has more than $20 billion in its order backlog Therefore it is inevitable to share contracts with the company given circumstances including exchange rate effects a related source said But South Korean companies keep a close eye on situations due to an increase in cases where Europeans companies enter with consortiums formed with either Chinese companies or Indian companies As a matter of fact Spain s TR succeeded in winning a package of the UAE Saah gas project last month by establishing a consortium with India s Punj LIoyd It certainly works as an advantage to engage in low price competition with involving either Indian or Chinese companies Written by Sun gul Kim Ji yong Lee Jong wook Park Jin Choi Yoojung Lee edited by Soyoung Chung 매일경제 핫뉴스 유시민 야권 경기지사 후보로 확정 상보 박용만 회장은 `트위터` 아들은 `광고짱` 北남성 1명 서해 백령도로 귀순 서울공항 주변 40층이상 건축 가능 북한 남성 1명 백령도로 귀순 Competition is heating up between South Korean companies and European rivals for the shipbuilding and plant construction orders which are regarded as the South Korea s key export industries Except for Samsung Engineering Co winning one order out of six projects for building the utilities and offsite facilities for the gas development project in Shah the remaining construction orders for five projects were awarded by European companies and local companies In fact the rest went to southern European companies three projects to Italy Saipem and one to Spain s TR South Korean companies struggle with difficulties due to the falling South Korean currency Until the latter half of last year the Korean won was traded at 1 800 won against the euro but fell to 1 437 won as of May 12 The value of euro fell against the Korean won nearly 20 In such situations South Korean companies will not be able to make much profit from overseas plant construction orders It is assumed that the European companies who participated in the bid process might have offered the unexpectedly low prices in Shah Project European companies making best use of their firm network in the engineering sector they had dominated for decades are striving to enhance their influences for winning plant construction orders behind the scene Taking these circumstances into consideration Daewoo Shipbuilding Marine Engineering DSME who have accomplished the outstanding feat of winning cruise construction orders in the beginning of this year faces difficulties in finalizing the contract The contract with European ship owner expected to be finalized without delay as of the beginning of 2010 is stalled before the final contract as the pressure from the European companies intensifies The Community of European Shipyard s Association CESA released joint declaration last month that says the EU must demonstrate its ability to jointly address the challenges of the shipbuilding sector in order to protect the European shipbuilding companies South Korean companies are facing mounting critical reports from local media which depict them as cheap competitors With respect to Greek shipping company Attica Group s order of two coastal passenger ships worth $140 million approximately $217 billion placed at DSME media reports assumed that DSME was able to win the order because it suggested prices below market value They also linked the South Korean government s support to the winning of the order at the low prices Such reports started to emerge amid a rising sense of alarm against South Korean companies which with their advanced technologies continuously make inroads into the cruise ship market previously dominated by Europeans companies One of the world s major cruise ship manufacturers Aker Yards ASA currently STX Europe AS has already been taken over by STX Furthermore as Samsung Heavy Industries and DSME have set out to win cruise ship orders concerns over losing more orders have grown South Korean construction companies bring worries that they are facing similar situations Though they have initially held the upper hand in the competition for winning orders conclusions have gone back to square one or are being delayed due to pressures from European companies Relevant industries in South Korea are bothered not only by European companies but also because of their support for Chinese and Indian companies Italy s Sipem for instance is a prominent leading company which has more than $20 billion in its order backlog Therefore it is inevitable to share contracts with the company given circumstances including exchange rate effects a related source said But South Korean companies keep a close eye on situations due to an increase in cases where Europeans companies enter with consortiums formed with either Chinese companies or Indian companies As a matter of fact Spain s TR succeeded in winning a package of the UAE Saah gas project last month by establishing a consortium with India s Punj LIoyd It certainly works as an advantage to engage in low price competition with involving either Indian or Chinese companies Written by Sun gul Kim Ji yong Lee Jong wook Park Jin Choi Yoojung Lee edited by Soyoung Chung 매일경제 핫뉴스 유시민 야권 경기지사 후보로 확정 상보 박용만 회장은 `트위터` 아들은 `광고짱` 北남성 1명 서해 백령도로 귀순 서울공항 주변 40층이상 건축 가능 북한 남성 1명 백령도로 귀순

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