Chosun Ilbo: Pohang to Sell Its Loss-Making Chinese Factory to a Chinese Enterprise
Chosun Ilbo reported on July 10 that the South Korean Pohang Group has decided to sell its sole steel plant in China, "Zhangjiagang Pohang Stainless Steel (PZSS)", for about 40 billion won (approximately 2.1 billion yuan) to the Chinese steel enterprise Tsingshan Group, and is currently finalizing the deal. PZSS was established in 1997 and was once called "the small Pohang of China" and considered a successful case of overseas expansion. However, with the oversupply of steel from Chinese enterprises and increasingly fierce low-price competition, PZSS suffered years of losses and eventually decided to withdraw.
PZSS is a joint venture established by Pohang Group in Jiangsu Province, China in 1997, to produce stainless steel. In the late 1990s, low-cost Chinese stainless steel flooded the South Korean market. As a response measure and to capture the Chinese domestic market, Pohang decided to enter China. Pohang partnered with Chinese steel company Shagang Group to build a steel plant with an annual production capacity of 1.1 million tons, more than half of South Korea's total annual stainless steel production (2 million tons). Pohang Group holds approximately 82.5% of the shares.
From the mid-2000s, PZSS continuously made hundreds of billions of won in profit annually and was considered a successful case of overseas expansion. In 2024, its sales were approximately 3 trillion won (about 15.6 billion yuan). However, due to the Chinese government's efforts to achieve self-reliance in steel, there was an oversupply, which directly hit PZSS. The current stainless steel capacity in China is about 30 million tons, higher than consumption (about 24 million tons). Recently, PZSS has been suffering losses of over 100 billion won (about 500 million yuan) for several consecutive years, leading to the decision to withdraw from the business.
The buyer, Tsingshan Group, is the top stainless steel enterprise in China and also the world's largest nickel producer. Industry experts said that the situation of overcapacity in China continues, and Pohang Group is accelerating its business restructuring, and other loss-making overseas subsidiaries are expected to be sold as well. Pohang has 38 overseas subsidiaries, and those located in countries such as Argentina and Turkey have seen continued deterioration in profitability and have been in continuous losses for several years.
Original: https://www.toutiao.com/article/1837268772581386/
Statement: This article represents the views of the author.