Government: "Financial, manpower, and R&D support for domestic replacement production of Chinese car parts"

7th 'New Coronavirus Response Economic Ministers Meeting' Held
Joint Ministry Emergency Support Plan for Automobile Industry Announced
Monitoring System Established...Agreed to Address Industry Difficulties

Sung Yun-mo, Minister of Trade, Industry and Energy. Photo by Hyunmin Kim kimhyun81@

[Asia Economy Reporter Kim Bo-kyung] As the spread of the novel coronavirus infection (Wuhan pneumonia) has caused an emergency in the supply of Chinese-made auto parts, the government has decided to support the funds, manpower, and research and development (R&D) necessary for domestic alternative production. In addition, it plans to support 24-hour customs clearance when importing parts produced in China and minimize import inspection procedures.

On the morning of the 7th, the government held an "Economic Ministers' Meeting on Novel Coronavirus Response" and jointly announced emergency support measures for the Korean automobile industry struggling due to the novel coronavirus.

Negotiations to Restart Chinese Factories... Comprehensive Support for Domestic Alternative Production

First, the government decided to accelerate consultations with the Chinese government to restart local parts factories in China. It plans to use all channels, including the Embassy in China, finished car manufacturers, and KOTRA, to negotiate with local Chinese governments. Through consulates in major regions such as Yantai, Qingdao, Weifang, Hada, and Qufu in Shandong Province, it plans to specify negotiations for factory restarts.

In preparation for the resumption of Chinese parts production, the government will minimize the time required for parts supply. A "logistics difficulty support system" will be activated between local factories, diplomatic missions, and KOTRA to support rapid logistics and customs clearance. When importing parts produced in China into Korea, 24-hour customs clearance will be supported, and document submission and inspection screening during import inspections will be minimized.

Parts alternatively produced at third-country parts factories outside China, such as in Vietnam, Cambodia, and the Philippines, will also be quickly imported.

The government will also provide funds and manpower support for domestic alternative production. It plans to promptly support the funds required for facility investments such as new or expanded factories and new equipment for alternative production of auto parts, and prioritize management stabilization funds for companies experiencing liquidity crises due to sharp sales declines.

If working hours exceeding 52 hours per week become unavoidable due to the rapid increase in domestic production to replace Chinese parts, special extended work hours will be promptly authorized. Additionally, if redevelopment is necessary for domestic alternative production of Chinese-made parts, short-term R&D support of about one year will be provided.

Additional employment will be supported for parts companies needing manpower through the "Automobile Retired Personnel Reemployment Program." For reemployment training of retired automobile personnel, 2 million KRW per person will be supported, and for hiring, labor costs of 22.5 million KRW per person annually will be provided.

[Image source=Yonhap News]

Seong Yun-mo: "Resolving Uncertainty... Preparing for Possible Prolonged Situation"

Seong Yun-mo, Minister of Trade, Industry and Energy, stated, "In this emergency situation where the public's concern and anxiety are high due to the recent novel coronavirus, we will take all necessary measures to minimize negative impacts on the industrial and economic sectors."

He added, "Through these measures, we will promptly resolve the short-term uncertainty in auto parts supply and normalize automobile production. We will also thoroughly prepare for the possibility of a prolonged situation."

The Ministry of Trade, Industry and Energy plans to establish an on-site monitoring system together with 13 local governments and 23 specialized support organizations including research institutes. They will check the on-site implementation status of these measures and continuously respond to the field difficulties of the automobile industry.

Meanwhile, China is a major trading partner accounting for 29.2% of Korea's total auto parts imports. Last year, out of Korea's total auto parts imports of 5.34 billion USD, imports from China amounted to 1.56 billion USD.

Korea relies on China mainly for labor-intensive auto parts such as wiring harnesses, steering devices (steering wheels), and airbags. Accordingly, the recent production stoppage of Chinese auto parts companies has affected production cuts at domestic finished car companies such as Hyundai Motor and SsangYong Motor.

This content was produced with the assistance of AI translation services.