Overseas Affiliates of Top 10 Conglomerates Double in 10 Years... Hanwha > Samsung > Hyundai Motor > SK Order

[Analysis and Graphic by Heejin Lim]

[Asia Economy Reporter Park So-yeon] The number of overseas affiliates of the top 10 conglomerates has nearly doubled compared to 10 years ago. The number of overseas affiliates surged as mergers and acquisitions (M&A) for discovering future growth engines and the expansion of renewable energy businesses such as solar power extended offshore. As global investments expanded, companies with numerous affiliates in tax havens like the Cayman Islands also stood out.

According to the Financial Supervisory Service's electronic disclosure system on the 1st, the number of overseas affiliates of the top 10 conglomerates was counted at 2,697 as of the end of 2020. This is an increase of 1,355 (101%) compared to the end of 2010, 10 years ago.

The conglomerate with the largest increase in overseas affiliates is Hanwha Group. It had 70 affiliates at the end of 2010, but increased by 377 (538.6%) to 447 at the end of 2020.

Hanwha Group, which is focusing on expanding renewable energy businesses such as hydrogen, wind power, and solar power as future growth engines, is expanding M&A of renewable energy-related companies through its major affiliate Hanwha Solutions.

Last year, it acquired the U.S.-based solar power-related software company 'Jelly' and merged with the U.S. hydrogen tank-related company 'Cimarron' in the same year.

The number of overseas affiliates also increased the most in the U.S., reaching 155 as of the end of 2020, an increase of 119 compared to the end of 2010. Among these, 110 companies are engaged in the solar power business.

The region with the second-largest increase is Spain. There were no affiliates in 2010, but as of the end of 2020, there were 61 affiliates. Forty-six of these companies are 'EPC (Engineering, Procurement, and Construction)' construction companies.

In Turkey, there were no affiliates at the end of 2010, but as of the end of 2020, there are 43 affiliates, all engaged in the solar power business.

The conglomerate with the second-largest increase in overseas affiliates is Samsung Group. It had 319 affiliates at the end of 2010, but increased by 275 (86.2%) to 594 as of the end of 2020.

Over 10 years, 50 affiliates were added in Canada, totaling 53, and 40 were added in the U.S., totaling 77. In the U.K., 25 affiliates were added, totaling 40.

Among these, most of the Canadian local subsidiaries, which increased from 3 to 53 over 10 years, are Samsung C&T affiliates engaged in renewable energy development such as wind and solar power.

Samsung C&T is expanding its solar power development business in North America based on its success in renewable energy projects centered in Canada, while also exploring entry into new markets such as Southeast Asia.

[Analysis and Graphic by Heejin Lim]

The third-largest increase in overseas affiliates was by Hyundai Motor Group, with 379 overseas affiliates as of the end of 2020, an increase of 214 from 165 in 2010.

Overseas affiliates increased by 42 in the U.S. and 37 in China (including Hong Kong). In the U.S., where the increase was the largest, financial companies related to automobile installment financing (including insurance companies) increased significantly. The number of Hyundai Motor financial affiliates in the U.S. rose from 1 at the end of 2010 to 22 at the end of 2020.

An industry insider said, "Hyundai Motor Group plans to invest $7.4 billion (KRW 8.1417 trillion) in the U.S. market over the next five years to locally produce electric vehicles, indicating that its focus on the U.S. market will further increase."

The conglomerate with the fourth-largest increase in overseas affiliates is SK Group. It had 163 affiliates at the end of 2010, but increased by 204 to 367 as of the end of 2020.

The number of affiliates in China (including Hong Kong) increased the most, by 70, totaling 135 as of the end of 2020. The U.S. saw an increase of 51 affiliates, totaling 78 as of the end of 2020.

One notable point is that the number of affiliates in the Cayman Islands, a representative tax haven, increased by 21 from 2010 to 26.

The top 10 domestic conglomerates have 32 affiliates in the Cayman Islands, of which SK holds 26, accounting for 81%. This is related to SK Inc., an investment holding company, leading aggressive investments across the board. The Cayman Islands is advantageous in terms of taxes and exchange rates for global M&A and strategic investments.

An industry insider explained, "This is a measure considering the location of the acquired company, joint investments, and ease of company establishment procedures."

Following this, the 5th largest increase in overseas affiliates among the top 10 groups was LG, which increased by 130 over 10 years; 6th was GS (69), 7th Lotte (68), 8th Shinsegae (8), 9th POSCO (7), and 10th Hyundai Heavy Industries (3).

Looking at the top 10 groups overall, the countries with the most overseas affiliates were China (including Hong Kong) and the U.S. China had the highest total number of overseas affiliates, while the U.S. showed a remarkable increase.

As of 2020, there were 517 overseas affiliates in China, an increase of 97 (23.1%) from 2010. The U.S. had 496 overseas affiliates as of 2020, a remarkable increase of 313 (171%) from 183 in 2010.

Meanwhile, as of 2020, Samsung Group was the only conglomerate with overseas sales exceeding KRW 200 trillion. Hyundai Motor, LG, and SK followed with overseas sales exceeding KRW 60 trillion. LG, ranked 4th in the business world, had nearly KRW 6 trillion more in overseas sales than SK, ranked 3rd. Additionally, POSCO, Hyundai Heavy Industries, GS, and Hanwha each earned over KRW 10 trillion overseas.

▲SK Group Cayman Islands-based affiliates shareholding structure (as of the end of 2020)
[Analysis and graphic by Hee-jin Lim]

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