Hyundai Elevator is in dilemma on whether to build a second plant in China. Given the country's growth potential, it must do so urgently no matter what. But its tiny market share way below the level earlier expected is making it dither in investment decision.
The company said on July 22 in a regulatory filing that it would invest 34,557 million won in its Chinese unit Shanghai Hyundai Elevator Ltd. As for the purpose of the investment, the Korean company said that it is for establishing a second Chinese plant as well as for its working capital needs.
A company official explained, "We are preparing for the capital for building the second plant whenever we can. Currently we are debating exactly when to do it." Once the company decides to build the plant, the most likely location would be Shanghai where the first plant is located.
The main reason Hyundai Elevator is trying to increase its production capacity has to do with the fact that China is by far the largest market in the world with a higher growth rate than any other markets. Last year, as many as 562,000 elevators were installed in China. This is 14 times of Korea's (34,000) and accounts for about 70 percent of the world's demand. Comparing to the figure in 2004, this is six times higher.
The problem, however, is the company's small market share of only 0.5 percent. The first Chinese plant of Hyundai Elevator sold 7,300 elevators last year. Of these, it sold 3,300 elevators in China while the remaining 4,000 selling in Southeast Asia and elsewhere.
