하나은행 하나금융연구소

In 2011, China embarked on the 12th five-year plan with a focus on improving living standards and promoting balanced development.

● The key points that may relevant to industries at home and abroad are: i)wage increase, ii) rise in domestic consumption, iii) accelerated development of the mid-western region, and iv) advanced industrial structure based on growth of seven strategic industries.

● Under the plan, China shifts its course from export-oriented economy to domestic demand-driven growth, and is expected to see its domestic consumer goods industry including distribution, clothing, and food and beverages to expand, boosted by rising income and growing consumer spending.

● In addition, the policy to advance its industrial structure will subject steel, shipbuilding, and other major industries with excess supply to restructuring, and spur the growth of new driving engines including seven strategic industries under the initiative of the government.

With growth of the Chinese domestic demand, Korean automobile and chemical businesses are expected to benefit among others.

● Boosted by rising demand and auto subsidies, Hyundai Motors Group is likely to enjoy more production and higher revenue, with its part manufacturing partners experiencing continued growth as well.

● As such, there should be corporate finance business opportunities targeting Korean part manufacturers which have established a stable sales channel in the Chinese market and are in need of facility investment for expansion.

● Also, major Korean chemical companies whose business largely consists of exports to China are expected to benefit from the growing consumption in China, and there are corporate finance opportunities as well, aiming at companies trying to win competitiveness via vertical integration.

However, the domestic industries may be negatively affected by more competitive steel products of China and expected excess supply in the shipbuilding industry.

● With Chinese steel makers growing more competitive after restructuring, Korean companies have been suffering owing to fierce competition and falling prices in a steel plate business where they have long enjoyed comparative advantage.

● As excess supply is expected to continue for a while in the global shipbuilding industry, especially in China, small to middle-sized shipbuilders of Korea are likely to steadily go through a bout of restructuring, which should raise the need of conservative credit policy for financial institutions.