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| A woman enters the Chinese Visa Application Service Center in Seoul, Jan. 11. Newsis |
Daesang's plan to buy Chinese food group hits snag
By Park Jae-hyuk
Korean companies have begun to suffer setbacks in their businesses in China as a result of Beijing's refusal to issue short-term visas for Korean travelers, according to industry officials, Monday.
Small- and medium-sized exporters here are feared to face further declines in their sales in China due to difficulties sending their employees there to talk to clients. And some Korean firms have been unable to complete major deals with their Chinese counterparts.
When the Chinese government took the retaliatory measure last Tuesday after the Korean government's decision to tighten quarantine measures against travelers from China, industry officials had initially expected the visa issuance ban to have a limited impact on Korean firms.
The Korea Federation of SMEs said last week that most companies have been using social media and teleconferencing to contact their clients during the pandemic.
However, nearly half of 30 small- and medium-sized enterprises in Korea, which had planned to attend the Dental South China International Expo in Guangzhou next month, cancelled their trips, because the abrupt visa ban prevents companies without subsidiaries or offices in China from participating in the event.
"If the Chinese government continues refusing to issue short-term visas for Koreans, it could be difficult for Korean manufacturers to maintain their facilities there and exporters to sign contracts with Chinese buyers in person," said Chang Sang-sik, head of industrial analysis at the Korea International Trade Association (KITA).
In response, the Korean government took emergency measures to minimize damage to exporters.
The Ministry of Trade, Industry and Energy convened a meeting of export promotion agencies and business associations last Friday to listen to difficulties facing companies and discuss possible solutions.
The ministry said both KITA and the Korea Trade-Investment Promotion Agency (KOTRA) will utilize each of their networks to support domestic companies hit by China's travel restriction.
"Given that China is Korea's largest trading partner, the government will make every effort for Korean firms to engage in business without difficulties," Deputy Minister for Trade and Investment Moon Dong-min said.
Korean companies that were supposed to finalize deals in China also fell victim to Beijing's abrupt measure.
Daesang said in a regulatory filing last Friday that it remains uncertain whether it would be able to complete the acquisition of a 32.87-percent stake in Heilongjiang Chengfu Food Group for 26.5 billion won ($21 million).
The Korean firm signed the contract in August 2021 to produce amino acids for feed additives in China, but the acquisition was delayed several times due to China's lockdown measures.
Last month, Daesang postponed the deadline for the acquisition once again to Jan. 13, reportedly asking the seller to improve Chengfu's manufacturing facilities and financial structure. However, the visa issuance ban made it difficult for Daesang to conduct an on-site due diligence to check whether the seller had fulfilled the request.
"As of Jan. 13, it is difficult for us to check whether the seller has fulfilled our requests," Daesang said in its regulatory filing.
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