Seoul, South Korea – South Korean chemical giant OCI has decided to dissolve and liquidate its Chinese subsidiary, Shandong OCI Jianyang Carbon Black Co., Ltd. (OJCB), citing persistent losses amid a sluggish domestic economy in China. The decision was finalized during a shareholder meeting held in January, according to industry sources on March 11th.
OCI established OJCB in 2016 as a joint venture with Shandong Energy Zao Kuang Group, a Chinese state-owned enterprise. The factory, located in Shandong Province, covered an area of 130,000 square meters and boasted an annual production capacity of 80,000 tons of carbon black, primarily supplying Chinese tire manufacturers.
The move to dissolve OJCB reflects the increasing pressure on profitability due to weakened domestic demand and broader economic challenges within China. Carbon black, a key component in tire production and other industrial applications, is highly sensitive to economic fluctuations.
The decision to shut down OJCB underscores the challenges faced by foreign companies operating in China’s increasingly competitive market, commented an industry analyst familiar with the situation. The economic slowdown, coupled with rising operational costs, has made it difficult for some ventures to maintain profitability.
OJCB primarily served the Chinese domestic market, and sources indicate that its closure is expected to have a limited impact on OCI’s overall carbon black business in South Korea. The company’s decision is seen as a strategic move to streamline operations and focus on more profitable ventures.
This development highlights the evolving dynamics of the South Korean-Chinese economic relationship, as companies on both sides navigate a changing global landscape. While China remains a crucial market for many South Korean businesses, factors such as increased competition, regulatory hurdles, and economic uncertainty are prompting some to reassess their investment strategies.
OCI has not yet released an official statement regarding the liquidation process or its future plans for the Chinese market. Further details are expected to emerge in the coming weeks.
References:
- Yonhap News Agency. (2024, March 11). 韩企OCI在华炭黑公司因亏损解散停业 [Korean Company OCI Closes Carbon Black Company in China Due to Losses]. Retrieved from [Insert URL if available, otherwise omit]
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