vlad.tribnet.com / Issue #156 / Business / Reading article...

Vladivostok’s business community buzzed recently when press sources reported that representatives from the Hyundai Group visited two factories in Arseniev to consider building an automobile plant in Primorye.

The rumors, however, are false. Though Hyundai has toyed with the idea, it has no plans to establish any venture to produce cars in Primorye.

“It’s all talk, and it all would be a very long way off,” said Korean Consul General En-Sam Choi.

Local press were confused, apparently, by a visit Hyundai scientists paid to the Progress and Askold factories in Arseniev. According to Hyundai’s Vladivostok Office General Manager Jong-Chan Lee, the trip was a response to local invitations designed at enhancing ties with the Hyundai group, whose knowledge of advanced technologies is useful to their Russian counterparts.

“They just discussed general ideas to find out if there were any opportunities for collaboration,” Lee said.

Press may also have been confused by the letters Lee periodically receives proposing automobile factory joint ventures. “We’ve received such proposals two or three times, and we hand the material over to the main office,” Lee said. “But the head office’s response has been very negative.”

“There was talk about a car factory,” said Gennady Nesov, Chairman of the Krai Shipping, Seaports, Communications and Transportation Committee. “But [the Koreans] require such advantages for themselves that for us, it’s not worth doing it.”

The possibility of a Hyundai-run auto plant in Primorye seemed like the next logical step for the business group that had just sunk $98 million into a western-style hotel that it doesn’t expect to make a profit on for more than ten years.

But even though Hyundai representatives agree that Russia will experience a car boom within the next decade, they think a plant is simply not feasible, considering financial climates in Korea and Russia. The Korean economy is in a slump, and only when the peninsula is unified, giving Seoul access to Russia by land, will further high-cost investment projects become possible, Lee said.

In addition, Lee noted that Japan has a stranglehold on the Primorye car market. Quality second-hand Japanese cars here cost approximately $3,000 to 4,000, whereas a new Hyundai car would cost as much as $8,000.

Lee did say that Hyundai is working closely with the krai on a number of other projects. “We have a good relationship with the krai government, and Hyundai has a keen interest in the territory,” Lee said. As to the nature of the projects, he would only say, “We are working with the krai regarding the power supply here.”