South Korean mid-sized automakers are increasingly dependent on China. The use of Chinese technology in new car development is growing, along with an expansion of capital influence. Concerns are being raised about the weakening of independent research and development capabilities.
According to a report released on August 9 by the Financial Supervisory Service, Renault Korea's purchases of vehicles, parts, and technology from China's Geely Group amounted to 952.7 billion won last year, an 82% increase from the previous year. Most of this was spent on vehicles and parts, totaling 901.9 billion won. KGM is reported to have paid 84 million dollars (approximately 120 billion won) to China's Chery Group this year.
The increase in transactions with Chinese companies is attributed to the growing use of platforms and parts in the new car development process. Renault Korea has applied Geely's modular vehicle platform (CMA) to its flagship crossover, the 'Philante,' following its use in the mid-size SUV 'Grand Koleos' released this year. KGM is also utilizing Chery's platform to develop the next-generation mid-size plug-in hybrid SUV 'SE10.'
As the domestic market shrinks, automakers are reaching out to China. Last year, the combined domestic sales of Renault Korea, KGM, and GM Korea totaled 107,607 units, accounting for just 6.4% of the overall market. This is a significant decline from 304,309 units in 2015, representing a third of the market in a decade.
With the automotive market shifting towards electrification and software-defined vehicles (SDVs), the investment burden for new car development has increased. For mid-sized automakers with relatively limited investment capacity, partnering with Chinese companies that have already secured electrification technology and large supply chains has become a practical option.
Collaboration with Chinese firms is expanding beyond technology to include capital relationships. Geely acquired a 34.02% stake in Renault Korea in 2022, becoming its second-largest shareholder. Chery has also purchased 75 million dollars (approximately 110 billion won) in convertible bonds issued by KGM. If these bonds are fully converted into shares, Chery will hold a 16.22% stake in KGM, making it the second-largest shareholder.
Industry experts express concern that if this collaborative structure becomes entrenched over the long term, it could weaken independent technological competitiveness. There are also worries that expanding influence as shareholders could reduce domestic production facilities to mere contract manufacturing bases for Chinese companies.
Kim Pil-soo, a professor at Daelim University’s Future Mobility Department, cautioned, "Even if products are labeled 'Made in Korea,' there is a risk that the structure may effectively turn into a role as an agent for Chinese companies."
* This article has been translated by AI.
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