Korean auto parts firms follow global automakers to pull back from China

SEOUL, December 02 (AJP) - South Korean auto parts suppliers are taking steps to restructure their supply chains as global automakers scale back operations in China.

The rapid shift toward electric vehicles (EVs) in the Chinese market and rising export costs triggered by tariffs are pushing companies to seek new manufacturing bases.

According to industry officials, wheel-bearing producer A Corp. earlier this year relocated part of its Jiangsu, China, plant to Gyeongju in southeastern South Korea. Wheel bearings — critical components for EVs and increasingly for humanoid robots — are viewed as essential to next-generation mobility technologies.

A Corp., which entered China in 2003, has supplied major global brands including Hyundai, Kia, GM, Ford, Mercedes-Benz, BMW and BYD. But orders plunged after the 2017 THAAD dispute and the rapid electrification of China’s auto market, prompting the company to sell half of its factories.

“Orders from Hyundai, Kia and other global automakers have dropped sharply, and we’re now operating only two production lines,” an A Corp. official said. “Local Chinese suppliers have also become far more competitive.”

Facing similar pressures, Korean components makers weighing downsizing or exiting China are increasingly targeting emerging markets such as Vietnam, Indonesia, India and Mexico.

Key Hyundai suppliers — including Seoyon E-Hwa, Sungwoo Hitech and Daewon Industrial — are already shifting operations abroad.

“As Hyundai struggles to keep pace with China’s electrification, its suppliers have lost competitiveness,” a parts industry insider said. “The move toward EVs, autonomous driving and smart vehicles is eroding the advantage Korean firms built around internal combustion engine technologies.”

The withdrawal of global automakers from China is adding to the urgency. General Motors has instructed suppliers to reduce dependence on Chinese parts and materials, with some told to eliminate them entirely by 2027. Tesla is also aiming to remove Chinese components from U.S. production by the same year, urging suppliers to relocate to Vietnam or Mexico.

Lim Yoon-ho, a researcher at the Korea International Trade Association, said the transition may open opportunities for Korean firms.

“Despite China’s booming EV market, Korean suppliers have had limited participation,” he said. “Relocating production bases amid intensifying trade disputes could create new openings. Suppliers should explore new supply chains, move into future vehicle components and consider joint ventures or contract manufacturing.”

* This article, published by Aju Business Daily, was translated by AI and edited by AJP.

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