Delicensed Chinese steelmaker exploits a loophole to export rebar in Korea

Delicensed Chinese steelmaker exploits a loophole to export rebar in Korea. August. 16, 2016 06:48. by 김성규기자 sunggyu@donga.com.

It has been reported that a Chinese steel company, whose KS (Korean Industrial Standard) license revoked for defective products, has obtained a new license handed over from other Chinese steel company and has been exporting reinforcement steel in Korea. It is an exploitation of the loophole in the Industrial Standardization Act of Korea that allows the transfer of KS licenses. The news is drawing a much-heated attention as there is no legal means to ban the practice.

According to the Korean Standards Association (KSA) and the steel industry in Korea reported on Monday, some 4000-5000 tons of reinforcement steel has been imported to Korea through the port of Incheon on Aug. 4 from Taigang Stainless Steel and Xinchangda Steel & Iron, the two Chinese steel companies based in Hebei Province. Given that it takes about 5 tons of rebar to complete the construction of a 99 m²-apartment building in Korea, the volume in question is enough to build 800 to 1,000 apartment buildings.

The issue stems from the fact that Taigang had it KS license revoked in October last year. Defects were found in March last year during a KSA inspection, and Taigang received a license cancellation notice in early July last year. The findings were further inspected for about four months, and Taigang had its KS license revoked conclusively on Oct. 14, 2015.

Under the current law, a company whose KS licensing has been cancelled cannot apply for a new license for the next one year. Taigang steel, however, put a KS mark on its products that was imported in Korea, and it was possible as Taigang acquired a steel business with a KS license from Xinchangda Steel & Iron, another Chinese steelmaker licensed with the Korean Standard, thereby getting a KS license handed over from the company. Xinchangda’s KS license on its steel business was taken over by Taigang on the same day of acquisition.

As a rule, a company that has been handed over with a KS license must go through a license screening process by the KSA within three months after handover. If screening finds the products to be defective, the license can be cancelled. "As far as the products manufactured before the screening starts are concerned, even the association has no particular means to intervene," the KSA admitted. Taigang has yet to apply for a license screening.