SK Group active in biz development around Chinese border areas

At a new town development zone southwest of Dandong in China`s Liaoning Province June 17, the building of a structural framework was in full swing in front of a 10-lane road. This was the construction site for Shincheong Complex 1 built by Networks China Holdings, a Chinese unit of Korea`s SK Group.

Chung Hae-joon, a member of Networks, said construction work continued even on Sundays.

Comprising eight apartment buildings and one office building, the complex is about 60 percent complete. A view from the top of one apartment building under construction clearly showed that it was right at the center of the new town.

Just two blocks away to the south, North Korea`s Hwanggumpyong area is visible across the Yalu River. The North and China agreed to jointly develop the area and held a groundbreaking ceremony last year.

"There is the potential that this area could grow as rapidly as Macau," an SK source said.

China`s strategy is to conduct massive development projects in border areas such as China Western Development and Mekong Basin Development to promote underdeveloped regions while putting neighboring countries under its influence at the same time. The development of the Dandong new town can be said to be guaranteed to a certain extent, even without the North Korea factor.

"We began to sell Shincheong Complex 1 late last year and have received good reactions from investors, as we have investment inquiries even from Beijing," Chung said. "We`re also seeking to win a project to develop the 220,000-square-meter Shincheng Complex 2."

A bonded logistics center right next to Complex 1 shows what kind of picture SK is drawing in Dandong. No other major Korean companies are doing business in that region.

The center, which was built by SK Networks and began operations in January, is the lone facility in Dandong that has warehouses for both imports and exports. Even on a Sunday, employees of a Chinese company were checking clothes imported from North Korea at an import warehouse.

Apparel and electronics companies in China`s three northeastern provinces of Liaoning, Jilin and Heilungjiang commission labor to North Korea to capitalize on the cheap labor there. The finished clothes are exported to Europe.

In 2010, SK Networks opened SK Bus Terminal, a 24-story complex for transportation, shopping and residence, in Shenyang. This was the first time a foreign company took on a public project there. The terminal is handles about 30 percent of inter-city bus transportation in the region.

"The Shenyang SK Bus Terminal and the Dandong bonded logistics center mean that SK has laid the groundwork for doing consumer goods and logistics businesses in Shenyang and Dandong, the hub cities of the three northeastern provinces," an SK source said. "They will help (Korean companies) advance into the Chinese market."

SK Group Chairman Chey Tae-won said in a speech at the completion ceremony for the bonded logistics center late last year, "SK should approach its China business from a long-term perspective rather than seeking short-term profits." He also proposed sharing profits with local communities.

The conglomerate will also develop another logistics center on 83,000 square meters of land in Dandong.

tesomiom@donga.com