Project to be fully operational by 2020
Hyosung Chairman Cho Hyun-Joon continues his global business drive, meeting with the Indian Prime Minister, Mr. Narendra Modi, just 10 days after he met with Vietnamese Prime Minister Nguyen Xuan Phuc on February 8.
On February 18, Mr. Cho reached an agreement with Mr. Modi in Mumbai to establish a spandex plant in Maharashtra by 2019. The spandex plant that Hyosung will build in India is expected to lay the foundation for making inroads into the domestic market of the country.
Mr. Cho selected India and Vietnam as the strategic bases for ‘100-year Hyosung,’ and it is forecast that he will accelerate penetration into the global market. He is planning to foster Hyosung Vietnam as the global outpost for manufacturing core products such as spandex and tire cords, bound for the European and Asian markets, and make Hyosung India as an advance guard for penetrating into the Indian market through ongoing addition and expansion.
“Hyosung started its first business foray in New Delhi in 2007, and has been operating a trading company in New Delhi since 2012. Throughout we have been expanding our business. For example, we erected the extra-high-voltage circuit breaker plant in Pune in 2016, and our annual sales eventually exceeded $300 million,” Mr. Cho said to the Prime Minister.
“India is the world’s largest textile market, and I am expecting that the size of its consumer market will grow remarkably. As Hyosung was able to build the new plant, thanks to the Indian Government’s full support, I anticipate that Hyosung and the Indian economy will flourish together.”
Mr. Modi said on the occasion: “Korea is playing a key role in the ‘Made in India’ policy that is driving the fast growth of India. I hope that Hyosung’s investment will further solidify India’s competitiveness and industrial foundation, and help facilitate a business-friendly environment so that Hyosung will continuously invest in India.”
Investing in Indian spandex market
As a result, Hyosung decided to invest $100 million for a new spandex plant in the first stage. It is planning to purchase a 120,000-pyeong (40ha) site in the AURIC industrial complex near Aurangabad, an industrial district in Maharashtra, and complete the construction of the plant by 2019. The company will continuously increase investment as market demands and growth are forecast.
As India is the world’s second-largest market with a population in excess of 1.3 billion, and possessing outstanding cutting-edge IT technology and a highly talented workforce, it is rated as an ideal location. India is an emerging economy growing by more than 7% every year, and is expected to become one of the top three economic powers in the world after China by 2030.
The textile market is also rapidly expanding. The Indian spandex market has been growing by more than 16% a year on an average from 2012 to 2017, and it is forecast that it will grow by more than 12% a year, while the market size will reach $200 million by 2020. Maharashtra where Hyosung is constructing a plant is recognized as being the core region that accounts for more than half of Indian fiber production.
Hyosung’s spandex brand ‘creora’ accounts for about 60% of the Indian market. It is focusing on the sale of spandex for Muslim wear like hijab, lingerie, sportswear, denim and diapers. In 2020, when the new plant will become fully operational, Hyosung will begin to concentrate on expanding the high-value-added premium market. Also, the company is planning to consolidate its market dominance, creating high profits by increasing its market share to 70%.
Hyosung believes that it has a high probability of success because the Indian spandex market has been a monopolistic production market where only Indian companies have been producing spandex. The company forecasts that if it capitalizes on its differentiated functions and quality, widely proven in the global market, to carry out marketing that meets the needs of Indian customers, it will realize the expected profits soon.
India also expects that the new plant of Hyosung will help related industries such as weaving, knitting, dyeing and sewing to grow and lead to an employment growth, including hiring of competent manpower and invigoration of the overall economy.
Mr. Cho also discussed the expansion of business to technical textiles, heavy industries and ATMs. He talked about the difficulties of Hyosung trying to advance into new businesses, such as carbon fiber and aramid, and asked for the Indian Government’s support, such as through deregulation.
As for heavy industries, he said that Hyosung is willing to actively participate in the bidding for Power Grid Corporation of India Ltd. (PGCIL) and that Hyosung is planning to push the ‘Made in India’ policy in the new environment-friendly transmission system sector, e.g., ESS and STATCOM.