Kumho Tire Co., a major tyre-maker of the Republic of Korea, and China's First Automobile Works (FAW), the country's largest auto-maker, signed a 150 million-dollar pact for cooperation in tyre production at the ongoing first China Jilin Northeast Asia Investment and Trade Expo.

This event marks that the FAW will possess the ability to produce high quality sedan car tyres.

Some famous auto-makers such as the FAW, Hyundai-Kia and GM Daewoo attended the Sino-ROK auto parts procurement negotiation meeting, held during the expo to seek auto parts suppliers.

More and more signs show that China's auto parts manufacturers are winning accumulating favor from ROK's car manufacturing industry.

With limited resources and high labor cost, Korean auto-makers are carrying out global procurement. The ROK has a great demand for auto parts, said Kim So-Rim, executive director of Korea Automobile Manufacturers Association (KAMA).

Statistics from KAMA show that auto parts imports by the ROK reached about 2.8 billion dollars in 2004. The ROK is expected to produce more than 3.7 million cars in 2005.

The low price and high quality of China's auto parts will greatly increase the chance for cooperation between Korean auto-makers and Chinese auto parts makers, Kim said.

As two neighboring countries, convenient transportation and short distance between each other also help boost bilateral procurement cooperation.

The ROK's auto industry mainly locates in coastal areas which are quite near to many Chinese ports. It takes only 15 to 18 hours for shipping between Incheon of the ROK and some north China ports. Such a short distance definitely adds an advantage for procurement cooperation, Kim said.

China has a great number of auto parts makers that produce vast varieties of auto parts. In Jilin Province alone, where the FAW headquarters are located, there are more than 200 auto parts makers that can produce over 2,700 types of auto parts.

The ROK is China's fourth largest trade partner and export market in 2004, if the EU and ASEAN are excluded. The ROK's import volume of Chinese auto parts has been soaring in recent years. The business volume between the two countries' auto industries reached 2.3 billion dollars in 2004, according to statistics from KAMA.

The Koreans believe that there is still much room for bilateral auto trade. As head of the ROK procurement delegation, Kim said that the negotiation is a great opportunity for Korean auto-makers to look for competitive Chinese auto parts suppliers, and for Chinese companies to expand its auto parts export.

Experts from both countries suggest that Chinese auto parts makers pay greater attention to the ROK market. The provincial government of Jilin has already decided to expand and strengthen the local auto parts industry, and the ROK will be targeted as a major market, said Bai Xugui, an official in charge of the development of auto industry in Jilin Province.

(Xinhua News Agency September 6, 2005)