"The quality of the steel is very good, very high, and the price was good."
Ko Ju Yung, Daewoo Prague on VSŽ deal
After seeing their car sales more than double in the first quarter of 1996 - to 2,713 units, accounting for a 17 percent market share - the South Korean auto maker Daewoo is convinced of Slovakia's promising economic potential. Their success coincided with the October 1995 drop of custom duties and import taxes on new vehicles with an engine capacity of 1500 cc or less.
The tariffs are expected to go into effect at the beginning of 1997, so Daewoo executives are looking into building an auto factory in Slovakia. This would give it the same advantages against import duties that Škoda and VW enjoy as they both produce domestically.
"We are looking to invest more in Slovakia," said Chun Keong Jun, Daewoo's director of Slovak operations. "We would seek to form a joint venture with an existing Slovak company or we might want to build our own factory. We are currently exploring our options."
The are not only interested in the production and sale of cars. "We are thinking about entering the Slovak market in banking and leasing," said Ko Ju Yung president of operations in Prague.
For the present, Daewoo is satisfied to just purchase Slovak products. On July 11, Ko met with VSŽ Košice executives in Bratislava to arrange a deal giving the auto maker 300,000 tons of steel at $460 per ton. They plan on sourcing the steel from Slovakia to their FSO auto factory in Poland and their Rodae factory in Romania. "The quality of the steel is very good, very high, and the price was good," said Ko. The steel is to be distributed over a three year period after which Daewoo hopes to buy, more according to Chun.
Another deal
The Ministry of Economy is also pushing for a deal that would see Daewoo make a purchase from Matador Puchov. "Daewoo wants to buy 100 million tires from Matador Púchov," said Jozef Šucha, the spokesman for the Ministry of Economy.
Ko met with Milan Rosina from Matador Púchov also on July 11, but no specific numbers were discussed. "We are interested in 500,000 to 1 million tires, but it depends on price," said Ko. Jozef Lackovič of Matador, who also deals Daewoo cars in Bratislava and Púchov, said that Daewoo will agree to have Matador as their tire supplier. "They [Daewoo] are making nice cars and we [Matador] are making nice tires. So that should go together very well," said Lackovič.
The coming weeks promise to be busy. The two companies are expected to make a deal soon according to Lackovič. Daewoo representatives are planning to visit the factory in Púchov while Matador managers might make a trip to South Korea. Chun also has scheduled meetings with the Ministry of Privatization and the Ministry of Economy to discuss his company's plans.
"The Slovak economy is quite promising," said Ko. "The country has a good balance of trade and cheap man-power while technology and know-how are quite strong. We see good possibilites for cooperation in Slovakia."
