Taekwang Industrial has completely suspended operations at its spandex production plant in China and is withdrawing from the market. This comes 20 years after entering China. The decision is due to global oversupply and weak demand, which have led to an operating loss of 93.5 billion won over the past three years.
Taekwang Industrial held a board meeting on the 30th and announced on the 31st that it resolved to suspend operations at its overseas subsidiary, Taekwang Chemical Fiber (Sang-Sook). All production plants will cease operations next month, and sales activities for inventory will be completed in October. They plan to finish recovering accounts receivable and terminating contracts with employees by the end of the year. Currently, 502 employees work at Taekwang Chemical Fiber.
The board of directors of Taekwang Industrial also resolved to conduct a capital increase of 100 billion won to facilitate the withdrawal of its Chinese subsidiary. The funds will be used to repay borrowing funds and for operating capital, among other things.
A representative from Taekwang Industrial noted, "The decision to withdraw from the local factory in China is a measure to prevent additional accumulated losses and strengthen the competitiveness of our core business," adding, "Based on this decision, we will improve management efficiency and accelerate the discovery of new growth drivers."
Taekwang Industrial is the first corporation in Korea to successfully commercialize spandex in 1979. It established a Chinese subsidiary in 2003 and began commercial production in 2005, creating an overseas production base for spandex.
Taekwang Chemical Fiber recorded a cumulative revenue of 2.6143 trillion won and a cumulative operating loss of 68.6 billion won up until last year since its establishment. Notably, its operating loss reached 93.5 billion won over the past three years, and it also recorded a loss of 7.2 billion won in the first quarter of this year.