Injecting an Additional 100 Billion KRW
Complete Withdrawal from Chinese Operations Planned
Operating Losses of 93.5 Billion KRW Over the Past Three Years
Taekwang Industrial has decided to completely halt operations at its spandex production plant in China and withdraw from the business, marking 20 years since its entry into the Chinese market. This decision aims to break away from a deficit structure, as the company has recorded operating losses totaling 93.5 billion KRW over the past three years due to global oversupply and weak demand.
On July 31, Taekwang Industrial announced that its board of directors, which convened the previous day, resolved to cease operations at its overseas subsidiary, Taekwang Huasheng (Shangshu). All production plants will be shut down in August, and sales activities to liquidate inventory will be completed by October.
Additionally, by the end of the year, the company plans to finish collecting accounts receivable and terminating employment contracts with staff. Currently, Taekwang Huasheng (Shangshu) employs 502 people.
On the same day, the board of directors also approved a paid-in capital increase of 100 billion KRW to facilitate the withdrawal from the Chinese subsidiary. The funds will be used to repay loans accumulated due to deficits and for operating capital.
A Taekwang Industrial representative stated, "The decision to withdraw the local plant in China is intended to prevent further accumulation of losses and to strengthen the competitiveness of our core business. Based on this decision, we will enhance management efficiency and accelerate the search for new growth engines."
Taekwang Industrial was the first company in Korea to commercialize spandex in 1979. Under the leadership of former chairman Lee Hojin, the company established its Chinese subsidiary in 2003 and began commercial production in 2005, establishing an overseas spandex production base. From its establishment until last year, Taekwang Huasheng (Shangshu) posted cumulative sales of 2.6143 trillion KRW and cumulative operating losses of 68.6 billion KRW. Notably, operating losses over the past three years reached 93.5 billion KRW, and a deficit of 7.2 billion KRW was recorded in the first quarter of this year.
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