[The Editors' Verdict] What If Korean Electric Trains Run Through the Heart of Sydney?

It is hard to find a country untouched by Chinese capital, but during a recent vacation to Sydney, Australia, I felt?perhaps with some exaggeration?that the line between China and Australia had become blurred due to China’s strong influence. I believe the special delegation dispatched by President Lee Jaemyung last week likely experienced something similar during their visit to Australia.

Didi Chuxing (Didi), China’s leading ride-sharing platform, is considered a successful company that has penetrated Australia’s vulnerable public transportation system, despite the country’s vast landmass, which ranks sixth in the world. In Sydney, having Didi’s app is essential for using taxis. Although Uber, the American company that entered the market early, still leads in terms of market share, Didi is threatening Uber’s top position through aggressive discounts and reduced platform fees. While traveling in Sydney, it was common to see drivers with two phones?one connected to Uber and the other to Didi?accepting whichever call came in first.

China has leveraged its formidable capital to penetrate various sectors of the Australian economy, particularly those with weak manufacturing and infrastructure. The fact that Chinese immigrants make up the largest portion of Asian migrants in Australia is also a driving force behind the rapid expansion of Chinese companies’ market share. The sudden appearance of commercial office buildings on previously empty land, the proliferation of mini Chinatowns with Chinese-language signs, and the rapid increase in property prices in certain areas?all these phenomena are backed by Chinese capital.

Australia is wary of the influence of Chinese capital. Recently, the Australian government has blocked some Chinese investments in critical minerals and has tightened security reviews for renewable energy and key infrastructure sectors. The government has also strengthened pre-screening of foreign investments and made mergers and acquisitions (M&A) by Chinese companies in Australia more difficult to approve. Last month, during a business meeting held in connection with Chinese Premier Li Qiang’s visit following Australian Prime Minister Anthony Albanese’s trip to China, Li expressed hope that issues faced by Chinese companies entering and investing in the Australian market would be resolved?a message aimed at easing Australia’s wariness toward China.

Can Korea take advantage of this opening? Currently, Hyundai Rotem, a Korean company making rapid inroads into the Australian market, stands at the threshold of opportunity. Hyundai Rotem is competing with China’s CRRC, France’s Alstom, and Germany’s Siemens for a bid to build a new electric train line connecting central Sydney to the western region, and it has already passed the most difficult stages of the process.

If successful, this would allow electric trains featuring Korean technology, components, and operational expertise to run through the heart of Sydney. Since winning a contract in 2016 to supply 512 double-decker electric trains for the metropolitan rail line connecting Sydney and Newcastle in New South Wales (NSW), Hyundai Rotem has accelerated its Australian business by signing a contract in 2023 to supply trains for the metropolitan rail line in Queensland, in preparation for the Brisbane Olympics.

Korea, which relies on imports for more than 95% of its mineral demand, has long regarded Australia?a country on the other side of the globe?as an important source of resources such as natural gas and iron ore, but has not made aggressive investments. This is a different approach from China, which entered the Australian market early through corporate M&A, real estate purchases, and infrastructure investments. According to a report by KOTRA, while Korea ranks fifth in goods exports to New South Wales?the region where over 30% of Australia’s population lives and which has the largest economy?its foreign direct investment (FDI) over the past five years has dropped to tenth place.

With last week’s presidential special delegation’s visit to Australia, now is the time to strengthen direct cooperation through active high-level exchanges between the two countries. As fatigue with Chinese capital grows, this is a golden opportunity for Korea to send a love call to Australia.