By Sunny Lee
Korea Times Correspondent
BEIJING ― The case of troubled Korean automaker Ssangyong, whose largest shareholder is Chinese carmaker Shanghai Automotive Industry Corporation (SAIC), has been drawing keen interest in China, especially after the news release about a protest in front of the Chinese Embassy in Seoul by some Ssangyong unionists.
Major Chinese newspapers including Beijing Times Global Times and International Herald Leader reported the case through their journalists in Seoul.
Overall, the Chinese media see Ssangyong's vocal and demanding worker's union as being at the center of instigating the issue.
The International Herald Leader accused the unionized workers of various unreasonable demands and drumming up the ``technology theft by a foreign company'' card to stir public opinion and sympathy and seek media attention.
Citing an anonymous industry analyst, the Beijing Times said, "The reason SAIC was unwilling to increase its investment into Ssangyong was because of the Korean government's discriminatory action against China-owned Ssangyong."
It also mentioned the growing anti-foreign sentiment in Korea, mentioning the Lone Star case ― an American private equity fund whose earlier purchase of the Korean Exchange Bank backfired.
The Global Times, an influential daily that mainly carries China-related international news, has been conducting an online survey on the matter. As of Friday morning, 63 percent of Chinese respondents chose the Korean workers' union's interference with management as the primary reason for the Ssangyong crisis; 31 percent attributed it to the global financial crisis and only 6.5 percent said it was due mismanagement by SAIC.
Susan Shirk, a well-known American expert on China affairs, once cited the Global Times as the newspaper that most well represents typical Chinese sentiment.
The paper's online article on Ssangyong has drawn 653 comments, most of them negative towards not jut the Ssangyong union but Korea in general.
One comment read: "We need to alert ourselves. Don't let Chinese capital go out to invest in such a place that is narrow-minded and prone to create problems. Don't become a person who likes Korean fashion and watches Korean dramas."
Another news outlet, Chinanews.com, said the Ssangyong case is SAIC paying its dues to expand its overseas market and cited three reasons for the current downfall, namely, the SAIC's alleged failure to correctly deal with the Korean labor union, the global auto market slump and no means of dealing with Korean nationalism.
SAIC is the second largest Chinese automaker after First Automobile Works. It is also the first Chinese manufacturer to partner with a foreign investor, forming Shanghai Volkswagen Automotive with Germany's Volkswagen Group in 1989. SAIC purchased a controlling 51 percent stake in Ssangyong for $500 million in 2004, making it China's largest investment in South Korea.
Meanwhile, an official with the South Korean Embassy in Beijing said that his office has been monitoring the Chinese Internet closely against the backdrop of the Ssangyong case. Last year, it was Chinese Internet forums and web blogs that primarily contributed to the anti-Korean sentiment.
Yang Pyung-sup, director of the Korea Institute for Industrial Economics and Trade (KIET)'s Beijing Branch, told The Korea Times the conflict has arisen because Korea and China have different interests.
``When Korea accepted the inflow of foreign capital to revive its ailing auto industry, it should have also considered a possible outflow of technology,'' he said, adding that it was also natural for SAIC to be interested in Ssangyong's technology when it decided to invest in the Korean auto company.
Industry sources say the Chinese government takes the Ssangyong matter very seriously as it considers the case critical to the survival of SAIC, which is 100 percent owned by the Shanghai government.
"After all, what was a business issue has now transformed into a political issue," Yang said.
Unfortunately, Yang said, there is no easy solution. Some worry that it may discourage future Chinese investment in Korea while others worry about a fresh round of anti-Korean sentiment in China.
Still other observers note that such conflict between two close neighbor countries with close economic ties is very common and should be dealt with in a calm manner. In fact, since the establishment of diplomatic relations in 1992, Korea and China have become dramatically closer, especially in economics and trade. But the two have had very little time to discuss how to deal with trade conflicts that might arise, they say.
"Such issues are bound to surface more as the relationship between the two nations become closer. They need to learn to get used to these types of problems and develop a common strategy to tackle them," Yang said.