2. Technical cooperation with NIPPONDENSO and localization of parts

(2) Developing overseas markets beyond domestic supply

In the 1970s, POONGSUNG Electric had a plant equipped with manufacturing equipment for 525 machine tools, 182 units of metal and processing machinery & tools, and 1,243 testing machines and instruments, thereby growing into a leading enterprise with 950 employees working together.

It actively responded to the government’s localized production plan by producing its principal electrical equipment and delivering it to South Korea’s three major car manufacturers: Hyundai Motor, Asia Motors, and Kia Motors. Of these parts, the localized production rate of compact heaters for passenger cars was as high as 95%, and that of horns was about 50%. This high level of technical capability and productivity was achieved at such an early stage thanks to the consistent banding together of every member and the active promotion of the joint venture with NIPPONDENSO.

On the other hand, the average operation ratio of POONGSUNG Electric was only 60-70% due to the stagnation of the South Korean economy from 1971 to 1972, and the company suffered damage. However, a surge in Japanese automobile production in 1973 led to a rapid increase in exports of assembly parts and after-sales service parts.

Through a US $1 million, 50-50 joint venture company with NIPPONDENSO, the company improved quality and boldly developed export markets, especially to Southeast Asia, for various products. In this way, through technical cooperation via the joint venture with NIPPONDENSO, POONGSUNG Electric overcame its financial difficulties by developing overseas markets beyond domestic supply and demand and established itself as a full-fledged automobile product manufacturer. Furthermore, it made a new start as a leading manufacturer in the South Korean electrical equipment market.