Taekwang Industrial has made the final decision to completely halt operations of its Chinese subsidiary, Taekwang Synthetic Fiber (Suzhou), and withdraw from business in China after 20 years of presence. This drastic measure was taken due to global oversupply and weak demand, which resulted in operating losses of 93.5 billion won over the past three years.

Taekwang Industrial announced on July 31 that its board of directors held a meeting on July 30 and resolved to cease operations of Taekwang Synthetic Fiber (Suzhou). The company plans to halt all production at its factories in August and conclude sales activities for inventory disposal by October. Currently, 502 employees work at Taekwang Synthetic Fiber, and the company aims to complete the collection of accounts receivable and terminate employee contracts by the end of the year.

The board of directors also resolved to raise 100 billion won through a rights offering to facilitate the withdrawal from China. The funds will be used to repay loans due to accumulated deficits and for operating capital. A Taekwang Industrial official stated, “The decision to withdraw from China is a measure to prevent further accumulation of losses and strengthen the competitiveness of our core businesses,” adding, “Based on this decision, we will improve management efficiency and accelerate the discovery of new growth engines.”

Taekwang Industrial was the first in Korea to successfully commercialize spandex in 1979. In 2003, when former Chairman Lee Ho-jin was serving as the representative, the company established its Chinese subsidiary and began commercial production in 2005, securing an overseas spandex production base.

Taekwang Synthetic Fiber has been producing 27,000 tons of spandex annually. Since its establishment until last year, it recorded cumulative sales of 2.6143 trillion won and cumulative operating losses of 68.6 billion won. Recently, operating losses reached 93.5 billion won over the past three years, and in the first quarter of this year, it recorded a loss of 7.2 billion won, falling into a state of complete capital impairment with negative total equity.

Source: BUSINESSKOREA