GE Unit Joins South Korea Exodus
By JEONGJIN LIM
June 28, 2006; Page C4
GE Consumer Finance, a unit of General Electric Co., agreed to sell its consumer-finance business to Hyundai Capital Services, in a move underscoring the difficulties faced by foreign companies operating in South Korea's competitive retail market.
GE Consumer Finance and Hyundai Capital declined to reveal financial terms for the deal.
Hyundai Capital, a unit of South Korea's No. 1 auto maker Hyundai Motor Co., is the country's largest auto-financing concern, with a market share of more than 66% at the end of 2005. Its assets totaled around 10 trillion won ($10.4 billion.)
"The transfer to Hyundai Capital Services streamlines GE Consumer Finance's presence in the market," said GE Consumer Finance, which also holds a stake in Hyundai Capital. A Hyundai Capital spokeswoman said the deal should bolster the company's growth.
GE Consumer Finance becomes the third major global company to retreat from South Korea's retail market in less than a year, after French retailer Carrefour SA and U.S.-based Wal-Mart Stores Inc., the world's No. 1 retailer, announced plans to exit this year.
Analysts said GE Capital has been struggling because of competition from Korean banks and credit-card companies.
"The Korean retail finance market is not that easy for foreign firms to penetrate into," said Kim Jin-Sang, senior financial analyst at Nomura Securities.
GE Consumer Finance's move comes two years after it entered a strategic alliance with Hyundai Capital, by buying a 38% stake in Hyundai Capital for 431.7 billion won. At that time, GE Consumer agreed to an option to buy an additional 5% stake by the end of 2006.
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