Posted on : Oct.22,2018 17:27 KST Modified on : Oct.24,2018 10:06 KST

Incheon Mayor Park Nam-chun (center) with GM Korea President poses for a commemorative photograph Kaher Kazem (second from right) after agreeing to cooperate on increasing Chevrolet sales on Sept. 7. (provided by the City of Incheon)

City provided land in free 30-year lease in hopes of attracting foreign investment

In reaction to GM Korea’s plan to split off its R&D operations into a separate company, the city of Incheon has decided to consider a plan to reclaim the land used for the Cheongna test driving site.

“The city of Incheon provided the land to GM Korea out of the expectation that the company would dedicate itself to developing Incheon’s automobile industry, creating jobs and stabilizing employment, but many people are worried about its current creation of a separate company. I have instructed the relevant department to carry out a legal review of reclaiming the test driving site that we provided to GM Korea,” Incheon mayor Park Nam-chun wrote in a Facebook post on Oct. 21.

GM Korea’s test driving site covers 410,000m2 in the Cheongna neighborhood of Incheon’s Seo District on land that the city lent to GM Daewoo in 2004 on a free 30-year lease with the possibility of a 20-year extension. There was some controversy about favoritism at the time of the lease, but Incheon explained that it was providing GM these shocking incentives with the hope that the test driving site would help attract foreign investors to Cheongna International City.

GM Korea’s test driving site

On Oct. 19, GM Korea held an extraordinary meeting of shareholders during which it passed a motion to establish a separate R&D corporation tentatively called the GM Korea Technical Center. GM Korea asserts that the spinoff is necessary to increase its competitiveness and upgrade its status and to expand the GM home office’s global operations for product development.

But GM Korea’s labor union and its second-largest shareholder, the Korea Development Bank (KDB), are opposed to the corporate split, which they say could be the next step in GM’s plan to eventually withdraw from the Korean market altogether, which would reduce the company’s manufacturing facilities and lead to additional workforce restructuring.

“The decision to split the company is completely invalid because the KDB, the second-largest shareholder, was unable to participate,” said the union, which has threatened to go on strike, while the KDB also says “there were procedural issues with the stockholders’ meeting” and has promised legal action. 

Members of the GM Korea labor union enter the company’s headquarter building in Bupyeong, Incheon, after hearing of a general shareholders’ meeting to pass a motion to establish a separate R&D corporation on Oct. 19. (Yonhap News)

By Park Kyung-man, North Gyeonggi correspondent

Please direct comments or questions to [english@hani.co.kr]

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