T3EX Global Holdings Plans Stake Purchase Deal in Korean Freight Forwarder LOGI in Q3
T3EX Global Holdings Corp. announced that it plans to take a 30 percent stake in LOGI International Co., Ltd., a South Korean provider of air and sea freight services, through a cash injection.
South Korea has signed free-trade agreements (FTAs) with 50 countries around the world, including the US and EU and ASEAN nations. Following the conclusion of an FTA with China on June 1st, 2015, South Korea took the number two position in the size of its FTA economic territory.
China is the biggest trade partner and exporting destination of South Korea, which is the third-largest trade partner of China. In 2014, bilateral trade between the two countries totaled US$235.3 billion. The signing of the trade treaty meant the mechanism for the construction of a China-Korea free trade zone came into being. Slated for launch in the end of 2015 or early 2016, the free trade zone will be the largest and most comprehensive economic zone by trade volume and type of trade set up by China enabling innovative services for cross-border e-commerce and local economic cooperation.
The new FTA signals an ending of trade barriers between China and South Korea, with the latter expecting bilateral trade to exceed US$300bn and resulting in an additional 1 percent point to the country's GDP over the next decade.
Through investing in LOGI, T3EX Global Holdings seeks to take advantage of the favorable logistics policies and increasing two-way freight traffic that come along with the China-Korea FTA, while at the same time enhancing the group's operational network in the ASEAN-plus-three bloc.
South Korea's economy is dominated by mid-and-large conglomerates whose footprints span across the world. In light of the language and cultural barriers for accessing the South Korean market, T3EX Global Holdings regards forming a strategic alliance with LOGI as an efficient approach to tackle the challenges and capture cross-border business opportunities at South Korean firms.
Recent years have seen increased migration of manufacturing facilities of South Korean firms to Southeast Asia. Samsung Electronics, for example, has unveiled plans to build a display module factory in Vietnam and opened a new cell-phone facility in Indonesia. This is expected to unlock the growth potential of logistics and freight transportation between Korea and Southeast Asian countries. Post the conclusion of the stake acquisition, T3EX Global Holdings will leverage LOGI as part of its business platform in Northeast Asia and combine it with T3EX's outreach in Southeast Asia, to provide sea and air freight service between the two regions. Moreover, the company also aims to further consolidate its vast operation network in Greater China to tap opportunities created by the bilateral FTA, in addition to exploring cross-border logistics business opportunities by leveraging third-party resources from Europe and the US.
Of the ASEAN-plus-three countries, T3EX has built up operations in eight countries - China, Japan, South Korea, Thailand, Singapore, Vietnam, Cambodia and Indonesia. With its network in Northeast Asia being close to completion, the company is set to explore investing opportunities in Malaysia, Myanmar and the Philippines to facilitate the execution of its strategic roadmap in ASEAN plus three.
