South Korea’s industry minister indicated on Monday that the government could interfere with the potential sale of Kumho Tire to smaller Chinese rival Doublestar Tyre if it deems risks in leak in technology and dent in the country’s industrial competitiveness should the country’s second largest tire maker fall under a Chinese company.

“It is entirely up to creditors on what they do with their controlling stake,” Paik Un-gyu, minister of trade, industry and energy, told lawmakers on Monday during a parliamentary questioning.

But the sale is not a simple business deal as it should also consider the repercussions on the regional economy, national competiveness and the defense industry, he said.

“We are looking into how much technologies of Kumho Tire fall under the category of state confidentiality and what impact the sale to a Chinese company could have on defense supplies,” he said.

Kumho Tire provides tires for Korean army vehicles.

Lawmakers demanded the government to interfere as the domestic tire industry could weaken if a major maker goes under a Chinese counterpart which currently is smaller in global scale.

China’s Doublestar, a preferred bidder to buy Kumho Tire, recently demanded creditors to cut the acquisition price by 16.2 percent from 955 billion won ($851.9 million) to 800 billion won, citing operating losses.

Creditors are reportedly ready to enter renegotiations under the new terms.

If creditors decide to accept the demand and adjust the sales price of Kumho Tire, Kumho Asiana Group Chairman Park Sam-koo will be given the opportunity to buy back ownership in the tire company as he would regain right of first refusal.

The sale to Doublestar also has been heavily protested by employees, parts suppliers, and residents of Jeolla Province, home to Kumho Tire’s local manufacturing base and supporting base for the ruling Democratic Party.

By Kim Ki-chul and Ko Jae-man

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]