Dongbu Daewoo Electronics Corp., South Korea’s home electronics company that has been under financial burden was awarded trade finance worth $20 million from state-owned Export-Import Bank of Korea (Korea Eximbank), a move that is expected to expedite the company’s exports.

According to finance industry sources on Sunday, Korea Eximbank decided to provide $20 million to finance trading of Dongbu Daewoo Electronics. The company will receive $10 million won for export transactions to Iran and another $10 million for running Tianjin manufacturing plant in China. The bank plans to provide additional financing for the electronics maker to aid its market penetration effort into the United States market through its manufacturing plant in Mexico.

During the past three years, Dongbu Daewoo Electronics had not received any new trade financing from local banks although the company heavily relies on exports with its overseas shipments comprising 80 percent of its total sales. Instead of lending, most local Korean financial institutions have refused to extend debts.

Dongbu Daewoo Electronics even lost a trade opportunity because it failed to obtain financial support in purchasing materials for production. Also, the company experienced trouble meeting delivery deadlines as it could not procure raw materials for making refrigerators and washing machines due to a reduction in the limit on the letter of credit. The electronics maker often lagged behind in price competition because of additional cost incurred in the course of urgently using export insurance for prompt delivery of goods.

“The support from Korea Exmibank is a great help, and the company is now able to expedite exports to Iran and Mexico,” said Ji Hyung-kyu, finance team senior vice president at Dongbu Daewoo Electronics.

By Song Sung-hoon

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