Local CEO of French company says wind and tidal energy look promising for Korea


Multinational companies often face challenges when doing business in foreign countries. For Alstom Korea, one of the ways to overcome these problems is to pursue strategic partnerships.

“Local manufacturers tend to have a monopolistic grip (in the power and transport industries) and they don’t have any real challenges ... so the key to growth for Alstom here is strategic partnering with local companies,” said Barry Howe, the president of Alstom Korea, in an interview in Seoul with The Korea Herald.

As the local branch of the French power and transport company, Alstom Korea has been doing business in the Korea since the 1960s, when the first domestic power plants and trains were installed and put into operation, according to Howe.

But while the company’s customers in the past have tended to be state-run businesses like the Korea Electric Power Corp., or KEPCO, regional utilities, and KORAIL, more private companies are now entering the market, and their entrance has been changing the market conditions somewhat, Howe said.

One such example is in the local power industry, he said.

“The dominant power provider is of course KEPCO ... (but) private sector players (such as the Dongbu Group) ... (may) be providers for the future,” Howe said.

For these companies, Alstom Korea designs, manufactures, supplies and maintains equipment. The firm imports parts from other manufacturing plants around the world, because there are currently no processing plants in Korea nor are there plans to build any in the near future, according to the British business executive. 

But even with the entrance of private companies, for private “engineer, procure, and construct,” or EPC projects, domestic players still hold more sway, due to an underlying “strong national preference,” Howe said.

While acknowledging that “Korean companies have mastered many of the technologies necessary to meet the (unique domestic) market needs,” Howe said that foreign firms still have a lot to offer.

“Big global players like Alstom, with their history and their significant research and development spending, often remain at the forefront in selected technologies,” he said.

But foreign companies do not enjoy a level playing field in the transportation and power markets in Korea, Howe said.

A presidential decree dating back to the early 2000s, Howe said, prevents foreign companies like Alstom from bidding in public sector projects, despite its strength and professional qualifications.

“They don’t say to (foreign companies) ... ‘you can’t bid,’ but what they do say is ‘you can bid, but it’s at your risk, because we cannot guarantee that you’ll be evaluated fairly,’” he said.

So as a European train builder, Alstom is not assured fair treatment, and their bids can be rejected without good reason, Howe said.

Howe said this is unfortunate, because the Alstom Group commands a significant market share in its business sectors, with operations in over 100 countries around the world.

“We’ve been in the business a long time. Broadly speaking, one in every four metrocars in the world is made by Alstom. ... If you look at the total power capacity in the world, one quarter of it uses Alstom technology,” he said.

But Alstom Korea has found ways to circumvent this problem.

While under current market regulations foreign firms are prevented from being the main project leaders for public sector projects, they can still partner up with public as well as private companies in order to lend their expertise, he said.

“For transmission ... we are currently involved in a big project for KEPCO, to build a sub-sea cable from Jindo (South Jeolla Province) to Jeju Island,” Howe said.

The project will help distribute power between the mainland and Jeju.

Meeting Korea’s growing energy and electricity needs is something all companies, regardless of whether they are public or private players, are interested in, he said.

“It’s well known that there is a very limited reserve capacity here in Korea, so there’s a drive to install more capacity ... and there’s also a drive to install more power efficiency,” Howe said.

According to Howe, Korea still relies heavily on fossil fuels to produce electricity, which becomes problematic because it has to import up to 97 percent of these fuels.

So Korean companies are increasingly looking for “green” or sustainable solutions to meet their customers’ energy needs.

Alstom Korea can help these domestic companies in their pursuit of sustainable energy solutions.

From his perspective, wind and tidal energy look especially promising for Korea.

“Alstom is a global leader in green growth. And we are (always) looking for partners to develop these new ideas. So why not Korean partners?” Howe asked.

By Renee Park  (renee@heraldcorp.com)