Transforming a South Korean Engineering Company: Solving Undercapitalization with Countertrade Mechanisms

Here's What We Do Better

Background
Our client was a mid-sized engineering company based in South Korea that specialized in the design and manufacturing of industrial machinery for various industries, including automotive, consumer goods, and electronics. They faced challenges due to undercapitalization, making it difficult for them to access capital for business expansion, research and development, and other essential activities. They sought our expertise to help them overcome these challenges and transform their business operations.
Problem
The client’s undercapitalization hindered their growth and competitiveness in the global market. They needed a solution that would allow them to access capital, expand their global presence, and improve their overall financial health.
COUNTERTRADE SOLUTIONS
SOLUTION 
We implemented multiple countertrade mechanisms, including:
  1. Counter-Purchase
  2. Offsets (Direct and Indirect Offsets)
  3. Joint Ventures (JVs)
  4. Industrial Compensation
Solution #1
Counter-Purchase: We helped the client establish counterpurchase agreements with customers in different countries, enabling them to access new markets and generate additional revenue.
Solution #2
Offsets (Direct and Indirect Offsets): We facilitated offset agreements with suppliers in various countries, leading to cost reductions and investments in the client’s domestic operations.
Solution #3
Joint Ventures (JVs): We assisted the client in forming strategic joint ventures with international partners, allowing them to share resources and expertise, and access new markets.
Solution #4
Industrial Compensation: We negotiated industrial compensation agreements with foreign buyers, ensuring investments in the client’s domestic facilities and research and development projects.
Implementation
We began by conducting a thorough analysis of the client’s business operations, identifying areas where countertrade mechanisms could be applied. We then engaged with potential customers and suppliers in target markets, negotiating counterpurchase and offset agreements. Additionally, we identified strategic partners for joint ventures and negotiated terms for industrial compensation agreements.
Result
RESULT
Through the implementation of these countertrade mechanisms, the client achieved the following results:
  1. Expanded their global presence to 20 new countries within 12 months.
  2. Increased sales revenue by 150%.
  3. Established new supplier bases in 15 countries, leading to a 70% cost reduction.
  4. Secured investments totaling $10 million for research and development projects through industrial compensation agreements.
  5. Established three joint ventures, which generated an additional $5 million in revenue.
CONCLUSION
By leveraging our countertrade expertise, we helped the South Korean engineering company overcome its undercapitalization issue, improve its financial health, and expand its global presence. The use of multiple countertrade mechanisms led to significant business transformation, enabling the company to outperform its competitors and achieve its growth objectives.
What YOU CAN DO TO
ACHIEVE SIMILAR RESULTS
To overcome undercapitalization and achieve growth and success, consider implementing the following countertrade mechanisms:
  1. Counter-Purchase: Establish counterpurchase agreements with customers in different countries, enabling access to new markets and generating additional revenue.
  2. Offsets (Direct and Indirect Offsets): Facilitate offset agreements with suppliers in various countries, leading to cost reductions and investments in your domestic operations.
  3. Joint Ventures (JVs): Form strategic joint ventures with international partners, allowing you to share resources and expertise, and access new markets.
  4. Industrial Compensation: Negotiate industrial compensation agreements with foreign buyers, ensuring investments in your domestic facilities and research and development projects.
HOW WE CAN HELP YOU
ACHIEVE SIMILAR RESULTS
Our team of countertrade experts and consultants can help you achieve impressive results by:
  1. Conducting a thorough analysis of your business operations and identifying areas where countertrade mechanisms can be applied.
  2. Engaging with potential customers and suppliers in target markets, negotiating counterpurchase and offset agreements.
  3. Identifying strategic partners for joint ventures and negotiating terms for industrial compensation agreements.
  4. Providing ongoing support and guidance to ensure the smooth and successful implementation of each mechanism.
CASE STUDY SUMMARY
A South Korean engineering company transformed its business by overcoming undercapitalization and improving its financial health through the implementation of multiple countertrade mechanisms. By utilizing counterpurchase agreements, offsets, joint ventures, and industrial compensation agreements, the company expanded its global presence, increased sales revenue, reduced costs, and secured investments for research and development projects. Partnering with our team of countertrade experts and consultants, you can harness the power of countertrade mechanisms to transform your business, overcome challenges, and achieve remarkable results.
JOIN COUNTERTRADE

READ MORE CASE STUDIES