As the polarization between the large- and mid-size companies has increased, the government has carried out new policies to stimulate collaboration among the large- and mid-size companies. However, the government effort have not been very effective because the parasitic collaboration, large firms’ giving benefits to small firms without getting anything in returns, cannot work in the long term.
This paper examines a case of international joint venture(POS-Austem) founded by POSCO and Austem, in which both firms achieved reciprocal benefits. By collaboration between the two firms, POSCO could expand its business to the automobile component industry and strengthen a captive market of automobile steel plate. Austem could secure a supply of high quality steel which is the most important element of the components that it produces.
POS-Austem was established in KunShan, China which offered the groundwork for the successful collaboration between POSCO and Austem. China was considered as a cheap manufacturing, and, recently, it is regarded as a potential consumer market. The findings of this paper show that China can also afford a foothold to solve domestic economic problems such as resolving polarization among firms and revitalizing insolvent enterprises.