Jungwoo Group

More than 20 years after entering Guatemala for the first time...Vertical plant to be operated
Tariffs from Trump...A foothold in Central America's production bases 'preemptive response to demand from North Korea'


More than 20 years after entering Guatemala for the first time...Vertical plant to be operated
Tariffs from Trump...A foothold in Central America's production bases 'preemptive response to demand from North Korea'

Jungwoo Vina (Chairman Oh Byung-chul), a domestic fabric wheat and export company, is set to expand and take another leap forward in the U.S. market with the aim of completing the second plant in Guatemala. It is a reinvestment in 20 years since Jungwoo Vina's first overseas production base in 2004.

Jungwoo Bina is building a second plant with a vertical system on a 260,000㎡ site in Guatemala in the first and second stages by 2027. According to Jungwoo Bina, the first stage (~2025) is to be completed by the end of this year, and if 2.2 million pounds is added to the current 3.3 million pounds (lb) per month (factory 1), the total production capa will be 5.5 million pounds per month (about 2.494,758 kilograms/month). ▲ In addition to securing 2.2 million pounds of dyeing production capa per month, special post-processing facilities such as ▲ Raising, Peach Brush, Compact, Tumble, and Shearing will also be established.

In the second stage (~2027), if 1.7 million pounds per month is added for ▲ knitting through the establishment of knitting and dyeing facilities, a total of 7.2 million pounds per month (about 3,265,865 kg/month) ▲ dyeing will be added 1.8 million pounds per month to secure a total of 4 million pounds (about 1,814,369 kg/month) production capa. On top of that, it plans to secure 1.7 million pounds (about 771,107 kg/month) of printing capa by constructing printing facilities such as flat beds and rotary screens.

In addition, the reinvestment in Guatemala is expected to ensure the financial stability of local subsidiaries and factories by reducing rents worth hundreds of millions of won as the site was purchased directly rather than the existing factory site rental method. After the groundbreaking ceremony in July 2024, Jungwoo Vina began construction of the plant in December. As more than 90% of construction and civil engineering work is currently completed, it is expected that it will be able to operate in earnest in the fourth quarter of this year or in the first half of next year at the latest.

Chairman Oh Byung-chul said, "Currently, competition between vendors and suppliers is fierce in Vietnam due to excessive facilities that lack orders compared to production capas. In this situation, we plan to balance the two major production bases, Vietnam and Guatemala, by winning orders from buyers through the operation of the second plant in Guatemala, he said.

He also stressed, "Latin America has a small production facility compared to orders. Therefore, the place where the factory is owned has priority. Just as the so-called factory was dominant in the 1970s in the past, the same applies to Latin America. As a result, agents and venders have advantages, such as providing prices and quality services." 

Above all, Vietnam is a fierce battlefield between numerous suppliers due to overcapacity compared to orders. Moreover, Vietnam's order competition has intensified as a large number of Chinese production plants have flowed into Vietnam due to the US-China trade dispute. For example, it is like sharing a pie for an order of 100. 

In the end, Chairman Oh Byung-chul's reinvestment in Guatemala (construction of new factories) came from a strategic judgment to secure new orders by expanding insufficient facilities (expanding production capa) compared to orders.



Chairman Oh Byung-chul's 'God' amid global tariff risks

The reinvestment plan, such as the construction of Guatemala's second plant, dates back to the time when COVID-19 just began four years ago. Recalling the time, CEO Lee Bok-hwa said, "I had a lot of worries when I heard the plan to re-enter Guatemala four years ago. There are many competitive countries such as Bangladesh and India, but I wondered if Guatemala was going far away. After careful consideration, we decided that it was right to invest in Guatemala once again considering that most of the exports to the Americas were made, and we decided to push for the construction of the second plant," and added, "As a result, I think we made the most appropriate investment considering the current trend."

Chairman Oh's reinvestment in Guatemala has been a step in the arm, with Trump's tariff policies and protectionism emerging as global trade risks.

Nevertheless, the re-investment in Guatemala for the first time in 22 years has presented many challenges.

CEO Lee Bok-hwa said, "The most difficult part of the process is how to set up production to meet buyer needs in the global market, which is changing into an era of super-gap, and how to meet rapidly changing markets. In addition, the problem of manpower supply and demand at overseas production bases and steep wage increases are also acting as operational difficulties," and emphasized that the company is closely pushing ahead with plans to build the second plant in consideration of these factors.

For reference, compared to Vietnam, Guatemala's plant 1 is operating stably with more than half of the employees who have been working since the beginning. In addition, Jungwoo Vina is operating its production plants in Vietnam and Guatemala as well as Korea by applying standard manuals and operating guidelines based on ERP system data that have been accumulated for more than 20 years.

CAFTA and 10% Basic Tariffs…Minimize tariff burden 

Currently, Guatemala's Jungubina (factory 1) has a knitting production capacity of 3.3 million pounds per month. Efficient logistics targeting the North American market is possible in that it can quickly deliver to the U.S. market by taking advantage of its geographical advantage adjacent to the U.S.

In addition, while the issue of mutual tariffs from Trump has recently emerged as a major risk, it is enjoying tariff-free benefits when exporting to North American markets such as the U.S. by utilizing the China-U.S. free trade agreement, or CAFTA. Guatemala's mutual tariff rate is 10%. (90-day grace period) This is a major strength in the supply strategy targeting the North American market as it can minimize the burden of tariffs when supplying products. In addition, it is expected to act as an important factor in quickly delivering goods to the U.S. market at competitive prices.

Jungubina expects to further strengthen its responsiveness to North American demand when the entire setup of the second plant in Guatemala is completed by 2027. 

Small-scale domestic production plant...Technology-focused development response

Meanwhile, Jungwoo Vina is operating fabric production plants in Korea along with overseas production bases such as Vietnam and Guatemala. Jungwoo Textile Co., Ltd., the parent company of Jungwoo Vina, operates a multi-variety small-scale production plant (50 knitting machines) that can produce 1 million pounds per month, focusing on small-scale production and R&D of 12,500 pyeong in Namyangju, Gyeonggi Province. It is developing various materials and fabrics such as single and double, and its strength is that it can respond to technology-oriented development. 

Realizing the 'sustainability' of the core values of corporate management

Sandwashing fabric / Eco-cell fabric © TIN News

Worldwide, sustainability, which values environmental protection and social responsibility, is becoming a core value of corporate management, and companies are pursuing sustainable development through various efforts such as circularity of the production process, improvement of working environment, and energy efficiency.

Jungwoo Vina is also working to implement sustainable development in line with these global trends. ▲In order to improve working conditions and increase production sustainability, it switched from two shifts to three shifts operating system from 2023. ▲In 2024, rotary printing machines were introduced to further strengthen production efficiency.

It is also investing in R&D and process introduction for sustainable material development.

With the aim of developing sustainable materials, eco-cell, an eco-friendly dyeing process, has been introduced to introduce products that meet the needs of global buyers. In addition, it is leading the knitwear market by introducing sandwashing processing facilities. "Sandwashing fabric," which is produced through sandwashing processing, is in the spotlight as a global leisure material such as Lululemon and Victoria Secret due to its soft touch and comfortable touch on the skin.

Finally, it has been making various efforts to climb up to the goal of carbon neutrality.

The ▲ heat exchange system was introduced to increase energy efficiency and a new facility was introduced in the dyeing process at the same time, reducing water consumption by about 13%. ▲We plan to reduce power costs by completing the construction of a solar panel power generation system by the end of 2025. ▲In the case of self-operating thermal power plants, the Carbon Leadership Project is also underway to reduce carbon emissions by switching from existing charcoal fuel to biomass, and the company is accelerating its efforts to achieve its goal of net-zero carbon neutrality.

Reporter Kim Sung-joon tinnews@tinnews.co.kr