Iris Ohyama Inc., a maker of home appliance and household goods, has launched its first factory in South Korea, aimed at meeting growing local demand from e-commerce and hedging the risks of the U.S.-China trade row.
The company has invested about ¥7 billion ($64 million) to produce circulators, air purifiers, comforter dryers and storage items at the plant in Incheon, near Seoul, it said at an opening ceremony Friday.
Aiming to meet increasing demand from online shoppers, the plant will double as a logistics center in addition to an existing facility in Gunpo, south of the capital, according to the company.
Iris Korea Co., its local unit, has so far handled LED lighting, cleaners and rice cookers among other products imported from its plant in Dalian on the northeastern coast of China.
The new factory mainly produces circulators, which the Japanese firm has manufactured in China and exported to other countries, including the United States.
In light of the lingering trade war between Beijing and Washington, it plans to initially produce 100,000 circulators per year at the new plant, avoiding the risk of additional tariffs on the goods.
Sales of circulators in the South Korean market topped 1 million units last year, according to local media reports.
The local e-commerce market grew 22.6 percent year on year to 111 trillion won ($97.8 billion) in 2018, government statistics show. Iris Korea's logistics base in Gunpo has fallen short of capacity.
The South Korean unit, which has hired about 50 employees for the Incheon plant launch, expects to post ¥5 billion in sales for the first year of the plant, said Akihiro Oyama, president of Sendai-based Iris Ohyama.
Iris Ohyama may consider building a second plant in South Korea, and if so the location will likely be outside Incheon to enhance efficiency of goods transportation, he said.