Thursday will be a big day for Ssangyong Motor, as a critical board of directors’ meeting is scheduled to review Ssangyong’s 2012 performance.

More importantly, it will be the day Ssangyong’s largest shareholder Mahindra & Mahindra of India decides on whether to perform a capital increase of up to 1 trillion won ($890 million).

The capital injection, to be endowed over a period of four years once approved, is more or less symbolic: It’s chiefly about Mahindra’s commitment, or lack thereof. 

Mahindra has been both good and bad news for Korea’s littlest automaker.

The Indian parent company’s money and means is the only way Ssangyong can hope for a turnaround. On the other hand, lingering doubts about Mahindra’s integrity continue to plague Ssangyong.

The Korean Metal Workers’ Union, a powerful external union organization, for one, refuses to back down on claims that Mahindra is taking and will continue to take advantage of Ssangyong, just as its predecessor Shanghai Automotive did, fleeing with Ssangyong’s key technologies.

The union also wants a National Assembly audit to address allegations of Ssangyong’s wrongdoings during its restructuring in the past years that eventually paved the way for its partnership with Mahindra.

How many of these accusations will turn out to be authentic is anybody’s guess, but those who have done business in India believe there is real reason behind the concerns.

“Ask anyone (with such experience) if Indians trust Koreans, and vice versa. I’m sure the answer will be no,” said one industry watcher who wished to be anonymous.

Socialism, the caste system, a constant conflict between the central and district governments and racism are just some of the factors that keep Koreans away from India or Indian investors.

Another strike against Mahindra is its past record of partnering with more advanced carmakers, after which the company would recycle the technology back home in India.

Observers say it’s also quite likely that Mahindra will use Ssangyong to capitalize on growth opportunities in its homeland, as India has undertaken an ambitious project to connect its four major cities including New Delhi and Mumbai with state-of-the-art highways.

But in the end, the problem is not Mahindra, nor even whether lawmakers should carry out the controversial audit, which both Ssangyong and Mahindra oppose.

More than anything, the government’s lack of matchmaking abilities seems to be at fault.

Korea, which has long depended on global markets for survival, has foreign investment policies that are hugely advantageous to foreign investors.

The Ministry of Knowledge Economy and Invest Korea, the two key government organs deliberating on and accepting foreign capital, have simple screening procedures for foreign companies seeking entry. Essentially, the investment process is identical to that of local companies setting up companies, with the only difference being that foreign investors are required to report to the government in advance.

The approval is just as easy, evidenced by the Fair Trade Commission taking less than three months to endorse Mahindra’s investment in Ssangyong.

In comparison, it takes companies ― even some of Korea’s top corporations such as POSCO ― years to get permission to do anything in India.

Given the easy entry, it’s no doubt the local corporate sector has been plagued by such issues involving foreign investors.

Legislation to better protect the country’s backbone industries also needs to be addressed, industry observers say.

The unionized workers at Hydis, a company being compared to Ssangyong on a frequent basis that is on the verge of being stripped of its technology by parent company E Ink, deplore of the same concerns.

“We have no hope when our own government chooses to turn a blind eye to critical technology being leaked out of the country,” bemoaned one union worker of Hydis.

In the U.S., a court jury ruled in favor of Apple Inc., the maker of the phenomenal iPhones and iPods, a move interpreted by many to symbolize Americans’ sense of protectionism for its core industries.

Here, the stories are the opposite, with the popular sentiment being that one investor after another ― Lone Star, Sovereign, Shanghai Automotive and E Ink ― taking advantage of Korean companies.

The mishaps involving unqualified foreign investors can be avoided, once the government assumes the role of a more responsible matchmaker.

By Kim Ji-hyun (jemmie@heraldcorp.com)