An emergency meeting with President Moon Jae-in was arranged on Wednesday with chiefs of the country’s major businesses to seek short- and long-term solutions to the problem of import-dependent manufacturing chains here, but it also appeared to have placed a burden on firms caught in the diplomatic crossfire between South Korea and Japan. Some industry observers raised concerns that it could send the “wrong signal,” instigating Tokyo to take additional restrictive measures.
At the meeting with Moon, the business leaders agreed on the Seoul government’s plan to take various steps and vowed to work closely with related ministries to strengthen domestic supply chains and reduce reliance on foreign materials, Cheong Wa Dae said.
“(Business leaders) also stressed the need to diversify supply chains, especially (those that depend) on a specific country, and to expand cooperation with Russia and Germany in the field of chemical components,” said presidential spokesperson Ko Min-jung. “They also addressed the need to review mergers and acquisitions (of companies producing core industrial materials) as a short-term strategy (to deal with the case).”
Attending chiefs reportedly voiced their concerns, with many commenting that they hoped to see a diplomatic resolution. Some were also quoted as saying that arbitrarily expanding transactions with smaller companies could be another form of regulation against them. There reportedly were also voices calling for a stronger government role, as protracted export restrictions would weigh upon the firms and ultimately on investment and employment.
The roundtable session held at Cheong Wa Dae was the latest and highest-level in a series of rendezvous between top government officials and conglomerate leaders to discuss countermeasures over Japan’s retaliatory measures. The Tokyo government said last week it would restrict exports of three materials crucial for chip fabrication in Korea, in an apparent protest against a local court’s ruling against a Japanese steelmaker, ordering it to compensate victims of forced labor during World War II.
President Moon Jae-in (left) shakes hand with SK Group Chairman Chey Tae-won before a group meeting with 30 South Korean conglomerates to discuss Japan’s export restrictions. (Yonhap)
Some experts praised Moon, saying he was on the right track in supporting companies as they face challenges that go beyond their corporate capacities. But others said the president might be hosting the rare meeting as a way of diverting public criticism that he has prioritized the repair of South Korea’s relations with North Korea over economic issues.
With Moon lashing out at Japan for creating an “unprecedented emergency” for South Korea’s industries, executives at leading conglomerates involved in chip manufacturing were asked to share their views.
However, raising their voices at such a high-profile session could send the wrong message, some industry insiders said.
“It’s always risky for a company to be involved in between governments,” said a company official who asked to not to be named. “But also, you can’t say no to an invitation from Cheong Wa Dae.”
Moon’s suggestion for businesses to take the lead in creating a new industrial environment and to build domestic supply chains would also not be easy to accept, publicly, they added.
“There’s not much to talk about especially in front of other business leaders, no more than that the company will seek a long-term plan and contribute in creating an ecosystem to reduce reliance on foreign products,” said an industry official.
“It is also difficult to say that one business will cooperate with another specific one, as (doing so) could be seen as collusion,” he said. Two South Korean chip giants -- Samsung Electronics and SK hynix -- produce a combined 70 percent of memory chips, which are crucial for technological devices.
To the hurriedly arranged meeting, Moon invited leaders of 30 conglomerates that hold assets of more than 10 trillion won ($8.46 billion). The list of chaebol leaders included SK Chairman Chey Tae-won, Hyundai Motor Executive Vice Chairman Chung Euisun and LG Chairman Koo Kwang-mo. Vice Chairman Lee Jae-yong of Samsung Electronics, the world’s largest memory chipmaker, and Chairman Shin Dong-bin of Lotte Group, which has deep ties with Japan, were absent from the meeting, citing business trips to Tokyo.
By Cho Chung-un (firstname.lastname@example.org)