President says conglomerates need to seek mutual growth with small firms


President Lee Myung-bak on Tuesday urged leaders of large business conglomerates to “open-mindedly discuss” with smaller companies how to seek mutual growth, a key policy goal of the Lee administration.

Lee asked Huh Chang-soo, new president of the Federation of Korean Industries, the nation’s most powerful business lobby, to visit the government agency in charge of supporting small and medium firms to hold talks with chief executives of the companies which mostly supply their products to the business giants.

“I wish the FKI chairman can visit the Small & Medium Business Administration and open-mindedly discuss (shared growth) with the presidents (of smaller companies),” Lee said during a luncheon meeting with the leaders of the country’s five major business lobbying groups.

Huh replied that he will try to set up such a meeting, according to Lee’s top aide for public relations Hong Sang-pyo.

A panel under the Ministry of Knowledge Economy for shared growth seeks to grade large businesses on how well they cooperate with subcontractors to seek mutual growth, and then offer preferential treatment to those who score high.

“I believe our society will run properly when business enterprises are positively assessed by the people. This would be possible when we develop a culture of mutual respect through shared growth between large and small companies,” Lee was quoted as saying by Hong.

“(The businesses) cannot be forced to do so by law or regulations. They should do it voluntarily. I have been consistent about this ever since I started talking about shared growth.”

Lee also urged small and medium-sized companies to gain trust by raising their competitiveness and transparency in accounting and finances.

The president went on to advise large conglomerates to take more effective approaches in their micro-credit loan programs for owners of small shops, He mentioned how retired executives of business giants sit in the loan centers to consult them.

“I hear that the micro-credit loan projects are going smoothly with active participation by large businesses, but retired executives (of big firms) may find it hard to provide realistic consulting service for small business owners,” Lee said.

Owners of large conglomerates might not like what the president and his aides have recently said.

A key advisor to Lee said last week that the National Pension Service, one of the largest institutional investors, which holds more than 5 percent of equities in 139 publicly traded companies in Korea, should more actively exercise its shareholder rights.

Kwak Seung-jun, head of the presidential council on vision and growth, noted that the NPS holds more shares of Samsung Electronics’ stock than its powerful chairman Lee Kun-hee.

Kwak said in a policy debate that the NPS, by omission, failed to prod the Samsung management out of complacency as it was doing business as usual with regard to mobile phones at a time when Apple was developing iPhones. He also criticized the NPS for failing to put the Samsung management in check and promote its transparency.

Lee Kun-hee said later that he “welcomes the idea of having shareholders publicly exercise their rights.”

Business groups including the FKI issued immediate statements of protest and objection to Kwak’s remarks, saying it was not the public funds’ role to try and improve corporate governance. Rather, they should help maximize company value, they said.

Also attending Tuesday’s luncheon with President Lee were Sohn Kyung-shik, chairman of the Korea Chamber of Commerce and Industry as well as CJ Group; SaKong Il, head of the Korea International Trade Association and former chief organizer of the Group of 20 summit in Seoul last year; Kim Ki-mun, chairman of the Korea Federation of Small and Medium Businesses; and Lee Hee-beom, president of the Korea Employers Federation and former minister of industry.

Sohn called on the government and the businesses “to understand each other better.”

“(Big) companies are doing well in some areas and may not be doing as well in other areas. If we talk about the negative side as if that explains everything, it could hurt the image of businesses. It is necessary to have an attitude to understand each other,” Sohn said.

SaKong asked the government to expand opportunities for small firms to take part in industrial exhibitions to promote their products for sales abroad, according to Hong.

It was Lee’s first official meeting with the newly elected FKI leader Tuesday.

Huh took helm of the FKI in February, seven months after his predecessor Cho Suck-rai, Hyosung Group chairman and in-law to President Lee Myung-bak, stepped down for health reasons in July last year amid a prosecution probe into allegations that his sons embezzled company money to buy property abroad.

Cho’s younger brother and chairman of Hankook Tire Co. Cho Yang-rai’s son Hyun-beom, vice president of the nation’s largest tire maker, is married to Lee’s third youngest daughter.

By Kim So-hyun (sophie@heraldcorp.com)