South Korea’s chaebol groups are expected to take a more cautious approach toward hiring and spending as they brace for rough times ahead amid widespread fears of an economic downturn.
Samsung Group held a rare CEO meeting on Monday, almost five years since a weekly meeting of top executives across affiliates was suspended following the dissolution of the Future Strategy Office, also dubbed as the group’s control tower, in 2017.
According to Samsung, a total of 25 CEOs of key affiliates, including Samsung Electronics, Samsung Display and Samsung SDI, convened to address growth uncertainties in the global economy.
The meeting comes after the group’s de facto leader, Samsung Electronics Vice Chairman Lee Jae-yong, returned home Saturday after a two-week business trip to Europe.
Upon arrival, he pinpointed “technology” and “talent” as key to tackling current challenges.
“We have run into a series of disruptions, twists and uncertainties in the market, and what I think I am tasked with is to nurture a flexible work environment in order for employees to adapt to a predictable shift,” Lee told reporters at the airport.
“And what else counts. First, technology. Second, technology, And third, technology. We will push ourselves harder.”
Also on Monday’s meeting agenda was a range of topics from the global business sentiment to future growth drivers to corporate culture. The Samsung chief didn’t attend the meeting.
A Samsung global strategy meeting slated for Tuesday will further the discussion.
SK Group, the nation’s No. 2 conglomerate, also held an extended management meeting on Friday, during which the group’s top brass discussed ways to further elevate corporate value.
“We should not focus on our present business models or business sectors. We should act more aggressively to go beyond that,” SK Group Chairman Chey Tae-won said during the meeting.
Hyundai Motor Group plans to hold a global strategy meeting next month in which it will convene business chiefs of its global operations, with its push for electric mobility and chip shortages topping the agenda. The meeting will be held in person for the first time in two years.
LG Group has also held a series of strategy meetings across affiliates, with Chairman Koo Kwang-mo presiding over the meetings. The meetings were held annually at the end of the year in 2020 and 2021, but the meetings will likely be held in the first half to review businesses.
Experts cautioned of corporate belt-tightening ahead amid fears of further rate hikes, a falling stock market and mounting concerns of an economic slowdown.
“A sizeable restructuring seems unavoidable,” said Kim Jung-sik, professor of international money and finance at Yonsei University, considering many of the nation’s businesses are dependent heavily on exports.
“Companies need to tighten their belts. In particular, exports to China are shrinking. They need to offset losses in China by diversifying export destinations.”
Lee Phil-sang, a visiting professor of financial economics at Seoul National University, however, cautioned against too much tightening on spending.
“Crisis can become opportunity. Despite growing uncertainties, companies that continue to invest at a time of crisis would outpace rivals when the economy recovers,” he said. “Companies need to come up with long-term investment plans for future growth.”
By Lee Ji-yoon and Son Ji-hyoung