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| 2020-12-23(코리아타임스) |
By Kim Hyun-bin
The year 2020 was full of uncertainties in the industrial and financial world. The COVID-19 pandemic has played its role forcing firms to swiftly digitize as well as other environmental factors that pushed companies to initiate green policies.
Listed below is The Korea Times' top 10 ranking of major trends and some positive changes that occurred this year.
1. 'Donghak ants movement'
Top of the list is the Donghak ants movement.
Seven out of 10 Korean office workers were found to be "Donghak ants." Donghak ant, a new Korean term, refers to an individual investor who actively purchases stocks when stock prices plummet as has been the case with COVID-19 wreaking havoc on stock markets worldwide.
Donghak derives from the 19th-century peasant revolution that fought against foreign invasions and has been applied to this year's stock market as ordinary investors defended domestic stocks after foreign investors pulled back and left the local stock market highly volatile.
However, due to the Donghak ants' help, the KOSPI recovered quickly and has been renewing its record highs, now on the verge of exceeding the 3,000 mark. In March, Individual investors bought over 11.18 trillion won worth of stocks when the KOSPI dropped to 1,457, its lowest point of the year. Through the Donghak ant movement the KOSPI swiftly recovered over 90 percent since then.
Experts say it would have been difficult for the market to recover swiftly without the help of the Donghak ants.
In the beginning of the year, the total investors deposit stood at 30 trillion won but that has exceeded 60 trillion won in the coming months. In addition, over 5.6 million new accounts have been opened taking the total to 35 million, a new record high.
In the past, the local stock market relied heavily on foreign investments but now individual investors have risen to stand as one of the main pillars of the local stock market.
2. Contactless
People worldwide have been forced to adjust to new ways of working and studying in response to the COVID-19 pandemic. This has created a new normal, even in Korea where there are over a thousand new cases being reported each day.
The pandemic has resulted in plunging consumer demand, while disrupting supply chains in many industries, particularly manufacturing. In the short term, these factors will force companies to spend less money on information technology.
But in the long term, companies will respond by accelerating their use of digital tools to adjust to the changing situation.
Contactless technology has already been established in many consumer sectors, such as the use of remote payment systems. There has been an increase of this technology into other areas, particularly in working environments.
There were concerns that remote working systems were not effective. But the world is now in a unique situation, forcing people to adapt to the system.
The coronavirus spread has also transformed marketing activities, leading companies to adopt contactless promotion strategies.
The increasing adoption of contactless technology can also be seen in education as the government has introduced online classes to maintain social distancing.
3. Green New Deal
On July 14, President Moon Jae-in formally announced the Green New Deal which aims to speed up the transition to an eco-friendly, low-carbon-emission economy.?The government is aiming to attract 73.4 trillion won of private investment into its Green New Deal, covering around 46 percent of the total 160 trillion won that is planned for the initiative by 2025. It expects to create 655,000 jobs.
Renewable energy will take up nearly 42 percent of South Korea's power generation capacity by 2034,
Just to name a few, Doosan Heavy Industries & Construction, Korea's largest power plant builder, aims to boost its annual sales from its offshore wind farm business to over 1 trillion won ($830 billion) by 2025.
Korea Hydro & Nuclear Power (KHNP) signed a memorandum of understanding (MOU) with OW Offshore, a Spanish marine wind power company, and Kumyang Industrial Development, a new and renewable energy company in Ulsan, to establish an offshore wind power generation farm.
More Korean firms also plan to join the RE100 campaign, with the goal to run their companies on 100 percent renewable energy, including KEPCO, LG Chem and several SK Group affiliates.
4. Real estate policy failures
The Moon Jae-in administration has rolled out 24 rounds of measures in efforts to cool down the real estate frenzy, including a tax hike, tighter lending rules and regulations.
However, the measures are deemed a total failure as prices of both homes and rentals have continued to surge in the Seoul metropolitan area, home to nearly half of the nation's 51.6 million population.
The average apartment price has soared 58 percent since Moon Jae-in took office just three years back, which is a 4.5-fold increase compared to the previous nine years under the two preceding conservative governments, according to data released by Citizens' Coalition for Economic Justice.
Apartment prices in Seoul have posted the largest growth even compared to those from other mega-cities such as New York, Paris, London, Munich and Tokyo.
5. Digital transformation
COVID-19 has drastically accelerated the global digital transformation of companies, pushing them to seek digital innovation through technology like hybrid computing and AI.
In the course of this year, tech companies such as Naver, Kakao and NCSOFT have become among the country's top 15 companies by market capitalization.
While South Korean companies have so far focused on VR and AR, the government hopes to develop the technologies to accelerate digital transformation of industries as part of its Digital New Deal program that aims to spend 58.2 trillion won in key tech industries to create 900,000 jobs by 2025.
Businesses in almost all sectors from finance and distribution to entertainment are seeking digital innovation. Big data accumulated by credit card companies is also being used to help contain the disease by tracking the movements of confirmed patients.
6. Carbon neutrality by 2050
The Moon Jae-in administration has announced measures to fight climate change through its "carbon neutrality by 2050" measures aimed to drastically offset carbon emissions. Following the announcement, major Korean conglomerates in carbon-intensive industries are increasing investments in hydrogen across sectors to cut their greenhouse gas emissions and capture new business opportunities. Korea relies heavily on fossil fuels especially in manufacturing, steelmaking and the petrochemical sectors traditionally known for their high carbon emissions.
The country also plans to accelerate the reduction of reliance on coal and establish a low-carbon economic structure to effectively reduce carbon emissions to zero by 2050. Carbon neutrality has become a key global agenda to tackle climate change after the Paris climate accord went into effect in 2016. Major countries, including the European Union nations, China and Japan, unveiled timelines for their carbon-zero initiatives.
7. Samsung's Lee Kun-hee passes away
Samsung Chairman Lee Kun-hee passed away in late October, and Samsung Electronics Vice Chairman Lee Jae-yong is set to take the helm of the nation's largest conglomerate after his father.
Since Lee Kun-hee inherited control from his father, the group's founder Lee Byung-chull, in 1987, the late chairman established Samsung as a global giant of semiconductors, smartphones, TVs and home appliances.
Samsung Group said its annual revenue was less than 10 trillion won in 1987, but the figure grew to 386 trillion won as of 2018. The group's total market capitalization also increased by 396 times from 1 trillion won to 396 trillion won, according to the conglomerate.
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| Fmr. Samsung Group Chairman Lee Kun-hee |
Dubbed the New Management Initiative, the late chairman summoned the group's executives to Frankfurt, Germany, in 1993 and delivered his view that the emerging digital revolution would be a precious opportunity for Samsung to make a leap forward to become a global leading tech company.
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| Korean Air Boeing 787-9 |
8 Korean Air ― Asiana acquisition
The country's leading airliner Korean Air has announced its planned acquisition of Asiana Airlines, which has been struggling to stay afloat after a drastic drop in number of passengers due to the pandemic.
The acquisition will transform Korean Air into a mega airline taking over the seventh spot in the world.
Korean Air operates 163 aircraft and Asiana has 79, so the combination of the fleets would make Korean Air a global top seven airliner in terms of capacity.
The acquisition deal comes after HDC Hyundai Development Company withdrew from acquiring Asiana in September.
HDC and brokerage Mirae Asset Daewoo had agreed in December 2019 to purchase Asiana Airlines for around 2.5 trillion won ($2.25 billion), but they called for better terms after the airline's debt surged due to the COVID-19 pandemic. After the plan fell through, KDB proposed the Asiana deal to Korean Air.
As of end of last year, Korean Air on its own had a 22.9 percent share of the domestic market compared to Asiana's 19.3 percent, but when factoring in Korean Air's affiliate Jin Air and Asiana affiliates Air Busan and Air Seoul, they take up 62.5 percent of the domestic market.
9. Banks scale down over digitization
Banks have expedited their efforts to scale down their outlets and staff headcount as finance goes digital faster amid the COVID-19 pandemic.
At the end of the first half of 2020, the number of outlets of five major banks here ― KB Kookmin, Shinhan, Hana, Woori and NH NongHyup ― declined to 4,564, down 97 from 4,661 at the end of 2019.
This came as more customers chose online tools for banking services. According to Bank of Korea data, 64.3 percent of the country's banking services took place online in June, up from 49.4 percent in June 2018.
As banks require less human labor, staffing declines also followed. The five major banks have launched voluntary retirement programs between November and December. Of them, NongHyup, which closed the retirement window on Nov. 30, received applications from 503 employees, up 41 percent from last year's retirement program.
While banks are scaling down their physical workforces for profitability, civic groups are raising concerns that such a rapid move will cause serious difficulties for aged and other customers who are not accustomed to digital banking.
10. Chung Euisun takes helm
Last but not least, Hyundai Motor Group embraced the new leadership of Chairman Chung Euisun in October.
Chung has been the de facto chief of the group since 2018 when he became the executive vice chairman, succeeding much of the decision-making authority of his father, former Chairman Chung Mong-koo.
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| Hyundai Motor Group Chairman Chung Euisun |
On Dec. 13, the group announced it will acquire an 80 percent stake in robotics firm Boston Dynamics for around 1 trillion won, marking the first M&A under Chung's leadership. In doing so, Chung invested his personal property into the robotics firm, showcasing his commitment to the robotics business.
Consequently, Chung also carried out a major reshuffle of executives in key affiliates, promoting technicians and researchers in air taxis, robotics and electric and fuel cell vehicles. This is in line with Chung's business blueprint that the group's future portfolio will be comprised of 50 percent mobility services, 30 percent air taxis and 20 percent robotics.
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