KoreaToday After Decade of Growth, Korea’s Major Exporters Plot for Global Supremacy
By Kim Tong-hyung
Staff Reporter
South Korea's major corporations began the 2000s with more of a whimper than a bang, but addressed the low-key start with a blazing finish to the decade.
Now, fresh out of the gate in 2010, the same industrial heavyweights appear engaged in rewriting their strategies and refocusing their core businesses as they plot for another 10 years of profitability.
The Korean blue-chips could do much worse than pick up where they left off in 2009. The economic turmoil obviously tested the mettle of the companies, and many of them responded admirably, successfully exploiting the softened competition to strengthen their positions in major markets.
Certainly, a depth of world-beating companies across key industries would help a country's economy stay on course while absorbing the hits. And this is not your father's Korea Inc. that was do-or-die about textile, clothes and shoes.
Samsung Electronics, now the world's largest electronics maker and crown jewel of the Korean corporate empire, is expecting a record profit for 2009 after excelling in consumer electronics and mobile phones, and benefiting from the improving prices and market conditions for memory chips and liquid-crystal displays (LCDs).
The company is now the global market leader in a variety of products, including flat-screen televisions, memory chips and LCDs, and is gaining on Nokia as the runner-up mobile-phone vendor.
Gaining in Samsung Electronics' rear-view mirror is LG Electronics, its bitter domestic rival that is also shaking an impressive 2009 report card. The rivalry between two electronics giants is now a full-blown global fight, with LG Electronics ascending as the world's second-largest flat-panel television maker and No. 3 handset maker, while its affiliate, LG Display and LG Innotek, also emerging among the leaders in LCDs and light-emitting diode (LED) chips.
Hyundai Motor, now the world's fourth-largest producer of automobiles, is another company that is beaming after enjoying the last 12 months, perhaps the only major carmaker in the world who could say that.
Last year, Hyundai sold a record 3.1 million vehicles, 12 percent more than 2008, while its affiliate, Kia Motors, increased sales 9.6 percent to 1.53 million, combining for a global market share of nearly 8 percent, according to the companies.
Hyundai's strength in fuel-efficient cars explains part of its recession-restraint performance, and the company is also benefiting from an improved reputation for quality, especially in the United States where more and more people are buying its cars.
Hynix Semiconductor trails Samsung Electronics as the No. 2 player in memory chips, while POSCO, the world's third-largest steel maker, is one of the few top steel companies in the world to report profit last year.
And Hyundai Heavy Industries, Samsung Heavy Industries, Daewoo Shipbuilding and Marine Engineering, and STX are the world's four largest shipbuilders in that order.
All in all, the country seems to have more than enough industrial juggernauts to carry the economy on their collective backs. And considering their proven track records and reputation for punching above their weights, one would find it hard to bet against these companies as they renew their efforts to increase their share in world exports.
``The Korean economy showed impressive quickness in recovering from the economic downturn last year, a speed that was not matched by any country in the world other than China,'' said Park Hyung-jung, a researcher from Woori Investment and Securities.
``The level of the recovery in consumption, production, currency value and stock prices here all represent some of the best numbers in the world, and a look into the inventory-shipment cycle suggests that the Korean economy has already completed its recovery and is entering a phase of expansion.
``The country's major exporters are maintaining a high level of competitiveness and this would be crucial in keeping the momentum going in 2010 and further. The increase in industrial production and facility operation, as well as the strengthening domestic consumption, are expected to drive the economy,'' he said.
The Korean economy managed to expand 3.2 percent in the third quarter of last year, the fastest increase in more than seven years. The Bank of Korea in a report last month forecast 4.6 percent growth for this year, up from a projected 0.2 percent expansion for last year.
Spending Big, Dreaming Bigger
After spending 2009 with a dose of apprehension, the Korea's leading corporations now look ready to loosen their purse strings as they look to strengthen their competitiveness in key markets and secure new revenue sources.
According to a recent report by the Federation of Korean Industries (FKI), the country's biggest business lobby, the country's top-30 business groups plan to increase investments by 16.3 percent this year to take advantage of an improving global economy and prepare for a recovery in consumption.
The conglomerates will spend a combined 87.1 trillion won (about $75.6 billion) this year, compared to 74.8 trillion won in 2009, and will also hire a total of 79,199 workers, up nearly 9 percent from last year's 72,863.
Samsung Group, the country's largest conglomerate that calls Samsung Electronics among its key affiliates, will spend 26.5 trillion won this year, its second-highest annual amount ever, and hire 19,000 workers.
This includes the 18.4 trillion won to be spent by Samsung Electronics, which is looking to improve its strength in semiconductors and LCDs.
LG Group is also increasing its annual investment by 28 percent to 15 trillion won this year, while it plans to hire about 10,000 new workers, according to LG Chairman Koo Bon-moo.
LG Group, another technology giant that counts LG Electronics, LG Display and LG Chem among its key units, will spend 15 trillion won this year, 28 percent more than last year, and hire more than 10,000 workers.
The group has particular optimism for LG Electronics, which expects its revenue to grow 10 percent to 59 trillion won this year, with much of the growth generated from consumer electronics and mobile phones.
Hyundai-Kia Automotive Group, the country's top carmaking conglomerate, will invest 10.5 trillion won this year, up 12 percent from last year, with much of the money spent on improving its presence in emerging products as hybrid and electric cars.
Hyundai and Kia are aiming to increase sales by 17 percent this year, targeting combined sales of 5.4 million vehicles worldwide, helped by the addition of new models such as the revamped Sonata sedan.
SK Group, which controls SK Telecom and other major companies, will increase its investment by about 10 percent to 7 trillion won, while STX Group looks to invest 1.2 trillion won, up 10 percent from last year, and hire 2,000 new workers.
POSCO earmarked 9.3 trillion won for investment this year, with most of the money saved for merger and acquisition (M&A) opportunities and constructing mills overseas, while the Doosan Group is also planning significant investment this year, as it expects its revenue to rise 14 percent at 24.4 trillion won.