Biz leaders tighten vigilance against economic woes

Hyundai Motor Group Executive Vice Chairman Chung Euisun, left, talks to SMEs and Startups Minister Park Young-sun, second from left, during the group's "ZER01NE Day" festival in Yongsan-gu, Seoul, Sept. 26.

UN expects world economic growth to hit 10-year low

By Kwak Yeon-soo

As a global slowdown is putting Korea's export-reliant economy in danger, major business leaders here are tightening vigilance to cope with growing challenges both at home and abroad.

Heads of the top four chaebol ― Samsung, LG, SK and Hyundai Motor ― are creating a sense of urgency among their executives and employees so that they can raise their guards against any fallout from global economic woes, such as the U.S.-China trade dispute.

They are coming up with contingency plans against worst-case scenarios while investing in future-oriented technologies, accelerating digital transformation and finding new business opportunities abroad.

Hyundai Motor Group Executive Vice Chairman Chug Euisun has been keen on transitioning to hydrogen-focused energy in recent years, stressing the need to become a "game changer" in the industry.

On Sept. 23, the automaker announced it has teamed up with Aptiv for a $4 billion joint venture to develop autonomous technology.

SK Group Chairman Chey Tae-won has been calling for a "deep change" in order to create social value and steer away from the economic downturn.

"I've been leading the company for 20 years, but a geopolitical crisis has never had such a huge impact on the business environment," Chey said at SK Night held in the U.S., Sept. 19.

Samsung Electronics Vice Chairman Lee Jae-yong has been striving to cope with external challenges by increasing on-site inspections and investing in the high-end display sector.

"The risks and opportunities come and go repeatedly, so Samsung should not give up on the large-sized display business because of the challenges," Lee said during his visit to the display manufacturing complex in Asan, South Chungcheong Province, Sept. 23.

Samsung Display will reportedly announce a new investment plan to build manufacturing lines for quantum dot OLED (QD-OLED) displays. The amount will likely reach 13 trillion won.

LG Group Chairman Koo Kwang-mo called on top executives to accelerate a digital transformation amid growing business uncertainties.

"The next few years will be crucial for our survival as we are facing completely different crises," Koo said at LG CEO Workshop, Sept 24. "We need to promptly secure fundamental competitiveness and change our way of doing business to overcome the challenges."

The business leaders' pre-emptive actions came as the global economy is expected to suffer its worst performance in a decade this year, which will deal a major blow to most Korean conglomerates.

Samsung Electronics Vice Chairman Lee Jae-yong, second from left, walks with Samsung C&T officials during his visit to a Riyadh metro construction site in Saudi Arabia, Sept. 15. / Courtesy of Samsung Electronics

In its Trade and Development Report 2019 released on Sunday, the United Nations Conference on Trade and Development (UNCTAD) said it expects global economic growth to hit a 10-year low.

The U.N. body cut its projection for global growth from 3 percent in 2018 to 2.3 percent this year, the lowest rate since a 1.7 percent contraction in 2009, due to trade tensions, corporate debts and geopolitical risks.

Bank of America Merrill Lynch (BoAML) downgraded its 2019 growth forecast for Korea to 1.8 percent from the previous projection of 1.9 percent while Morgan Stanley slashed Korea's growth for this year to 1.8 percent from its previous estimate of 2.2 percent.

The two multinational investment banks cited the U.S.-China trade war, escalating trade conflict with Japan, sluggish exports and weak private investment as downside risks to growth.

Korea's top 10 chaebol saw their combined operating profits more than halve in the January-June period from the same period a year earlier, according to data from industry tracker Chaebol.com, Sunday.

"The operating profits of the top 10 conglomerates, which have a combined 96 affiliates listed publicly on the stock exchange, came to 24.9 trillion won ($21 billion) in the first half of 2019, down 51 percent from 51.1 trillion won posted a year earlier," it said.

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