Bandwagon firms overcrowd marketplace

More companies bend business to policy trends

By Kang Seung-woo

Korea’s big businesses appear more concerned about massaging bureaucratic egos than pursuing their own strategies for corporate growth and global competitiveness.

Policymakers have successfully pressed corporations to follow their drumbeat on economy-related drives, including strengthening micro-financing services for struggling families, achieving ``mutual growth’’ by improving the relations between large companies and small- and medium-sized enterprises (SMEs), and providing more jobs.

The latest companies to leap on the policy bandwagon are banking groups, which are releasing news releases day after day about the increasing number of high-school graduates they are hiring in doing their part to cure the country’s unemployment woes.

On cue, President Lee Myung-bak visited the Industrial Bank of Korea (IBK) on Wednesday to personally meet a group of bank employees straight out of high school.

``Educational backgrounds are not a big problem once the person works in his profession for a decade or two. It’s important that everybody gets an equal chance to prove their abilities,’’ Lee said during the visit.

The government has been pressuring companies to recruit more jobseekers without university degrees as the jobs going to them have been declining dramatically since the late-1990s financial crisis.

POSCO, the Korean steel giant, has hired 400 high school graduates out of its self-set ``quota’’ of 900 last year, and plans to fill the remaining number by the end of the year. Samsung Electronics, the global technology powerhouse, has been hiring graduates from ``Meister’’ vocational high schools since last year and has selected 100 high-school freshmen who will be receiving job training and an annual scholarship of 5 million won (about $4,760) for the next two years.

Other conglomerates like Hyundai Heavy Industries, GS Retail and SKC are also in the hunt for talented high school students.

Since late 2009, the country’s five biggest conglomerates, Samsung, Hyundai-Kia, LG, Lotte, SK and POSCO, have been participating in the government’s microfinance campaign , setting up ``smile’’ microcredit banks to help people with low credit ratings and limited access to commercial banks.

Korea launched its own microfinance program in a bid to shield low-income, self-employed workers against the global financial crisis and the six corporations are aiming to provide a combined 1 trillion Won in microcredit loans over the next 10 years.

As of April this year, Samsung loaned 21.2 billion won to 1,730 borrowers, while SK lent more than 15 billion won for some 1,400 people.

The Lee government has consistently stressed mutual growth between major firms and their smaller partners for the past year, saying that ``chaebol,’’ or family-owned conglomerates, should share “excess” profit with their contractors to provide them with a better business environment.

The Commission of Shared Growth for Large and Small Companies was launched in December to kick start the drive, but the reluctance of companies and internal feuding between policymakers and commission officials appears to have the campaign falling apart.

The Fair Trade Commission (FTC) announced last week that just 66 of the 116 conglomerates that signed up to the shared growth program since 2009 have delivered on their commitments. The antitrust watchdog plans to start an investigation on 56 of the companies that haven’t.

The head of the Korean Chamber of Commerce and Industry (KCCI) said that the mutual growth had better be handled voluntarily between entities, rather than looking to regulations.

“Small- and medium-sized enterprises are one of the partners with which larger firms deal along with another major firm and foreign corporations, so it is not desirable to set regulations in all cases,” KCCI Chairman Sohn Kyung-shik said at the KCCI’s annual forum on Jeju Island last week.

“About 80 percent of small- and medium-sized firms do not have any connection with larger counterparts, so we need to seek ways to help them.”