Reporter's Notebook NongHyup's obedience to China raises eyebrows

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By Park Jae-hyuk

It seems quite certain that making official negative comments about China has been considered taboo by many of those in the financial industry in Korea.

NongHyup (NH) Bank CEO Son Byung-hwan, who was nominated this week as the new chairman of the bank's holding company, appears to be one of those, given he avoided mentioning China in his recent column published in a local newspaper to emphasize the importance of sustainable growth and the environmental, social and corporate governance (ESG) principles.

When citing People's Republic of China founder Mao Zedong's “Eliminate Sparrows Campaign” that caused the ballooning locust populations as an example of a short-sighted approach to avoid, Son just wrote this campaign took place in “a certain country in the past.”

Considering NH Bank applied for a preliminary approval for its Beijing branch in August ― its first branch in the country ― he might have faced difficulties in directly mentioning China's previous mistake ― even in Korean.

His column, however, has unintentionally raised eyebrows of its readers, who have already witnessed the Korean financial industry's excessively obedient attitude toward the world's second-largest economy.

After the Hong Kong protest started last year against the Chinese government's attempt to tighten its grip over the region, Korean financial services firms doing businesses there have ruled out the possibility of relocation, in contrast to foreign ones that have downsized their operations there.

Amid intensifying competition among Asian cities to attract financial firms leaving Hong Kong, the Korean financial authorities also hesitated to mention the nationality and locations of the firms they are trying to attract, apparently concerned about a possible diplomatic feud.

It is understandable that businesses have to rely on the Chinese government to some degree, to expand their global presence. But at the same time, they have to take into account their investors and customers here, who have been annoyed at the world's most populous country's series of measures against Korea.

Throughout this year, Chinese state media has outspokenly condemned Korean entertainers by distorting their remarks to allege they have insulted China. In 2016, Lotte and several other Korean businesses suffered from China's retaliatory measures against the deployment of a U.S. THAAD anti-missile battery here.

Moreover, local stock investors suffered huge losses this week, after a Kosdaq-listed manufacturer owned by a Chinese firm abruptly withdrew its announcement of a $900 million contract, just a week after the announcement.

In this regard, it is regrettable that the NH Financial Group chairman nominee failed to be more cautious about writing the column, as the next leader of the nation's fifth-largest financial holding company. If he was really unable to make negative remarks on China, he should have cited a different example, rather than indirectly mentioning Mao's mistake.