By Lee Hyo-sik
Korean companies have been slower in reshuffling their business portfolios in line with changing economic conditions, compared to their U.S. and Japanese peers, a think tank said Thursday.
According to a report issued by the Korea Economic Research Institute (KERI), affiliated with the Federation of Korean Industries, Samsung Electronics acquired 37 other firms from 2010 through September 2015.
However, Google, the world’s largest Internet portal, took over 154 entities during the same period, 4.1 times more than Korea’s largest enterprise. Softbank, Japan’s largest Internet firm, purchased 16 companies since 2014, more than Samsung’s nine.
KERI said that in addition to Samsung, Hyundai Motor, SK, LG, POSCO and other large companies here have largely remained risk averse and reluctant to revamp their business structures in accordance with the rapidly changing industrial landscape.
“Global companies have actively engaged in mergers and acquisitions to reorganize their portfolios,” KERI researcher Kim Yoon-kyung said. “For instance, Google has bought entities that possess 3D printing, unmanned vehicle software and other latest, cutting-edge technologies. In contrast, Korean businesses have stayed reluctant to advance into new areas of business over the years.”
The think tank said IBM transformed itself into an IT service provider from a computer manufacturer, while General Electric unloaded its home appliance unit to focus more on energy and financial businesses.
Kim urged Korea Inc, to be more active in regrouping units by integrating them or adding new entities to their portfolios.
“Korea’s ranking of listed companies hasn’t changed much over the past four years. Only several Internet and IT firms added their names to the top 50,” the researcher said. “This indicates Korea Inc. has lost vitality with no newcomers emerging to shift the country’s industrial landscape.”
To encourage local companies to revamp their structures, Kim said the government should provide greater policy support.
“The National Assembly also needs to enact bills aimed at promoting the overhaul of large corporations. They should be allowed to more easily acquire other businesses and dispose of existing units,” Kim said “Companies currently sitting on a huge pile of cash will then expand their investments; and more people will begin startups.”