Baek Byung-yeul is a journalist at The Korea Times focused on cultural content, including films and cultural events in South Korea. You can contact him at baekby@koreatimes.co.kr to share your insights.
ANALYSIS Top Korean companies boost lobbying in US amid global chip war
By Baek Byung-yeul
More companies moving to set up offices in Washington DC
By Baek Byung-yeul
Major Korean companies are beefing up their lobbying activities in Washington D.C. by setting up offices there at a time when they are required to agilely respond to ever-changing geopolitical friction between the United States and China.
The moves are quite different from before when they were passive about opening offices in the U.S. capital due to the negative view of lobbying activities in Korea.
However, they seem to be abandoning this attitude and are rushing to launch local bases in Washington as the semiconductor and battery industries become more valuable, and are classified as national strategic assets in many advanced countries.
According to industry sources, 10 large Korean conglomerates will have liaison offices there from next year as LG Group, whose businesses range from home appliances to electric vehicle (EV) batteries, will open one.
Currently nine corporations run Washington offices including Samsung Electronics, SK hynix, Hyundai Motor, Kia, SK Group and POSCO.
Industry officials said they plan to increase their lobbying of the U.S. government, politicians and social organizations to make sure their voices are heard, adding it is natural that their lobbying will increase as the size of their businesses in the U.S. grows.
“Large companies are increasing spending on lobbying because the core of U.S. business is not just about selling goods, but about reading U.S. government policy changes,” an official at the Korea Chamber of Commerce and Industry (KCCI) said. The KCCI is the country's top business lobby representing the interests of conglomerates.
The capital is home to a variety of federal government agencies, as well as the White House and the U.S. Capitol, where lobbyists' activities are concentrated.
Another industry official said Korean companies have become more aware of the importance of strengthening their lobbying after seeing the stronger connection between industries and government policies following the information disclosure demand made to global semiconductor companies by the Biden administration.
Washington's request for confidential chip data
The U.S. government recently told global chip companies, including Samsung Electronics and SK Hynix, to submit information, including lists of their clients by Nov. 9 (KST), in an apparent bid to gain a strategic advantage in its long-lasting hegemonic conflict with China.
At the time of the notice, Washington said the information submission was “voluntary,” but Secretary of Commerce Gina Raimondo added that her department could invoke the Defense Production Act (DPA) or other available measures to strong-arm chipmakers into handing over the data.
As widely-expected, Samsung and SK partially complied to Washington's demands with the companies submitting some secondary-level semiconductor data to the department, in order to protect trade secrets.
“Strengthening corporate activities in the U.S. has always been one of the important activities of many firms, and strengthening lobbying is one of them. If the firms give information to the U.S. government as demanded, China will come out with the same demands. In that respect, firms are trying to understand the situation in the U.S. more quickly through their Washington offices,” the KCCI official said.
An LG Group official said the conglomerate decided to set up its Washington office, headed by an executive vice president, recently and would hire local employees.
Observes note that LG realized the need for a Washington office after the trade secrets dispute in the U.S. between its battery affiliate LG Energy Solution and SK Innovation. This is because establishing relations with the U.S. political community has become more important as global automakers, seeking to take the lead in the EV era, also became entangled in the dispute.
Samsung is also increasingly dealing with the U.S. government. Samsung Electronics operates massive chip-manufacturing plants in Texas and it is waiting for updates from the U.S. government regarding the tech giant's requests for tax credits, before finalizing its $17 billion investment in a city near Austin, Texas. The group's EV battery unit Samsung SDI also recently agreed to establish a battery-making joint venture with global carmaker Stellantis.
SK Innovation is building battery plants in the U.S. state of Georgia with financial assistance; and has also agreed to set up a joint venture with Ford to build battery and assembly lines in Tennessee and Kentucky.
Hyundai Motor, is seeking a new opportunity in urban air mobility, also established Genesis Air Mobility in Washington D.C. last April, as cooperation with the U.S. government is essential for an aircraft business operating in cities.
Hanwha Group's defense manufacturing unit Hanwha Defense had an overseas division office there, but launched its U.S. corporation Hanwha Defense USA in Washington D.C. in May. The U.S. branch is headed by John Kelly, former vice president of British defense company BAE Systems.
“Since our business has to be localized, we established the corporation to win contract orders and strengthen such efforts,” a Hanwha Defense official said.
Korean companies' lobbying activities will “mainly target the U.S. Department of Commerce, which is in charge of economy-related affairs,” officials said. “For smooth communication with Korea, the Washington offices of the companies are expected to actively recruit senior officials from the Korean government as advisors,” a representative of a top conglomerate here said.