State policy chief to meet Samsung, LG, SK execs

Presidential chief of staff for policy Kim Sang-jo, right, talks with the country's ruling Democratic Party of Korea floor leader Lee In-young during a meeting with senior party officials, ministers and presidential aides at the National Assembly, Aug. 4. Yonhap

By Kim Yoo-chul

A senior presidential aide said Monday he will meet with high-profile executives at Samsung, Hyundai, SK, LG and Lotte conglomerates on Thursday, Aug. 8, for talks concerning the potential disruptions to South Korea's manufacturing supply chain as a result of Seoul being dropped from Japan's “whitelist.”

“A meeting with senior executives at the country's top-five business conglomerates has been scheduled for Aug. 8. Although the meeting agenda is subject to change, the key point is to discuss the response to Tokyo's decision to remove Seoul from its list of trusted trading partners,” Kim Sang-jo, presidential chief of staff for policy, told reporters in a briefing at Cheong Wa Dae.

At the meeting, Samsung Vice Chairman Yoon Boo-keun and LG Vice Chairman Kwon Young-soo will assess the potential short- and long-term effects of the deepening trade row between South Korea and Japan with the presidential aide.

But it remains uncertain whether Samsung executive Yoon will uncover the specifics of his group's de facto leader Lee Jae-yong's recent meetings with leading Japanese financiers in Tokyo.

Another senior presidential aide who attended the briefing said the planned meeting would mainly explore possible ways on how to cut negative investor sentiment in the short term following Japan's decision.

“As far as we understand, South Korea's manufacturing sector is looking quite stable because the inventory level of components and materials crucial to the country's manufacturing sector isn't that bad. However, we have to be prepared to weather worst-case scenarios as the trade row is escalating into a full-blown trade war,” the aide said.

South Korea is reliant on imports of Japanese intermediate parts and materials for its manufacturing industry, with South Korea having recorded a bilateral trade deficit in parts and materials with Japan amounting to $15.1 billion in 2018, according to government data.

The bilateral trade deficit is particularly large for imports of Japanese electronics parts and materials as well as chemical products. This highlights the vulnerability of South Korea's manufacturing supply chain to Japanese intermediate goods, notably for electronics components and chemical products.

The potential disruption to the country's manufacturing industry segments could be quite substantial if there are delays to the export licensing approvals, depending on how easily the South Korean companies can replace these products with other suppliers, globally, Cheong Wa Dae officials said.

A few hours after the briefing, the finance ministry said it will spend up to 7.8 trillion won ($6.47 billion) over the next five years to expand local materials and parts suppliers.

Of the 100 key strategic items it identified, the industry ministry said it plans to secure supplies of 20 items within a year by reaching out to suppliers in other countries, including the United States and China.