Leaders of some of South Korea’s largest conglomerates have pledged to invest more in their businesses in the New Year to tide over economic woes as the eurozone debt crisis persists.
Samsung Group chairman Lee Kun-hee is expected to emphasise greater investment in a bid to pull through tough economic conditions in 2012.
The 69-year-old tycoon in charge of the country’s largest conglomerate has stressed the need for large investments as the global economic slump is projected to continue, especially with the unease in Europe.
He will also focus on projects with potential to become the group’s new growth engines. He recently reconstructed the “two-top system” for its flagship electronics arm, seating Kwon Oh-hyun as the vice chairman of Samsung Electronics’ subpart divisions such as its semiconductor and liquid-crystal display businesses.
Joined by the firm’s vice chairman Choi Gee-sung, who will oversee the finished goods sector, Kwon will spearhead Samsung LED, which was recently merged with the company.
In the meantime, Samsung chairman Lee will officially outline his business scheme for 2012 by making a speech at the group’s New Year’s greeting at the Shilla Hotel on Monday.
It will be Lee’s first appearance since he stopped making public appearances after catching a cold about a month ago.
He will be joined by his wife Hong Ra-hee and his offspring Jae-yong, Boo-jin and Seo-hyun at the event.
Chung Mong-koo, chairman of the world’s fifth-largest automaker, Hyundai Motor Group, is boosting R&D and facility investment while withdrawing from excessive expansion. The group promoted 309 people in its annual reshuffle Wednesday where 44 per cent of the changes were with research and development positions.
“We’re strengthening our research and marketing arms in preparation for a decline in business sentiment across the globe,” an official at the group said.
Its investments are geared toward developing cutting-edge technologies and enhancing product quality. The group plans to invest a total of 11.6 trillion won in Korea, up 27.5 per cent from the figure for this year. Some 4.6 trillion won of the total is allocated to the group’s R&D centre, where it develops technologies including hybrid, electric and hydrogen fuel-cell cars.
Chung plans to continue building new plants in China and Brazil despite the sales decline widely expected in Europe and other advanced economies. The group announced its plans to proceed with constructing three new manufacturing facilities in China for Kia Motors Corp. in November ― at a time when other conglomerates were revising their business plans for next year in expectation for slower growth.
“We have plans to widen our profit even as our sales drop, by diversifying timing of our launches across the globe and localizing our sales strategies for each region,” another Hyundai Motor official said.
LG Group faltered in 2011 with its key affiliates such as LG Electronics and LG Chem showing a weak performance. For chairman Koo Bon-moo, a dramatic turnaround should be made in the New Year.
LG Electronics, the world’s No. 3 handset maker, issued new shares worth 1.06 trillion won in November. Industry watchers said that the move, which came for the first time in six years, showed the group’s faith in LG Electronics by making preemptive investments.
Driven by the fast adoption of the fourth-generation Long Term Evolution network service here, LG’s smartphone sales have showed signs of recovery in recent months. Using the recent sales momentum, the company plans to target North American and European markets next year with premium handsets such as the Optimus LTE and Prada 3.0.
The world’s No. 2 TV maker also aims to take more than 25 per cent of the global TV-set market by increasing its production of the premium 3-D TV to 70 per cent of its total production.
“We need to make products and services in key areas such as electronics, chemicals and network services that create different consumer values and lead the market,” Koo recently said to executive officials.
The chairman of the nation’s third-largest conglomerate is expected to continue investments in key businesses this year and to soon come up with new investment and employment plans.
SK Group chairman Chey Tae-won unveiled his determination to tide over economic challenges his conglomerate is facing with his strong leadership.
In an apparent show of his confidence, Chey abruptly visited Hynix Semiconductor Inc. in Icheon, Gyeonggi Province, just three days after he underwent questioning from the prosecution about his alleged wrondoings on December 19, and promised to provide the group’s full support for the chipmaker.
SK Telecom recently got antitrust agency’s approval of its bid to take over the world’s second largest memory chipmaker.
The chairman had promoted the takeover of Hynix in his efforts to make the mobile giant jump into the memory chip sector and advance into a global market.
Meeting with CEOs of group’s affiliates, Chey stressed the need for the group and Hynix to secure high-caliber human resources and make investments at an appropriate time, according to group officials.
Last year, Chey focused on cooperating on resources development with Latin American countries, Middleast and China. Market estimates have it that SK Group will post the largest ever earnings for 2011 given that its total sales already surpassed 100 trillion won from January to August last year.
For GS Group chairman Huh Chang-soo, there is no better recipe than investment for crisis management in these times of economic uncertainty.
Last week, Korea’s seventh-largest conglomerate said it would invest a record 3.1 trillion won ($2.7 billion) next year to prop up its core businesses of energy, retail and construction.
It also set a record sales goal of 7.5 trillion won, up 10 per cent from 2011. The investment plan reflects a 48 per cent year-on-year rise.
“Despite the economic doldrums, we should build a springboard to long-term growth, create jobs and expand exports through continuous investment,” Huh said in his New Year’s speech.
The group allocated 1.8 trillion won for GS Caltex Corp., GS EPS Co. and GS Global Corp. The refiner plans to set up its fourth heavy-oil upgrading unit, and the two other affiliates will build more power generation facilities and beef up their search for oil and soft coal overseas.
The group is gearing up to launch an energy firm this year, which will be in charge of resource development and renewable energy projects.
As part of the investment package, GS Retail Co. will spend 600 billion won to expand its convenience store branches at home and online shopping mall known as GS Shop in other Asian countries.
The group also plans to help its builder, GS Engineering and Construction, secure growth engines with 700 billion won.
On the employment front, the group said it will hire 2,900 young and experienced people this year including 250 high school graduates. That is about 3.6 per cent up from last year’s 2,800.
“As a slump gets protracted, a company’s or industry’s frailties tend to get easier to be detected,” Huh said. “That is the reason we have to make a big bet now on areas that could firm up our business framework.”
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Chris Randles