Surviving 2016

Slogans for Korean conglomerates for the year 2016 all boil down to survival in the face of tough challenges at home and abroad. After LG Group Chairman Koo Bon-moo emphatically said, “If we cope with the global recession in a lax manner, our survival is threatened,” Posco Chairman Kwon Oh-joon joined the chorus by saying, “Now we face an environment defying our survival strategies of the past.” Another keyword in corporate leaders’ New Year’s addresses was “crisis.” Stressing a need to abandon their uncompetitive businesses, corporate leaders unanimously declared an end to aggressive investments and growth-focused management.

The rhetoric clearly shows how pessimistically they view our economic future. Prospects for our industries are dominated by gloomy news. The Korea Economic Research Institute has compared it to the 2000 dot-com bubble bursting and the 2003 credit card crisis. Hyundai Research Institute forecasts a dismal lack of demand, oversupply of housing, shrinking of leading industries, the public sector’s increasing role in upholding the economy and a delayed recovery. External conditions are also hostile, as seen in a slew of bad news from abroad, such as the crash of Chinese stock markets, heightened tension between Iran and Saudi Arabia and a very unsettled Middle East. The economy can hardly find hope in either the domestic or overseas markets.

A glimmer of hope can be found in Samsung and Hyundai Motor, which announced a plan for drastic investment to strengthen their competitiveness. Our industries’ loss of competitiveness stems from large companies’ laidback management of their businesses. Yet, we have time to prepare for upcoming tough challenges - a big difference from the 1997 foreign exchange crisis, which hit the entire nation suddenly.

Experts underscore the importance of companies energizing themselves with a dynamic and innovative spirit. Despite being the 13th largest economy in the world, Korea’s entrepreneurship was ranked 32nd in 2014 among 120 countries by the Global Entrepreneurship Development Institute. Entrepreneurship shines in times of crisis. Thanks to its unceasing innovation, Hanmi Pharmaceutical could dole out 40 million won ($33,628) worth of its stock to each employee.

Our society must foster corporate social responsibility in the painful process of restructuring, which could lead to the wiping out of the middle class. The corporate sector must find socially acceptable ways of restructuring.

JoongAng Ilbo, Jan. 6, Page 30