[Viewpoint] Korea’s child needs to come homeIts first name is Daewoo and its family name GM.
Its birth in Incheon nearly five decades ago was glamorous.
When it manufactured the Saenara, the first sedan made in Korea, it was called the hope of car-producing Korea.
But it experienced hardship and agony as an abandoned child.
Its fate started to change in 1972, when it turned 10 years old. As its father Sinjin suffered from a shortage of money, it married the auto company off to GM. As the father died, GM took the Korea Development Bank into the family.
The auto manufacturer was then called Saehan Motor Company.
In the summer, when the company turned 16, GM remarried Daewoo. Daewoo was then a rising young jaebeol. It was very ambitious.
It took the new name, Daewoo. In 1992 it divorced GM, and Daewoo stood on its own.
Ten years after, Daewoo entered a golden age as Daewoo Motor.
It was a grandchild of the Daewoo family. The step-grandfather, Kim Woo-jung, adored his new grandchild. He did not mind taking a loan to support the company.
Other siblings in electronics, construction and securities tried to stop the chairman from doing so.
But he did not listen.
Daewoo Motor did not have the technology to produce the best cars, but it took confidence in its capability to assemble parts into quality automobiles at good prices.
Daewoo Motor made inroads not only in the United States but also in Poland and India.
Its luck, however, ran out.
When the foreign exchange crisis hit Korea in 1997, the company became strangled by its loans. In 2000, it filed for bankruptcy and went under court receivership. Leaders of the country and creditors decided to sell it abroad.
Some, though not many, tried to restore it to the nation’s top automotive company. Instead, we heard strange rumors that it need to produce more than 3 million units annually within 10 years to survive. One wants to ask, however, why it is that 1o years later, GM produces more than 10 million cars yearly but is on the verge of bankruptcy anyway.
Daewoo Motor was stripped of its clothes and put up for sale. For more than two years there was no interested buyer. The problem was its loan of 18 trillion won ($13.7 billion) compared to its assets of 12 trillion won.
Thanks to painful restructuring, it barely saw a surplus in 2004. It was only then that GM adopted Daewoo as if were a benevolent stepfather. GM even took a generous sum for the expense of bringing up the kid.
A decade has passed since Daewoo Motor was sold off to GM.
For the large part, Daewoo seemed happy. Now, though, it once again faces difficulties.
It seeks help everywhere, but there are no easy solutions.
The stepfather, GM, has its own problems. Since the economic crisis broke out, Americans want to protect domestic businesses first. GM still has vivid memories of being able to get benefits by being stubborn. That is why Nick Riley, the chief of GM operations in the Asia and Pacific region, declared the company would not provide aid to Daewoo.
By the way, KDB is the second-largest shareholder of Daewoo, with 28 percent of shares.
The KDB feels stuck as well.
Since Daewoo has its own stepfather, the Korean bank has no reason to take on additional expenses to bring up the child. But if Daewoo collapses, our country will suffer. Although its family name has changed, Daewoo is still rooted in Korea. It has 17,000 Korean employees.
If the issue is neglected, the country might turn upside down, and the administration might be taken over.
That is why the political circles talk about giving millions in won to the automaker.
Both GM and the KDB know a lot about those talks.
Now it is about time to think about bringing Daewoo back home.
We can take it from GM.
The KDB can take care of Daewoo first. In five to 10 years, when the time is right, we can find a good Korean parent for the company. That’s a good reason to use taxpayer money to save the company.
It would be a good idea to redraw the map of Korea’s entire auto industry.
Ssangyong, Daewoo’s little brother, is also in trouble. It was adopted by a Chinese parent and then abandoned again. It is on the verge of starving to death. We can think about merging them.
If the two are merged there is more to gain than to lose. The foundation of Korea’s auto industry will be enhanced. Nobody knows, but perhaps in 10 years Daewoo will have overcome all the hardship and agony and be reborn as one of the world’s best automakers.
The writer is an economic news editor of the Joongang Sunday.
by Yi Jung-jae