The Korea discountWhen foreign media cover the Korean Peninsula, most of the news is negative and often centers on North Korea’s nuclear tests. The negative reputation has led to a so-called Korea discount, referring to Korean companies being undervalued. Lately, revelations of Choi Soon-sil’s involvement in state affairs and President Park Geun-hye’s corruption has led to an impeachment vote, adding yet another negative factor.
On Tuesday, foreign media paid special attention to the National Assembly hearing on the scandal. The heads of nine corporate groups, including Samsung, Hyundai, LG and SK, stood as witnesses together for the first time in 28 years. “It’s a rare moment of public reckoning for South Korea’s most powerful business leaders,” the AP wrote. “The panel has no power to punish but its chairman has said the hearing is a place for apology,” the BBC reported.
At the hearing, the cozy relationship between politics and business came into focus. All news reports included a remark by the GS Group chairman and head of the Federation of Korean Industries, Huh Chang-soo, that went, “It’s a South Korean reality that if there is a government request, it is difficult for companies to decline.”
The Wall Street Journal noted, “Traditionally, South Korean officials have leaned on the Federation of Korean Industries, a private lobbying group of the chaebol of which Samsung’s founder was the inaugural chairman, to solicit donations from the corporate sector.”
The foreign media has also focused on Samsung Electronics’ vice chairman Lee Jae-yong, heir-apparent to a conglomerate with the 11th highest brand value in 2016. Lee vowed to abolish Samsung’s Future Strategy Office and leave the Federation of Korean Industries.
Bloomberg reported that Lee appeared in public without a script for the first time and seemed nervous and hesitant to answer lawmakers’ questions. It also pointed out that opposition lawmakers demanded Lee give appropriate answers.
The foreign media described “chaebol” as a legacy of back-scratching between the government and businesses. The Financial Times wrote that chaebol make up 80 percent of the Korean economy and are tightly linked with the government.
They are regularly found guilty for unlawful gains and tax evasion, but presidents often pardon them. “These are men who never appear in public if they can help it,” the BBC wrote. “They normally live in an enclave of power and wealth, hidden behind the shaded glass of chauffeur-driven black cars.”
During the parliamentary hearing, elements of the Korea discount were revealed, and it will never be go away if business leaders continue to break their pledge for reform.
JoongAng Ilbo, Dec. 8, Page 29
*The author is an international news reporter for the JoongAng Ilbo.