A disgraceful floor leaderDemocratic Party (DP) floor leader Hong Yong-pyo on Friday claimed that Samsung Group was able to become one of the world’s top companies by victimizing its suppliers. Samsung has become a household name, but Korean households are getting poorer as a result, he added.
Just 20 trillion won ($18 billion) of Samsung’s net profit of 60 trillion won in 2017 is enough to give 10 million won each to 2 million people. When his socialist-like comment stirred controversy, Hong said he wasn’t implying that the company should hand out its money, but was simply making an example to explain how big Samsung’s treasure trove is.
Hong is the leader of the legislature that sets the laws for the world’s 12th economy. It is stunning that the leading ruling party lawmaker can make such a preposterous comment. Even his explanation suggests that he still is confident in his belief.
Hong also got his facts wrong. Korea’s household income has increased by 9.6 percent on average annually over the last 20 years. The growth lags far behind corporations’ annual income gains of 23.3 percent, but it is incorrect to say that Korean households have become poorer.
The 149 first-tier suppliers of Samsung Electronics reported that their average operating profit margin ratio was 8.5 percent in the 2017 fiscal year, a profitability level near the top of global manufacturers. Samsung Electronics has ascended to such heights not by exploiting suppliers, but through continuous research, development and investment in its semiconductor technology.
Hong claimed the sluggishness in employment is due to the two conservative administrations’ poor response to structural problems over the last 10 years.
But that kind of carefree mindset has worsened the economy over the past 14 months since President Moon Jae-in took office. Even Deputy Prime Minister for the Economy and Finance Minister Kim Dong-yeon admitted that the steep increase to the minimum wage has affected jobs in some sectors.
During his state visit to India last week, President Moon vowed to work harder to improve Korea’s business environment. His remarks have raised hopes that the liberal administration may turn towards more corporate-friendly policies. But Hong’s comment dashed such hopes. The ruling power must make its policy direction clearer.
JoongAng Ilbo, July 16, Page 29