Rewind 2024: Korea’s top 10 business stories

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Rewind 2024: Korea’s top 10 business stories

Published: 24 Dec. 2024, 06:00

PARK EUN-JEE
[email protected]

Audio report: written by reporters, read by AI

A television at a train station in Seoul broadcasts footage of U.S. President-elect Donald Trump as he speaks during an election night event on Nov. 6. [AFP/YONHAP]

1. Trump 2.0 ignites fears in Korea over tariffs, currency woes

Donald Trump’s landslide election victory in November raised alarms for the Korean economy, as the president-elect’s bold tariff proposals and policy shifts fueled uncertainties for the export-drive nation.

The prospect of the incoming second Trump term, which is expected to implement an expansionary fiscal policy, also further strengthened the dollar, pushing the won’s value down.

Rewind 2024: Korea’s top 10 news stories

Trump's campaign has proposed a universal base tariff of at least 10 percent on all imports, a policy expected to hit Korea's export-reliant economy hard. The Korea Institute for International Economic Policy estimated that a 10 percent tariff would knock the country's shipments to the United States down by $15.2 billion per year and those to other countries by $7 to $8.9 billion.

EV battery stocks were among the hardest hit, as shown in a post-election drop in their share prices, as Trump has repeatedly maintained critical views of EVs and indicated plans to repeal the outgoing Joe Biden administration's expanded manufacturing subsidies.

Industry Minister Ahn Duk-geun hosts a joint meeting on the U.S. Inflation Reduction Act with the private sector at JW Marriott Seoul. [YONHAP]

As concerns have been growing for Korean chipmakers as well, especially with the president-elect’s cabinet nominees hinting at overhauling Biden’s CHIPS Act policy that promised a substantial amount of incentives for investments made on U.S. soil, the Commerce Department has been speeding up the process to finalize their funding deals with companies ahead of Trump's inauguration.

SK hynix has been awarded up to $458 million in subsidies for its $3.9 billion chip packaging facility in Indiana on Dec. 19, while Samsung Electronics, which was initially promised up to $6.4 billion, secured direct funding of up to $4.75 billion, as the chipmaker scaled back its investment plans from $45 billion to $37 billion.

2. Exchange rate blows past 1,400 won to the dollar with turbulent end of year

An exchange rate of 1,400 won per dollar, once a significant threshold, has become less of an outlier in 2024 as the continued strengthening of the greenback coupled with Korea's political and economic uncertainties sent the local currency plunging to a 15-year low.

On Dec. 19, the won tumbled to its weakest point since March 2009 to breach the 1,450 per dollar mark, as the U.S. central bank hinted at a hawkish shift with fewer rate cuts next year.

A screen in Hana Bank's trading room in central Seoul shows the Kospi opening and the won trading above 1,450 to the dollar on Dec. 19. [YONHAP]

The won's already-sharp weakening trend has accelerated, trading at a two-year low since November, weighed down by U.S. policy shifts, President Yoon Suk Yeol's martial law declaration and the country’s waning growth momentum.

A won-dollar exchange rate of 1,400 has been widely considered a theoretical threshold to warrant government intervention. Before 2024, the rate had surpassed the mark only during three major financial crises: the 1997 Asian financial crisis, the 2008 global financial crisis and 2022 post-pandemic monetary tightening.

While authorities have offered assurances that the country's foreign exchange situation does not constitute a crisis, the consistently high won-dollar rate may stimulate inflation and slow down the pace of rate cuts in the upcoming year for the Bank of Korea (BOK).

The central bank kicked off its monetary easing cycle on Oct. 11 with a 25-basis-point reduction to 3.25 percent, its first key rate cut since May 2020, as the country’s headline inflation moderated to below the 2 percent threshold.

Bank of Korea Gov. Rhee Chang-yong bangs the gavel at the central bank in central Seoul on Nov. 28. [JOINT PRESS CORPS]

The decision followed the U.S. Federal Reserve’s 0.5 percentage point reduction to a range of 4.75 to 5 percent in September, its first easing since 2020. The Fed implemented two additional 25-basis-point rate cuts on Nov. 7 and Dec. 18, to a final range of 4.25 to 4.5 percent for the year.

During the same period, the BOK reduced its benchmark rate by an additional 25 basis points to 3 percent in its final rate-setting meeting on Nov. 28, which defied market expectations as the high won-dollar rate has been considered a major risk factor.

The BOK, however, prioritized boosting Korea’s weakening growth momentum, as the country faces a harsher trade environment with the incoming U.S. administration’s protectionist policy proposals and an export growth slowdown.

3. Samsung suffers tumultuous year with HBM, labor missteps

Samsung Electronics Vice Chairman Jun Young-hyun makes a celebratory speech at the Giheung campus in Gyeonggi on Nov. 18. [SAMSUNG ELECTRONICS]

Samsung Electronics faced a grueling year in 2024 as it grappled with a prolonged slump in its semiconductor business, prompting its leadership to issue an unprecedented public apology.

Adding to its woes, the company confronted a historic labor dispute with its unionized workforce, fueling concerns over a potential existential crisis for a corporation that claimed market capitalization of 16.1 percent in the country’s main bourse as of Dec.18.

The year initially showed promise, with its chip division rebounding to profitability in the first quarter after record losses the previous year due to a global chip glut. However, momentum faltered quickly as the year progressed. By the third quarter, earnings had missed estimates, prompting Samsung’s semiconductor chief Jun Young-hyun to issue the first public apology regarding the earnings in the company’s history. Jun acknowledged failures in maintaining a competitive technological edge.

While the apology merely contained vague terms, it was clear that the core issue stemmed from Samsung’s shortcomings in high bandwidth memory (HBM) technology — critical for AI chips. Crosstown rival SK hynix continued to secure Nvidia’s approval for successive HBM generations, leaving Samsung struggling to keep pace.

Meanwhile, labor unrest escalated as unionized workers staged the first strike in the company’s history over stalled wage negotiations. That talks remain unresolved.

Investor frustration was evident as Samsung’s share price sank to the 40,000 won ($28) level in November. In response, the company announced a 10 trillion won share buyback program to restore market confidence.

4. Mercedes-Benz EQE fire damages 880 cars, disrupts 1,600 households

Korea’s fear of EV fire reached its peak in 2024 after a Mercedes-Benz EV burst into flames in an underground parking lot in an apartment complex in Incheon in August.

The Mercedes EQE sedan exploded on Aug. 1 and damaged as many as 880 nearby cars, including 87 that burned entirely in the parking lot. The incident cut electricity and water supply to some 1,600 households in the apartment complex at the time, with 400 of them having suffered for more than four months now.

A Mercedes-Benz executive examines a burned Mercedes EQE sedan in Incheon on Aug. 8. The Mercedes EQE EV explosion damaged as many as 880 vehicles parked in the garage. [NEWS1]

A total of 139,067 EVs were sold in Korea through the end of November, according to market tracker CarIsYou, down 7.2 percent compared to same period a year earlier.

The exact cause has not been declared, according to the police, as the battery management system in the vehicle that monitors the conditions of the car was destroyed.

The Mercedes EV explosion spread anger and fear regarding EV fires after it turned out that the EQE was equipped with batteries made by Chinese company Farasis Energy.

Some Mercedes owners launched lawsuits against the German carmaker claiming they'd been deceived by the company after a Mercedes executive said the vehicle would include batteries from Contemporary Amperex Technology, the world’s largest EV battery maker, in an interview.

5. Korean Air completes acquisition of Asiana Airlines

Asiana Airlines and Korean Air planes at Incheon International Airport on Nov. 29 [YONHAP]

Korean Air finalized the acquisition of Asiana Airlines, bringing the country’s two largest full-service carriers a step closer to initiating a merger to give birth to a top 10 global mega carrier.

The country’s flagship airline acquired 63.9 percent of Asiana Airlines on Dec. 12 after obtaining approvals from regulators in all 14 mandatory reporting bodies, including the European Union and the United States.

To fulfill merger conditions regarding monopoly concerns, Korean Air divested four European routes — to Paris; Rome; Barcelona, Spain; and Frankfurt — to budget carrier T’way Air and sold off Asiana’s cargo business to Air Incheon.

Korean Air will maintain Asiana as a subsidiary airline for two years and finalize the merger process by 2026.

The merger could place Korean Air among the 10 biggest airlines in the world, ahead of Japan Airlines. The new integrated airline will own a total of 238 aircraft, of which 203 are passenger planes, with some 27,500 employees including 9,000 flight attendants. The amalgamated carrier will have 186 operational routes with Korean Air’s 114 and Asiana’s 72.

The merger will also lead to a merger of three budget carriers: Korean Air-owned Jin Air, and Asiana’s Air Seoul and Air Busan.

6. Korean consortium wins bid for $17 billion Czech nuclear reactor project

A view of the new Dukovany nuclear power plant site in the Czech Republic [KHNP]

A Korean consortium was selected in July as the preferred bidder for a $17 billion nuclear reactor project in Czech Republic, paving the way for winning the country’s largest nuclear power export deal in history.

The selection was critical for Korea as a litmus test to gauge the European nation’s perception of the country as a supplier of nuclear reactors, since the sensitive nature of the facility could convince buyers to favor EU providers.

A consortium led by the state-run Korea Hydro & Nuclear Power (KHNP) competed with EDF, France’s state-run electricity corporation, and previously with Westinghouse Electric of the United States.

The Korean and Czech governments aim to finalize the deal by March 2025, but some media outlets have speculated that ongoing domestic political turmoil following President Yoon Suk Yeol’s short-lived martial law declaration could hamper the procedure.

Both the Seoul and Prague have stated that the process is going as planned.

7. Korean food exports projected to hit $10 billion in 2024 with ramyeon, gimbap surging

The global hype for Korean food has yet to fizzle out. Food exports are set to record a yearly high in 2024 on the back of continued strong demand for ramyeon, rice products and snacks.

Clockwise from left: ramyeon, chocolate biscuit snacks and frozen gimbap (seaweed rice rolls) [NEWS1, YONHAP]

Korea’s food exports hit a fresh high of $9.05 billion through November, up 8.1 percent from the same period last year, according to the Ministry of Agriculture, Food and Rural Affairs. The amount is nearing the government’s annual year target of $10 billion.

Processed goods led the way. Sales of the top export, instant noodles, rose 30 percent on year to $1.13 billion in the January to November period. Major ramyeon manufacturers laid the groundwork for new production lines and overseas offices over the year in anticipation of even more demand in 2025.

Samyang Foods had a smashing year with its Buldak Ramen products and is gunning to even further expand its global reach through its first overseas factory in China as well as new plants in Korea. Shin Ramyun maker Nongshim invested in an export-only plant in Busan and is set to establish a sales unit in Europe next year.

Rice products like frozen gimbap (seaweed rice rolls), instant steamed rice and tteokkbokki (spicy rice cakes) also continued to rise thanks to demand in major markets like the United States and China.

Snacks and beverage exports also rose by more than 10 percent on year through November.

The United States imported $1.4 billion worth of Korean food, up 20 percent on year, during the 11-month period. Sales growth is expected to increase through the end of the year as Korean products hit the shelves of major retailers. China-bound exports increased 7 percent to $1.38 billion.

The increase in exports, however, had some downsides for domestic customers. Gim (dried seaweed) prices jumped as demand grew overseas, due to its popularity as both a snack and a gimbap ingredient.

8. AliExpress grows in Korea as TMON, WeMakePrice melt down

Chinese e-commerce platforms AliExpress and Temu cemented their strong presence in the Korean market through cheap prices backed by aggressive investments — despite never-ending concerns about their products’ quality and safety.

AliExpress became the second most-used shopping app in Korea in the January-October period with 8.48 million average monthly active users according to data from market tracker WiseApp, Retail, Goods. While the number is overshadowed by that of Coupang, which has 31.17 million average monthly users, AliExpress experienced on-year growth of 68 percent while Temu, currently sitting in fourth, grew 179 percent on year and reported 7.21 million average monthly active users.

AliExpress announced March that it planned to invest $1.1 billion in Korea in the next three years, including the construction of a $200 million distribution center in the country.

Actors Tang Wei, left, and Don Lee serve as ambassadors of AliExpress Korea. [SCREEN CAPTURE]

But not all has been smooth sailing. The Korean government banned the import of 1,900 or so products from China in May after claiming to have found toxic materials in certain items such as toys and camping equipment.

E-commerce platforms TMON, WeMakePrice and their parent company Qoo10, along with merchants that were operating on the platforms, suffered greatly. The platforms had fallen behind on payments owed to merchants operating on their sites, which were allegedly used in embezzlement, including funding for Qoo10's acquisition of the U.S. shopping platform Wish earlier this year. The three platforms currently owe an estimated 1.85 trillion won ($1.27 billion) and their executives were indicted without detention on Dec. 11.

9. SK Group chairman faces historic divorce settlement

SK Group Chairman Chey Tae-won, left, and his estranged wife Roh Soh-yeong attend an appeals trial at the Seoul High Court on April 16. [YONHAP]

SK Group Chairman Chey Tae-won’s high-profile divorce case with estranged wife Roh Soh-yeong took an unexpected turn this year when the Seoul High Court significantly increased the property division settlement in Roh’s favor.

In May, the court ordered Chey to pay 1.38 trillion won ($960 million) to Roh, marking the most expensive divorce settlement in Korean history and a staggering 20-fold increase from the initial 66.5 billion won determined in the first trial.

The higher court sided with Roh’s argument that her late father, President Roh Tae-woo, had played a substantial role in SK Group’s growth, rendering Chey’s SK shares subject to property division. The court assessed the couple’s combined assets at 4 trillion won, awarding Roh 35 percent.

Chey promptly appealed, citing "critical errors" in the court’s assessment of Roh’s contributions to the conglomerate’s success. He argued that the court overstated her influence, claiming that much of the company's success is owed to his father and late SK Chairman Chey Jong-hyun.

Although the Seoul High Court acknowledged minor calculation errors, it upheld the settlement amount.

In November, the Supreme Court accepted Chey’s appeal in another surprise move, deciding to re-examine the case. Should the Supreme Court fully support Chey’s claims, the amount of wealth subject to division could drop to 2 trillion won.

10. Naver-Line leak sparks clash between Korea and Japan

Cybersecurity concerns surrounding Line Yahoo (LY), the Tokyo-based operator of the popular messenger Line, spawned a national dispute between Japan and Korea, as the Japanese government pressured Korea’s leading portal, Naver, to cut ties with LY.

The issue stemmed from an incident in October 2023 where 510,000 items of private information belonging to Line users were leaked through Naver Cloud, the operator’s subcontractor.

In turn, Japan’s Ministry of Internal Affairs and Communications in April ordered LY to develop measures to prevent such occurrences. What aroused concern in Korea was that the ministry also requested LY to review its capital relationship with Naver.

LY is 64.5 percent owned by A Holdings, a 50:50 joint venture between Naver and SoftBank.

Although Naver retains management rights, relinquishing even a single share would transfer those rights to Japan’s SoftBank, deterring the Korean company’s plans for overseas expansion.

As SoftBank and Naver floated the possibility of the latter’s equity divestment in LY, seemingly giving in to Tokyo’s duress, the Korean government belatedly chimed in to oppose the matter.

Naver’s entire stake valuation was estimated to be 10 trillion won ($6.8 billion).

Following three months of intense negotiations among the involved parties, the tension eased when Naver CEO Choi Soo-yeon stated during the parliamentary audit on July 2 that the company would not be divesting its equity “in the short term.”

BY JIN EUN-SOO, LEE JAE-LIM, SARAH CHEA, SHIN HA-NEE, CHO YONG-JUN, KIM JU-YEON, PARK EUN-JEE [[email protected]]