[THE INVESTOR] In an all-out effort to overcome the ongoing political ramifications affecting the entire business arena and survive economic uncertainty, heads of South Korean conglomerates set a new vision on Jan.2, calling for change and innovation.
In the face of unprecedented political turmoil that raised questions to businesses’ alleged clandestine dealings with President Park Geun-hye and her aides, the business leaders emphasized the need to restore customer trust by improving corporate social responsibility and product quality. They also urged the need to secure new technologies and establish a creative work culture to flexibly deal with the fast-evolving markets around the world buoyed up by expectations on future industries.
Samsung Electronics urges drastic reform
Calling for a complete reform, Samsung Electronics Vice Chairman Kwon Oh-hyun on Jan.2 urged the South Korean tech giant to move on from the Galaxy Note 7 debacle last year and seek new opportunities for future technologies.
“Taking last year’s experience, which cost a lot, as a lesson, we have to achieve a complete reform this year,” he said at meeting to kick off the year at Samsung Digital City in Suwon, Gyeonggi Province.
“We should not compromise with even minor problems in terms of product quality (which is) the basic element of product competitiveness. … Let’s restore our pride in product quality by improving the production process and strengthening monitoring.”
Kwon suggested establishing a new corporate culture that is open to creative ideas and flexible to change, stressing the intensifying market for future industries and economic uncertainty.
“(Market) uncertainty is intensifying with stagnant growth in major markets and the rise of protectionism. Rival companies are concentrating on future industries, on artificial intelligence and big data, by making drastic investment,” he said. “By facing the reality strictly, let’s overcome the crisis confidently.”
The meeting was held without the attendance of Samsung Electronics Vice Chairman Lee Jae-yong, who joined the board in October.
Hyundai chairman urges company to overcome uncertainty
Hyundai Motor Group Chairman Chung Mong-koo on Jan.2 urged the company to strive to overcome the uncertain business environment and achieve the group’s sales target of 8.25 million cars in the new year.
“Trade protectionism is spreading and competition in the auto industry is intensifying, raising business uncertainty” Chung warned on Jan.2 during a New Year’s meeting. “We will have agile and flexible responses to changes in the external environment by ensuring internal stability and responsible management.”
The company will overcome the challenging business environment by improving the competitiveness of its products, Chung said. The group will enhance the quality of its luxury sedans and new energy vehicles, and introduce more than 10 new models every year.
The group aims to sell 8.25 million units of Hyundai and Kia cars in the new year by pioneering new markets through its 35 production plants in 10 countries, with more vehicles tailored to local markets. It will also expand its lineups of sport utility vehicles and new energy vehicles, according to the company.
LG Group calls for fundamental changes
LG Group Chairman Koo Bon-moo on Jan.2 called for a fundamental change in the company’s business portfolio, urging employees to seek new opportunities with creative ideas.
“The past ways of achieving success are meaningless when facing the new management environment ahead of us,” he said.“We need to bring changes in R&D and the manufacturing (process).”
The nation’s fourth-largest conglomerate -- which operates a wide range of businesses including electronics, energy and display panels -- has sought to realign its business portfolio in recent years. Under the new corporate slogan, “Innovation for a Better Life,” LG has been developing ways to take the lead in display panels operated by organic light-emitting diodes, batteries for electric vehicles, energy storage systems, smart building systems and green bio solutions. This year marks the group’s 70th anniversary.
To accelerate efforts for change, Koo stressed enhancing efficiency, flexibility and transparency at work, and solidifying customer trust.
“We should not tolerate any mistakes related to customer safety by complying with the principles of (maintaining) product quality and a safe environment,” the chairman said.
“By enhancing transparency at the management (level), we should meet expectations from investors and the society, and step closer to (people) in need.”
GS Group vows to diversify business portfolio
GS Chairman Huh Chang-soo urged the group to diversify its business portfolio and make attempts to explore new markets.
“With the uncertainty growing over the management environment, we should diversify profit-oriented platforms by making drastic investments and explore new business opportunities and new markets by encouraging (employees) to make various attempts,” he said during his New Year’s address delivered at a meeting at GS Tower in Seoul.
Citing the unfavorable political situation in markets around the world, Huh asked GS executives to establish a new corporate culture for the group that would evolve through self-reflection.
“To overcome the hardship we are facing today and to make a leap forward, we need to have some time for introspection,” he said.
The nation’s ninth-largest conglomerate has been focusing on energy, retail and construction, but has been seeking merger and acquisition opportunities to widen its business portfolio.
Hanwha to focus on core competency
Hanwha Group Chairman Kim Seung-youn asked each affiliate to focus on developing their core competency to lead future growth.
“The advent of the fourth industrial revolution is a big challenge and opportunity for us,” Kim said on Jan.2. “Based on the long-term trend, such as decrease in the production population, we should beef up our future competency with new technology, new business and new markets.”
The defense unit should aggressively expand in overseas markets while the chemical section should focus on securing high-value-added technologies beyond the conventional business products, according to Kim.
For the financial sector, Kim pointed out the current business model is difficult to grow further amid an aging population and new international accounting standards. He encouraged seeking next-generation growth engines based on digitalization, such as financial technology and big data.
As for the photovoltaic sector, Kim said the company should be equipped with an overwhelming technical advantage to solidify the leading position in the fiercely competitive global market.
Lotte calls for innovation, ethical management
Lotte Group Chairman Shin Dong-bin began the year with an address emphasizing “bold innovation and change” for the company’s survival in the face of difficult business conditions.
Shin called on Lotte to focus on improving its core capabilities and advantages by conducting operations focused on on-site supervision rather than depending on the group’s central control tower.
He said each of Lotte’s affiliates will have to create a strategy to prepare for coming “mega-trends” including the “fourth industrial revolution based on new information technology such as artificial intelligence and virtual reality” as well as the erosion of borders between online and offline channels, and “changing demographics such as the low birth rate and aging (population).”
After a tumultuous year of raids by prosecutors and parliamentary hearings, Shin also said Lotte needs to achieve “law-abiding management based on a healthy corporate philosophy.”
To be loved and respected by the Korean community, ethical management must be accompanied by corporate social responsibility making the company “grow together with society,” he said.
Hanjin Group to prioritize safety-security balance
Hanjin Group Chairman Cho Yang-ho called in his New Year‘s address for a balance of safety and service to bring “customer happiness” in 2017.
As for Korean Air, the chairman said that employees must go beyond a simple understanding of service rules and manuals, and make the rules a part of their daily lives through repeated training. Cho said that precise and strict application of existing rules will allow Korean Air to “prevent problematic situations,” seemingly pointing to recent criticisms about flight attendants’ safety training.
On the business front, Cho said the company must prepare for predictable risk factors and increase profitability by optimizing flight routes and equipment.
In particular, Cho urged employees to pay closer attention to the needs of the market in order to choose the best flights for both customers and efficiency. Taking a long-term approach to service, rather than chasing immediate profits, would allow Hanjin Group to earn the trust of customers and to contribute to the Korean economy, he said.
Posco stresses further leap for next 50 years
Posco Chairman Kwon Oh-joon on Jan.2 vowed to bring the company to greater heights over the next 50 years, at a New Year’s meeting at the company’s headquarters in Pohang, North Gyeongsang Province.
Kwon ordered the company to expand its earning power by upgrading its steelmaking business and continue restructuring its business to maximize work efficiency.
“This year should be the year to secure the top steel earning power in the world and wrap up the scheduled restructuring while establishing a foothold for future growth. Let us complete the goal of ‘Posco the Great’ and prepare for the leap into the next 50 years,” Kwon said. The chairman also highlighted the necessity of cultivating the drive for future growth by establishing a smart system.
CJ Group to push for M&As
South Korea’s CJ Group vowed to actively pursue new strategic mergers and acquisitions in 2017 to strengthen its core businesses and boost their global competitiveness.
“Despite the continued economic downturn and unstable market conditions, I ask all our employees to make this a historic year in the future growth of the company,” said CJ Group Chairman Sohn Kyoung-shik.
Sohn urged CJ to pursue strategic M&As to expand its main businesses -- food, biotechnology, retail and entertainment -- and to break into new, emerging markets that can drive new growth.
CJ’s business units should also strive to become the No. 1 player in their respective fields, as well as adopt a culture of aiming to be the best, Sohn said.
Urging employees to help the group “go beyond the ‘Great CJ’ to become the ‘World Best CJ,’” Sohn pledged to take the lead in steering the group toward this direction.
CJ is hoping to build upon its 2016 achievements, including CJ CheilJedang’s expansion into the home meal replacement food market and driving up exports. Last year, CJ Korea Express also began constructing the Konjiam Terminal while CJ E&M led various TV programs and dramas to success including “Three Meals a Day, “Signal” and “Another Oh Hae Young,” the group said.
Kumho Asiana hopes to rebuild group
Kumho Asiana Group’s goal for 2017 is to become a “leader of the fourth industrial society,” according to the new year’s address given by Chairman Park Sam-koo.
In addition to completing the “last task” of buying back Kumho Tire from creditors to rebuild his Kumho Asiana Group, the chairman said that it was imperative for the group to make preparations for big changes coming to Korea’s business environment.
“By the fourth industrial society, I mean a society that has undergone great changes in its industrial structure through the convergence of digital and analog, manufacturing and information communications technology, and online and offline,” he said.
Park urged the group’s affiliate companies to rethink their operational structures and to adopt a bottom-up mindset for creating new strategies in the face of changing business climates.
In particular, Park said that the group would need to strive to collect, manage, and build meaningful uses for big data. “Using big data, we can make decision-making processes more efficient and automatic,” he said.
By Cho Chung-un/The Korea Herald (firstname.lastname@example.org)
Park Ga-young/The Korea He (email@example.com)
Lee Hyun-jeong/The Korea Herald (firstname.lastname@example.org)
Won Ho-jung/The Korea Herald (email@example.com)
Sohn Ji-young/The Korea Herald (firstname.lastname@example.org)