Category: Korea-Business

The younger brother has successfully held off his older sister of “Nutrage” fame of removing as head of the family Chaebol:

Hanjin Group Chairman Cho Won-tae was reappointed as an executive director of Hanjin KAL, the group’s holding company, Friday, defending his management rights of the logistics-centered business group amid a sibling feud with his elder sister and group heiress Cho Hyun-ah.

During the holding firm’s shareholders meeting, the incumbent chairman defended his board seat by garnering 56.67 percent approval.

Cho Won-tae has been in fight for control of the group with a three-party anti-chairman alliance led by his sister. 

Hyun-ah, a former vice president at Korean Air who is backed by local activist fund Korea Corporate Governance Improvement (KCGI) and mid-sized builder Bando Engineering & Construction, has called for the need to replace the leadership to improve the group’s financial status and shareholder value. 

A day ahead of the shareholders meeting, the National Pension Service (NPS) announced its decision to vote for the reappointment of the group’s incumbent chairman as an executive director.

The state pension fund, which holds a 2.9 percent stake in Hanjin KAL, was considered to hold a casting vote in determining the chairman’s fate. 

Korea Times

You can read more at the link, but it makes you wonder what if any backroom deals were agreed upon with the National Pension fund to keep Cho Won-tae as CEO?

South Korea’s most hated Chaebol family member, Cho Hyun-ah is definitely not going away any time soon as she makes a bid to wrest control of Hanjin Group from her brother:

Cho Hyun-ah, 45, whose family control the Hanjin group that includes flag-carrier Korean Air, made headlines worldwide with her furious reaction when she was served nuts in a bag instead of a plate in first class.

A series of scandals centring on abuse of subordinates rapidly made the Chos the South’s most vilified billionaires.

But now her struggle against brother Cho Won-tae could mark a watershed moment for the family-controlled conglomerates known as chaebols that dominate business in the world’s 12th-largest economy.

She has joined forces with an activist investment fund, Korea Corporate Governance Improvement (KCGI), which says better chaebol management will improve efficiency, employee engagement, and shareholder returns.

Cho Won-tae inherited the chairmanship of the conglomerate’s holding company Hanjin Kal after the siblings’ father Cho Yang-ho — who led the successful bid for the Pyeongchang Winter Olympics — died last year.

But “you can’t just run a company because you happen to be a grandson of its founder”, said Lee Seung-hoon, KCGI’s head of global business.

AFP

You can read more at the link, but Cho Hyun-ah also has other family members and Delta Airlines backing her to take over Hanjin Group from her brother. However, she claims she will not take over the President spot and instead install a professional to run the conglomerate.

I take that this news is only going to further pummel air travel on Korean Air:

A Korean Air flight attendant has tested positive for the novel coronavirus, the South Korean airline announced on Tuesday. 

Korean Air “is creating a structure to work very closely with the Centers for Disease Control and Prevention Korea (CDCK) to prevent the spreading of the virus,” a representative for the airline told Business Insider. 

The airline is disinfecting aircraft, asking flight attendants with symptoms to self-quarantine, and installing thermal cameras at Korean Air’s operations locations.

The confirmed case also prompted Korean Air to temporarily shutter its office near the Incheon International Airport, the main airport in the South Korean capital, Seoul, so it could be disinfected.

Business Insider via a reader tip

You can read more at the link.

If there wasn’t enough problems for Samsung dealing with the coronavirus outbreak, now Iran is making threats against the smartphone maker:

An Iranian official on Tuesday warned Samsung Electronics that it is planning to restrict the use of the tech giant’s mobile phones in the country, accusing the company of bowing to pressure from the United States.

The official’s statement is a response to Samsung’s decision to limit app purchases for Iranian users of its Galaxy Store, for which it cited issues with converting Iranian currency. The policy is set to take effect beginning in late February.

But Iranian news outlets have reported the move as a response to U.S. sanctions against the country and have suggested the restriction will widen to free apps as well next month. Samsung is the dominant smartphone producer in Iran, with more than 50 percent market share.  

Mohammad Jafar Na’nakar, a government official who heads the legal department at Iran’s Ministry of Information and Communications Technology, delivered the warning to Samsung during an interview Tuesday with Press TV, an Iranian state-run news outlet.

“The list of measures against Samsung is ready,” Na’nakar said.

Joong Ang Ilbo

You can read more at the link.

Asiana Airlines was struggling even before this coronavirus outbreak which is making things even harder for the airline:

Asiana Airlines Inc., South Korea’s second-biggest airline, on Tuesday said all of its employees will take unpaid leave as air travel demand has plummeted due to the spreading coronavirus outbreak.

Some of about 10,500 employees are set to take 10 days of unpaid leave starting Wednesday. Others will join the cost-cutting measure later in a way that does not affect flights.

Asiana had 4,078 crew members as of Feb. 1, accounting for 39 percent of its total workforce of 10,538, according to the airline.

Asiana Airlines also said it will cut wages of its CEO, executives and heads of departments by 40 percent, 30 percent and 20 percent, respectively.

“We are desperately trying to come up with and implement measures to overcome a crisis of a massive operating loss this year,” Asiana Chief Executive Han Chang-soo said in a statement.

For 2019, Asiana’s net losses widened to 672.6 billion won (US$565.3 million) from 96.2 billion won a year earlier, due mainly to a sharp decline in travel on Japanese routes.

Korea Times

You can read more at the link, but it is interesting that Asiana Airlines is losing money before the coronavirus crisis from a sharp decline on Japanese travel routes. The Korean government has been promoting anti-Japanese sentiment that is in turn destroying one of their biggest airlines.

This shows the power of the taxi unions in South Korea when competitors face being thrown in jail by taking them on:

This week is being cast as the do-or-die moment for Korean mobility services – ride sharing, van hailing and the like. It is also seen as an inflection point for the sharing economy, and more generally for innovation. 

On Monday, the National Assembly will begin discussing revisions to the transportation law that could render Tada all but illegal. It has become known as the “Tada Ban Law.”  

Another decision awaits the van-hailing service, with the Seoul Central District Court scheduled to announce its decision on Tada’s legality on Wednesday. 

Prosecutors are calling for one-year sentences for Lee Jae-woong, the CEO of Socar, and Park Jae-wook, the CEO of Tada operator VCNC, for violating the existing motor vehicle law. 

Joong Ang Ilbo

You can read more at the link.

Another auto manufacturer has shutdown production because of the coronavirus’s impact on China:

GM Korea is temporarily halting operations at one of its three car assembly plants as the Wuhan coronavirus outbreak threatens the steady supply of auto parts.

The Korean unit of General Motors said Wednesday that it is closing its Bupyeong factory in Incheon on Feb. 17 and 18 because of delays in the arrival of auto parts, including wiring harnesses, from China. 

The factory will resume operations on Feb. 19.

The decision by GM Korea follows Hyundai Motor, Kia Motors, Renault Samsung Motors and SsangYong Motor shutting their factories temporarily as a result of supply shortages.

Joong Ang Ilbo

You can read more at the link.

It looks like firing the person in charge of gathering economic statistics in South Korea has worked for the Moon administration:

Employment growth hit a five-and-a-half-year high last month, with the most notable turnaround in manufacturing jobs.

Optimism is tempered however as the momentum could stall with the Wuhan coronavirus still threatening the economy.

In January, 568,000 new jobs were added compared to the same month the previous year. That is the most since 670,000 new jobs were added in August 2014.

January was the second consecutive month in which more than 500,000 jobs were created. 

The big news was in manufacturing, where jobs were added for the first time in almost two years. Totals have been dropping since 2018. In January, 8,000 manufacturing jobs were added.

Most of the jobs created since last year have been in health and social welfare and added with the help of government spending.

Last month, 189,000 health and welfare jobs were added, the most of any category. A total of 92,000 transportation and storage jobs were added, followed by lodging and restaurant positions, at 86,000.

Joong Ang Ilbo

You can read more at the link, but notice that the major source of jobs is not organic job creation, but instead the government handing out jobs. Even more interesting is that the majority of the government jobs are going to the elderly who tend to vote more than younger people. Does anyone think that this is just a coincidence that is happening right before April’s parliamentary elections?

Here is another unexpected consequences of relying on Chinese parts:

The nation’s largest automaker Hyundai Motor confirmed Tuesday it will suspend all production lines at local plants in phases due to the disruption of parts supplies from China. 

The decision follows three-hour talks between the labor union and management, and the suspension is expected to last until around Monday. 

The production shutdown is due mainly to the inventory shortage of wiring harnesses, which are mostly produced in China. Handmade wiring harnesses need to be laid on the floor of vehicles during their initial assembly. Because every car model uses a different wiring harness, inventories are not usually accumulated due to difficulties in management, industry watchers said. 

Korea Herald

You can read more at the link, but this should give Korean companies a taste of what would happen if the Chinese decided to put a squeeze on the Korean economy for political reasons.

It is arguable that by being on the flight Cho was setting an example that he was willing to risk getting sick the same as his employees who volunteered to work these two flights:

Hanjin Group Chairman and Korean Air CEO Cho Won-tae faced criticism for being onboard a chartered flight arranged by the government to bring back Korean citizens from the coronavirus-hit Chinese city of Wuhan, according to industry officials Monday. 

Critics called Cho’s decision to be on the flight an “overaction” designed to improve his image ahead of an important general meeting of shareholders, as he apparently had no particular role on the aircraft that carried out the evacuation mission.

The government sent two charters Korean Air planes to Wuhan, one each on Thursday and Friday, completing the mission to bring home about 700 nationals from the epicenter of the deadly illness. Cho boarded the first flight.

Korea Times

You can read more at the link, but this sounds like people hating on the guy simply because of the family he comes from.