de Facto Return
The four major conglomerates - Samsung, SK, Hyundai Motor, and LG - have virtually returned to the Federation of Korean Industries (FKI). The return isn’t in the form of re-enlistment, but rather through the transfer of membership from affiliated research institutions.
According to industry insiders and the FKI on July 5, the FKI held a board meeting at its building in Yeouido, Seoul, on July 4, where it discussed plans to change its name and integrate with the Korea Economic Research Institute (KERI), its affiliated research institution. KERI also held a general meeting on the same day and voted on a resolution to dissolve in order to facilitate integration with the FKI. Alongside its dissolution, it was decided that KERI’s assets and membership lists, among other items, would be transferred to the FKI. If the integration with KERI is finalized at the FKI general meeting in August or September, the four major conglomerates’ membership will naturally be restored.
The four groups sequentially withdrew from the FKI in 2016 due to controversies over their contributions to the K-Sports and Mir foundations. However, KERI, as a research organization, did not withdraw and maintained its membership. It’s known that the four groups did not oppose this method of returning to the FKI, thus implicitly indicating their consent. However, it was reported that they failed to reach a consensus on whether they would pay membership dues, which at one point accounted for up to 70% of all FKI dues.
The decision of the four groups to return to the FKI this manner, rather than rejoining, is interpreted as a conscious effort to manage public sentiment amid lingering negative perceptions due to unsavory incidents.
The FKI plans to officially announce its merger with KERI at a general meeting around August or September, and intends to start afresh by changing its name to the Korea Business People’s Association.
The return of the four major conglomerates holds significant meaning for the FKI, as it gains sturdy support for the return of the “elder brother of the business community.” The FKI’s reputation significantly plummeted after being thoroughly “passed over” by the previous government, but it is showing a different image under the current government. In March, the FKI led exchange events with the Japanese business community during President Yoon Suk-yeol’s visit to Japan and also raised its profile by forming an economic delegation during a visit to the U.S. in April.
Kim Byung-joon, acting chairman of the FKI, who is tasked with restoring the federation’s status, plans to transform the FKI into a “think-tank type economic organization” by integrating it with KERI and significantly enhancing its research capabilities. He has also revealed plans to preemptively respond to national and global issues by strengthening research capabilities and to completely block the possibility of collusion between politics and business by setting up an ethics management committee.
The remaining task is to select a high-profile next chairman. The FKI hopes that an influential business figure, such as the head of one of the four major groups, will take on the role of the next chairman. Names such as Chung Eui-sun, chairman of Hyundai Motor Group, and Kim Seung-youn, chairman of Hanwha Group, are being mentioned. However, it is anticipated that it will take quite some time to select the next leader, as the heads of major groups are reluctant to come forward as FKI chairman.