The five largest conglomerates in South Korea are working on their future growth engines in order to better cope with unpredictable external conditions such as foreign exchange rates and international oil prices.
For example, LG vice chairman Koo Bon-joon himself is currently taking care of his group’s new businesses like automotive electronic components and energy. “He was in charge of the group’s new business promotion team until last year, giving rise to the vehicle component division of LG Electronics and so on,” said an LG subsidiary.
Recently, LG Electronics signed a series of electric vehicle component supply contracts with the multiple companies including GM. LG Chem’s manufacturing facilities located in Nanjing, China, which recently took a hit for the Chinese government’s decision not to provide subsidies, have increased their utilization rate from 20% or so to 70% between last year and this year by means of demand diversification covering energy storage systems and the like.
Samsung Electronics is concentrating on automotive telematics, too. This company recently obtained a temporary self-driving car operation permit from the South Korean government and is accelerating its truck navigation, telematics software and electronic logging device businesses in the regions including the United States.
SK Group chairman Chey Tae-Won is trying to acquire the semiconductor division of Toshiba while calling for its subsidiaries to become more aggressive when it comes to investment in new business. Hyundai Motor Group vice chairman Chung Eui-sun visited China last week, participating in Cisco’s smart city groundbreaking ceremony in Guangzhou. Lotte Group chairman Shin Dong-bin flew to the United States last month and met with global financial companies, IBM, Hershey, etc.
Their moves for new business opportunities have to do with uncertainties attributable to external conditions. The won-dollar exchange rate fell from 1,212.5 won to 1,108.5 won per U.S. dollar between December 28, 2016 and March 27, 2017. The Dubai crude price, in the meantime, fell from US$55.08 to US$49.3 per barrel between February 3 and May 2 this year.