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Investments of Top Four Korean Conglomerates Estimated at Over 100 Trillion Won
Conglomerate Investment
Investments of Top Four Korean Conglomerates Estimated at Over 100 Trillion Won
  • By matthew
  • January 15, 2014, 05:22
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Korea’s top 4 conglomerates.
Korea’s top 4 conglomerates.

 

It is expected that the combined investment by the four major business groups in Korea - Samsung Group, Hyundai Motor Group, SK Group and LG Group - will exceed 100 trillion won (US$94 billion) this year. Last year, the amount was approximately 98 trillion won (US$92 billion). In early 2013, they announced that they would make an investment of 48 trillion, 14 trillion, 16 trillion and 20 trillion won each. The actual amount of investment is said to have been slightly lower than the targets.

The Samsung Group reported to the Ministry of Trade, Industry and Energy late last year that its investment for 2014 would be around 50 trillion won (US$47 billion), which is about two trillion won larger than the previous year. Samsung President Lee Sang-hoon met with reporters on January 14 at the Seoul Plaza Hotel and mentioned the amount. 

Samsung has already made public its plan to set up a new biosimilar production plant this year. Samsung Electronics and Samsung Everland said late last year that they would invest 600 billion won (US$564 million) into Samsung Biologics to this end. In addition, large-scale investments are scheduled in the group’s main business fields such as semiconductors, mobile phones, and displays. Cheil Industries is going to increase its investment in materials research as well. 

The Hyundai Motor Group has only a few reasons to step up its investment, because its major investment projects were wrapped up in 2013. This year’s amount is estimated at 14 trillion won (US$13 billion), which is similar to last year’s, and most of it goes to the development of eco-friendly vehicles and information technologies and the merchant ship business of Hyundai Glovis. Its fourth plant in China is expected to built in 2014, too.

The SK Group is planning on an investment of 16 trillion won (US$15 billion) or so, mainly in the petrochemical and semiconductor sectors. SK Chemicals’ joint investment has been postponed due to the delay of the parliamentary passage of the Foreign Investment Promotion Act, which allows joint business between a sub-subsidiary company and a foreign company, and SK Lubricants and SK Chemicals are predicted to speed up the investment this year for facility expansion. In addition, SK Hynix has recently decided to add two production lines to its DRAM semiconductor facilities in Icheon City, Gyeonggi Province. Investment for convergence R&D research and the establishment of an LNG power station are also slated for this year along with that in the information and communication technology (ICT) sector. 

LG planned on a 20 trillion won investment last year, but only executed 80% of it. This year, the amount is likely to be increased from a year earlier. It is going to concentrate the investment on ultra HD TVs and flexible display panels.

The conglomerates could not come up with clear investment plans last year due to the risks associated with regulations. However, they are expected to bring out bigger plans in 2014 as the government is encouraging them to do so while promising to improve the business environment. “We will focus on deregulation by means of a ceiling on regulations and overhaul investment-related regulations,” said Minister of Trade, Industry and Energy Yoon Sang-jik, adding, “I promise that my ministry will be in the vanguard of such efforts so that more corporate investments can be made.”