South Korean President Moon Jae-in, left, talks with corporate tycoons at Sangchunjae at the Blue House in Seoul, South Korea , on Friday (27/07). (Reuters Photo/Presidential Blue House)

Happy Hour? Craft Beer, No Ties as South Korea's Leader Hosts Business Tycoons


JULY 28, 2017

Seoul. Craft beer, finger food and bowls of rice replaced a full-course meal on Thursday (27/07) as South Korean President Moon Jae-in played host to corporate tycoons for the first time since his election in May.

Against the casual backdrop, Moon had more serious business at hand, as he pushed his message of corporate reform to deliver on a campaign pledge to curb the power of the conglomerates that dominate South Korea's economy.

The event at the presidential Blue House was a departure from previous meet-and-greets, where corporate bosses in dark suits and ties typically sat and listened to presidents speak.

Moon proposed a no-tie, no-jacket dress code to free up conversations.

"We hosted this event because I wanted to fully hear from you all," Moon said in his welcome to company officials. "There is no script, no theme, no time limit and no handout materials."

Instead of hosting the 15 corporate leaders in the imposing, main building where such events usually take place, Moon's guests were taken to Sangchunjae, a scenic Korean-style house with a garden, in the grounds of the Blue House.

In the casual setting, some aired gripes over economic hardship, such as retaliation by China for the deployment of a United States anti-missile radar system in South Korea, which Beijing has vehemently protested.

"All the Chinese tourist groups in our duty-free shops have evaporated," said Shinsegae Group chief executive Chung Yong-jin.

China was refusing to buy South Korean batteries for electric cars, LG Electronics vice chairman Koo Bon-joon added.

But the two days of meetings will probably be anything but comfortable for the leaders of the conglomerates, the top 10 of which account for more than half of the stock market's value, according to the Korea Stock Exchange.

Moon said he will break close ties between government and businesses in the wake of a corruption scandal involving his impeached predecessor Park Geun-hye and Samsung, the largest of the powerful family-run conglomerates, or chaebols.

Jailed Samsung leader Jay Y. Lee will not be at the meetings with Moon while on trial charged with bribery and embezzlement in the Park scandal. Samsung Electronics chief executive Kwon Oh-hyun will attend instead.

Lotte Group chairman Shin Dong-bin, who has also been charged with bribery in the Park case, is due to attend. Shin, who attends sessions of his trial on Thursdays and Fridays, has received court permission, a group spokesman said.

Wish List

Participants enjoyed craft beer made by local brewery Sevenbrau at the event, attended by the chairman of food company Ottogi as the only representative of mid-sized companies.

Shares of Ottogi rose 8 percent this week on news of the invitation, while Moon lauded its high proportion of regular workers.

Moon wants chaebols to create more full-time jobs, improve working conditions and stop using dominant market positions to squeeze small and mid-size suppliers.

He has also talked of raising taxes for the largest conglomerates to fund economic stimulus plans and welfare packages.

Days before the Blue House event, companies such as Samsung, SK Hynix and flat-screen producer LG Display, announced big investments, new jobs and plans to help suppliers.

"It is positive that a person in authority tries to have an unassuming demeanor. But businesses will come under pressure to create more jobs," an official at food-to-entertainment giant CJ Group told Reuters, asking not to be identified because of the sensitivity of the matter.

CJ, South Korea's 15th biggest conglomerate by assets, has said it will convert about 3,000 contract workers into regular employees.

Changing of the Guard

Several chaebol chiefs, who attended meetings with Moon's predecessor, were absent and represented instead by their sons or chief executives.

Samsung chairman Lee Kun-hee has been hospitalized since May 2014 following a heart attack and a Hyundai Motor Group chairman Chung Mong-koo, 79, did not attend due to a flu, his only son and Hyundai vice chairman, E S Chung, said at the meeting.

Asked by Moon if the company had suffered recently due to poor demand in China, Chung admitted, "The situation is difficult."

Hyundai Motor posted its smallest quarterly net profit in five years on Wednesday, missing estimates, and warned of a challenging second half as political headwinds hit China sales and US demand remains slow.

The average age of the 15 leaders is 61, down from 69 at Park's first meeting with top business leaders in 2013.

"Moon seems to be trying to shrug off his "anti-chaebol" image through this casual setting," said Park Ju-gun, the head of corporate analysis firm CEO Score.