Samsung, Hyundai brace for uncertainty
SEOUL- Agence France-Presse
Shoppers look at a Samsung I-Core 7 laptop on sale on Black Friday, Nov. 25 at a store in Virginia. Samsung and Hyundai face competition due to weak global demand.Samsung Electronics and Hyundai Motor, South Korea’s largest companies, told employees to brace for intense competition in a weak global economy as the government called for contingency planning.
“South Korea’s economy is facing increased uncertainties this year, and the global economy may rapidly deteriorate if the European debt crisis worsens,” Finance Minister Bahk Jae Wan said in a New Year statement released yesterday. “Contingency plans to prevent contagion from Europe’s crisis should be strengthened.”
Exports from Asia’s fourth-largest economy may grow 6.7 percent in 2012, down from 19.6 percent in 2011, according to government forecasts. Security risks from a leadership change in North Korea are adding to uncertainties for the South as European leaders struggle to hold their monetary union together in the face of credit downgrades and a looming recession.
Seeking more flexibility
“The global economy’s low-growth trend will continue and uncertainty surrounding the business environment won’t be easily removed,” Samsung Chairman Lee Kun Hee said in his speech to employees yesterday. “We should make our corporate culture more open, flexible and innovative.”
Samsung group companies had combined sales in 2010 equivalent to one-fifth of South Korea’s gross domestic product (GDP).
“The auto industry in 2012 is expected to show slow growth and intense competition between companies,” Chung Mong Koo, chairman of Hyundai and its affiliate, Kia Motors, said yesterday in a New Year speech to workers in Seoul.
The carmakers will focus on improving quality and the image of their brands as they seek to increase global sales by 6.1 percent this year to a combined 7 million vehicles.
“Compared to the last two years, the growth target is conservative,” said Park In Woo, an analyst at LIG Investment & Securities. “This may come from the grim economic outlook, but more so, Hyundai is planning to take this year to focus on internal management such as quality control.”
“This year is a big uncertainty for Samsung,” Park Hyun, a Seoul-based analyst at Tong Yang Securities said. “Potential demand may be there, but whether it will materialize totally depends on the macroeconomic situation.”