S. Korean biz groups in emergency mode as Korea-Japan feud drags on

Samsung heir Lee Jae-yong comes back from Japan on Friday. Yonhap via The Korea Herald/Asia News Network

SEOUL — South Korea’s major business groups are shifting to emergency mode, setting detailed contingency plans for a variety of scenarios amid concerns that the restrictions on exports of key tech materials from Japan to Korea could stay in place for a long time, according to the industry on Monday.

The leaders of the country’s five biggest conglomerates — Samsung Electronics, Hyundai Motor Group, SK Group, LG Group and Lotte Group — are tightening their reins on the groups’ operations, bracing for possible ripple effects on the global economy and business environment as a result of Japan’s decision.

Samsung Electronics Vice Chairman Lee Jae-yong is spearheading an array of contingency plans.

After coming back from a six-day trip to Tokyo last week, Lee convened a meeting with the top brass of the company’s semiconductor division Saturday, ordering it to establish detailed contingency plans for a range of possible scenarios.

The Samsung heir reportedly contacted major shareholders of Japanese materials suppliers, including JSR, while he was in Tokyo, but the names of the people he met were not revealed.

Some news reports said Lee had secured a certain volume of the materials in question, but Samsung officially denied that claim.

“The vice chairman checked on the current status of major material supplies and the impact of short supplies on the entire Samsung (business group),” a Samsung official said.

If the Japanese government removes Korea from its white list, up to 1,112 export items to Korean companies will be subject to close scrutiny by the Japanese authorities with every shipment.

“Lee ordered contingency plans not only for the semiconductor division but also the smartphone and consumer electronics divisions, considering the possibility of the restrictions being expanded to other materials and parts,” the official said.

SK hynix, a flagship affiliate of SK Group, is also focusing its efforts on diversifying suppliers of the three materials.

“For etching gas, the chipmaker is looking for alternatives in Korea, China and other countries,” an industry official said. “Some Korea-made etching gas is being tested on some lines to gauge productivity.”

LG Group is closely monitoring the development of the situation as it has two affiliates that would suffer greatly if the trade dispute were to become protracted.

“LG Display is currently working to secure some substitutes for the Japan-made etching gas, while LG Chem is watching closely with countermeasures against possible expansion of the curbs to battery materials.”

Lotte Group Chairman Shin Dong-bin returned from Tokyo to Seoul on Monday after meeting with various financial and political figures in Japan in hopes of easing the tensions. Shin is also expected to hold emergency meetings with the group’s top brass to establish countermeasures.