Patriotism of Samsung Electronics and Hyundai Motor

Samsung Electronics has three semiconductor plants in Korea. It completed a plant in Kiheung in 1983, one in Onyang in 1991, and one in Hwaseong in 2000. Since then, the Korean tech giant has set up all plants in China. Some were concerned about the leak of its cutting-edge technology in China as it built an LED plant in Tianjin in 2009 and a semiconductor memory (NAND flash) factory in Xian in 2012.

On Monday, Samsung Electronics announced a plan to build a semiconductor plant in Pyeongtaek, Gyeonggi Province, which came in 14 years since the plant in Hwaseong. It is a large project that requires an investment of 15.6 trillion won (14.6 million U.S. dollars) for the next three years starting from next year. It is a good news that the company returns to Korea instead of building factories in China and Vietnam in search of low labor costs. Even U.S. President Barack Obama urged manufacturing companies to return to the U.S., offering benefits such as tax benefits for the factories that return to the U.S., but a plant that “went abroad once” does not easily come back.

Some criticize large companies, saying, “Who helped Chaebol grow like this? Why are they running away to other countries?” However, there is only so much to appeal to patriotism at a time when the border of capital has collapsed. A company makes an economic decision when making investments for profits. We should thank Samsung Electronics for the recent decision to choose Korea among other countries. The plant in Pyeongtaek is expected to generate more than 70,000 jobs, which could be a boon to the job market.

Samsung Electronics has 15.88 trillion won (14.7 million dollars) and Hyundai Motor Company 11.4 trillion won (10.67 million dollars) in their corporate cash holdings. They are capable of investment if they intend to. The stock price of Hyundai Motor Company fell after Hyundai Motor Group Chairman Chung Mong-koo made a record 10 billion-dollar bid for the land of Korea Electric Power Corporation in southern Seoul. However, it relieved the burden of the government that has to reduce the debts of state-run companies. As Finance Minister Choi Kyung-hwan threatened to impose taxes on corporate cash holdings upon his inauguration, companies seem to hurriedly release their money in the coffer. It would be nice if the two leading companies’ large investments spread to the business community and increase domestic investments and decent jobs substantially.