Companies Assess Plans to Survive Possible Collapse of 1,000 Won Line

It has been reported that Hyundai-Kia Motors, LG electronics, LG chemicals, and a number of other big business companies are planning next year’s annual business agendas to cover a worst case scenario in which Won/Dollar Exchange Rate drops below the 1,000 won line.

It is the first time since the foreign currency crisis that well known domestic enterprises are creating their business plans according to the possibility of the won-dollar exchange rate below the 1,000 won line, and it is also expected that this factor will influence middle to long-term business plans.

An executive from Hyundai-Kia’s Project Management Headquarters said, “Recently, as Won/Dollar Exchange Rate has been rapidly depreciating (with a won value increase), we have been creating a number of business scenarios in accordance to the changing exchange rate. One of the scenarios includes the case in which the exchange rate drops below the 1,000 won line.”

LG electronics is also creating a business management scenario to prepare for a possible the won-dollar exchange rate drops below the 1,000 won line. A representative from LG electronics said, “Recently, after witnessing the won-dollar exchange rate drops below the 1,100 won line, we have changed our plans to prepare for a drop below the 1,000 won line.”

Also, an official from LG Chemical’s Business Planning Team said, “Next year, since fluctuations in exchange rates are going to be the biggest risk to business, we had no choice but to assess a change in business management that will be put in place if the won-dollar exchange rate were to drop below the 1,000 won line.”

Ever since the won-dollar exchange rate surpassed the 1,000 won mark during the foreign exchange crisis that began in November of 1997, it has not dropped below the 1,000 won level. Most big business companies have assessed the standard the won-dollar exchange rate in the 1,050 won to 1,070 won range. However, other companies have been creating emergency backup plans to prepare for further depreciation.

It is expected that the creation of such scenarios in preparation for the “collapse of the 1,000 won line” will indeed affect the middle to long-term business strategies of many companies.

Ahn Soo-yong, a researcher in charge of auto industries from the Hanhwa Securities Company, said “Even if the won-dollar exchange rate drops below 1,000, companies will try to create business plans that will maximize profits. For this to happen, companies will most likely accelerate outsourcing of corporate manufacturing, changes in investment plans, and corporate restructuring of personnel that result in the circumscription of business.”