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Major Companies Expanding Investment Despite Crisis

Posted November. 20, 2008 08:20,   


Despite the slowdown in the global economy, Korea’s largest steelmaker POSCO will invest six trillion won (4.15 billion U.S. dollars) next year, the largest in its history and up from 3.4 trillion (2.35 billion dollars) won invested this year.

POSCO is the world’s fourth-biggest steelmaker.

Hyundai Steel will invest 2.05 trillion won (1.42 billion dollars) to complete construction of the Ilgwan steel mill in Dangjin, South Chungcheong Province, by January 2010. Hyundai’s investment this year was 1.95 trillion won (1.35 billion dollars).

Shinsegae will invest more than one trillion won (691 million dollars) in building three department stores under construction and expanding the number of E-Mart discount outlets nationwide.

LG Electronics Vice Chairman Nam Yong recently urged the heads of his company’s overseas branches to go ahead with their investment plans as scheduled. “When the economy is in recession, companies tend to hesitate over investment. But aggressive investment will bring more results in the long run,” he said.

KT Corp., the country`s largest telecom company, is also joining the investment drive by injecting 1.53 trillion won (1.06 billion dollars) into the new Internet protocol TV business by 2012 despite the contracting communications market.

Certain small and medium enterprises are also expanding both investment and employment.

Software developer ALTIBASE will hire 50 staff, equivalent to almost half of its workforce, by the first half of next year. “If we act passively due to economic woes, another opportunity will never come,” said company president Kim Ki-wan. “Now is an opportune time to strengthen personnel and technological development.”

Businesses around the world are also trying to turn the economic crisis into an opportunity to expand. With the stock prices of promising foreign companies plummeting and the yen gaining ground, Japanese companies are pursuing mergers and acquisitions.

Japanese petrochemical giant Mitsubishi Rayon will buy British chemicals producer Lucite International, the world’s largest producer of acrylic resins, for 150 billion yen (1.55 billion dollars).

Pharmaceutical company Daiichi Sankyo will also purchase India`s largest drug maker Ranbaxy Laboratories.

In the United States, most companies are restructuring but others are preparing for the future by expanding investment.

The leading U.S. maker of construction and mining equipment Caterpillar, which prioritizes long-term investment, is working on building additional manufacturing lines.

Oh Mun-seok, senior researcher at LG Economic Research Institute in Seoul, said, “Good investment in times of recession will help a company improve its industry ranking when the economy perks up. Cash-strapped companies, however, will have difficulty expanding investment now.”

jinhup@donga.com swon@donga.com