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Business & Politics

LG, CJ join other Korean firms to run offices in Washington

The move comes as having a handle on US policy trends and networking become crucial for doing business in the US

By Nov 01, 2021 (Gmt+09:00)

Washington D.C. is becoming a key destination for Korean conglomerates.
Washington D.C. is becoming a key destination for Korean conglomerates.

WASHINGTON D.C. – South Korea’s major business conglomerates are heading to Washington D.C. to run offices handling regulatory and government issues as gaining an understanding of the Biden administration’s policy becomes increasingly crucial to their business decisions.

According to industry officials on Monday, LG Group recently decided to set up an office in the US capital to be staffed by 15 employees, including a senior executive from Seoul.

Once established by the end of this month, LG will be joining three other Korean conglomerates – Samsung, Hyundai and SK – which already run offices in charge of government relations and information gathering in Washington.

CJ, a group specialized in the food and beverage business, has also decided to move its US government affairs office to Washington from its New Jersey headquarters.

Even smaller businesses such as Hyundai Steel Co. and Hanwha Defense Co. are either considering establishing such an office or expanding existing organizations to better cope with any significant US policy changes.

“There is a growing consensus about the need for such offices among Korean companies, both big and small. There’s a kind of urgency among them that the Korean government’s diplomacy alone isn’t enough for them to do business in the US,” said an official at a Korean conglomerate.

US Secretary of Commerce Gina Raimondo (Courtesy of AP)
US Secretary of Commerce Gina Raimondo (Courtesy of AP)

NETWORKING CRUCIAL

These moves by major Korean companies come as the administration under US President Joe Biden is becoming increasingly explicit in demanding business information, even industrial secrets, from foreign firms operating in the US.

During the White House-hosted global semiconductor summit in late September, US Secretary of Commerce Gina Raimondo asked chipmakers, including Samsung Electronics Co. and Taiwan Semiconductor Manufacturing Company (TSMC), to disclose by mid-November internal information such as their client lists and inventory levels, citing the need to tackle the global chip shortage.

The pressure from the US government has been heightened with US companies such as Intel complaining that they compete against foreign rivals at a disadvantage even on their own soil.

For many Korean big companies, the North American market is one of their largest sources of revenue growth outside Korea.

On the sidelines of the South Korea-US summit in May, Samsung Electronics announced it is investing $17 billion to build a new foundry plant in the US.

Samsung SDI Co., another unit of Samsung Group, said last month it joined hands with Dutch-domiciled multinational automaker Stellantis N.V. to build a multi-billion-dollar battery facility in the US, joining other Korean battery makers’ move to gain ground in one of the world’s largest electric vehicle markets.

SK Group Chairman Chey Tae-won at the bilateral business roundtable in the US in May
SK Group Chairman Chey Tae-won at the bilateral business roundtable in the US in May

LG Energy Solution Ltd. a unit of LG Chem Ltd., is expanding its battery joint venture with General Motors, while SK Innovation Co. in September launched its first US battery JV with Ford Motor.

No conglomerates would better understand the importance of having a handle on the US government’s policy stance than LG and SK, which earlier this year were embroiled in a legal dispute in the US over trade secret infringement and battery-related patent violations.

With the growing need for efficiently handling US government affairs, SK Group is said to soon be naming Yoo Jung-joon, vice chairman of SK E&S Co., to head up the group’s North American affairs.

BUSINESS LEADERS HEAD TO US

Hyundai Motor Group, which acquired Boston Dynamics, a US robotics startup, in December, established in April this year Genesis Air Mobility LLC, in Washington instead of the Silicon Valley, to spearhead its urban air mobility (UAM) business in the US, led by Hyundai Motor Co.

Hyundai’s chief Chung Euisun visited the US for two weeks last month to meet US politicians, government officials and business leaders to build a government-to-business network there, according to industry officials.

SK Group Chairman Chey Tae-won and LG Group Chairman Koo Kwang-mo are also said to heading to the US on similar missions soon, they said.

Korean President Moon Jae-in speaks at the bilateral business roundtable May 21 in Washington, D.C.
Korean President Moon Jae-in speaks at the bilateral business roundtable May 21 in Washington, D.C.

ENLISTING FORMER BUREAUCRATS

Some Korean companies are hiring former US bureaucrats in hopes of gaining an understanding of US policy trends through strengthened networks with US government officials.

POSCO, Korea’s top steelmaker, said in September it hired Stephen Biegun, former US deputy secretary of state, as its adviser for business in the US.

Coupang Corp., a Korean e-commerce giant that listed its shares on the New York Stock Exchange in March, recently named former Deputy Assistant Secretary of State for East Asian & Pacific Affairs Alex Wong to  the role of chief public affairs officer based in Washington to oversee public policy matters, US government relations and engagement with an array of stakeholders.

Write to In-Seol Jeong, Hyung-Suk Song and Kyung-Min Kang at surisuri@hankyung.com

In-Soo Nam edited this article.
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