Fleet-dismantling laws threaten Korea’s corporate structure

 
Song Ho-keun
 
The author is a columnist of the JoongAng Ilbo and a chair professor and director of Doheon Academy, Hallym University.
 
   
The catchy refrain of Netflix’s “K-pop Demon Hunters” has been echoing everywhere. “We’re goin’ up, up, up” builds toward “gonna be golden,” lifting spirits and shaking bodies. Into that wave of sound, Korea’s president and senior officials boarded a heavy flight to the United States. The plane was filled with chiefs of staff, trade negotiators, working-level aides and reporters. While prior coordination reduced the chance of an outright snub — like what the Swiss president once endured — there was still anxiety over the unpredictability of President Donald Trump, leaving little time to brief Korea’s leader.
 

President Lee Jae Myung, center, listens to U.S. Commerce Secretary Howard Lutnick speak during the Korus Business Roundtable at Willard InterContinental in Washington on Aug. 25. [JOINT PRESS CORPS]

 
Indeed, Trump’s remarks just before the summit stirred alarm. “Is Korea in a purge or a revolutionary moment? We cannot ignore this, and business cannot proceed,” he said. Though the controversy was smoothed over, investigations into sedition and special probes are still active. President Lee Jae Myung, quick to adapt, stressed his role as a “peacemaker on the global stage.” Trump too recognized Korea’s value as an essential partner in his “Make America Great Again” strategy. Korea’s business leaders brought gifts: 16 conglomerate chiefs presented letters of intent promising astronomical levels of U.S. investment.
 
The pledges were staggering. Korean Air signed a contract worth 75 trillion won ($54 billion) for 103 aircraft and engines. Samsung Electronics promised 51 trillion won for a new Texas plant. SK hynix committed 18 trillion won to a packaging facility. Hyundai Motor pledged 34 trillion won over four years. Shipbuilding, nuclear energy and other strategic sectors added further commitments. Ryu Jin, chair of Poongsan Group and head of the Federation of Korean Industries, announced agreements worth $150 billion in energy, bio, mineral resources and smelting. The outflow of jobs and capital to America was undeniable.
 

Korean President Lee Jae Myung, left, shakes hands with Nvidia CEO Jensen Huang at the Korea-U.S. business roundtable reception at a hotel in Washington on Aug. 25. [JOINT PRESS CORPS]

 
At home, however, the mood was starkly different. On the very day corporate leaders signed away vast sums, the ruling party pushed through legislation aimed at big business. The so-called "Yellow Envelope Bill" now allows subcontractors’ unions to negotiate directly with parent companies. Already, subcontractors at Hyundai Steel have filed lawsuits, while Hyundai Motor and Hanwha Ocean reported disputes. Conglomerates such as Samsung and SK hynix oversee thousands of subcontractors, becoming exposed to endless legal battles. The slogan “equal pay for equal work” may sound fair, but no advanced economy has realized it in practice.
 

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Further amendments to commercial law tighten corporate governance. Majority shareholders must now heed minority voices when appointing directors and auditors, and face liability for investment failures. A cap of 3 percent on voting rights opens doors for foreign hedge funds to interfere in boardrooms. Korea’s ability to invest quickly and decisively abroad — an advantage over more cautious Japanese firms — risks being lost. The ruling party claims these measures will usher in a “Kospi 5000” era, but critics see ideological wishful thinking.
 
Korea’s corporate ecosystem has long operated as a fleet. Thousands of subcontractors surround the flagship conglomerates, advancing together in global competition. Advanced economies fear this armada-like model. Yet, lawmakers have now given destroyers the right to fire on their own mother ships. Many abroad will welcome such self-inflicted weakness.
 

Lawmakers vote on the Yellow Envelope Bill, a revision to Articles 2 and 3 of the Trade Union Act, during a plenary session at the National Assembly on Aug. 24. The bill passed with 183 votes in favor and three against out of 186 lawmakers present. [KIM SUNG-RYONG]

 
Korea today appears a divided country. The president encourages conglomerates to invest while the legislature punishes them. Corporate leaders must deliver on Trump-era promises of massive U.S. spending, while also absorbing lawsuits from unions and pressure from the government. The economy climbs “up, up, up” only to face mounting national debt and shuttered factories in industrial zones.


This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.