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By Yoon Sung-won
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| Harim Chairman Kim Hong-kuk |
Earlier on Nov. 30, Pan Ocean, a Harim affiliate and the largest bulk shipper in Korea, said it ordered six very large ore carriers (VLOC) from a Chinese shipyard for a 2 trillion won (1.8 billion) shipping deal with Brazilian ore provider Vale.
A Pan Ocean official said, "Currently, Korean shipbuilders are demanding 10 percent more to build new ships compared to Chinese shipyards. It was an inevitable choice to boost our competitiveness under the nature of competitive global bidding."
However, this is bad news for major Korean shipbuilders such as Hyundai Heavy Industries, Daewoo Shipbuilding & Marine Engineering and Samsung Heavy Industries which have just managed to start recovering from the severe slump of recent years.
"Building a VLOC doesn't require top-level technologies. It is difficult for Korean shipbuilders to beat their Chinese counterparts in price competition because the latter are backed by low-paid human resources and generous government subsidies," a Korean shipbuilding industry source said. "As a Korean shipper, Pan Ocean could have ordered the new ships from a Korean shipbuilder. It's regretful that didn't happen."
In 2013, when it was called STX Pan Ocean, the shipper received relief funds worth 200 billion won from state-run financial institutions including the Korea Development Bank while it was under legal management.
The shipper was acquired by Harim later in June 2015 for 1 trillion won, which was a relatively cheap price, amid the prolonged slowdown in the Korean shipping industry at the time. But the company chose not to help other local businesses this time when they are in need.
Though the group has grown to one of the 30 largest conglomerates in Korea with 31 affiliates and assets worth 9 trillion won, this has not been the first time for Harim and its chairman to face public criticism for irregularities and shameful incidents.
The company faces a government investigation by the Fair Trade Commission (FTC) for alleged unfair trading.
In November, FTC Chairman Kim Sang-jo said the antitrust agency was looking into the suspicion claimed by Rep. Kim Hyun-kwon of the ruling Democratic Party of Korea that Harim had allegedly pressured farms over the ownership of the chickens they raise.
"We launched an investigation in September to closely look into the alleged unfair trade," the FTC chairman said. "Harim has faced multiple claims of unfair trade with its partnered chicken farms."
The Harim chairman has also been embroiled in other allegations such as avoiding gift taxes while handing over the group's unlisted chicken-processing business to his eldest son in 2012.
A Seoul analyst said that bottom lines, not nationalism, should come first for companies.
"We cannot criticize an owner of a company for opting for cheaper products. Otherwise, the company will eventually go bankrupt and cause bigger losses to its employees," said the analyst who asked not to be named.
"If Pan Ocean makes a more expensive order for the same product instead of a cheaper one, it is tantamount to a breach of trust to its shareholders. We cannot urge the management of any company to break laws."
