Has the Korea Federation of Economic Organizations, once the 'eldest brother,' been pushed aside... Is changing the chairman the answer?

[Economic Groups Power Struggle]①
FKI-KCCI Integration Talk Also 'Solsol'

The Federation of Korean Industries (FKI), which is supposed to gather opinions from the business community to support the economic policies of the Yoon Suk-yeol administration and act as a private diplomatic envoy overseas, is facing a major issue of 'finding its role.' Since the reduction of FKI's role, the balance of power among economic organizations that once collaborated to invigorate the economy?such as the Korea International Trade Association, the Korea Chamber of Commerce and Industry, the Korea Federation of Small and Medium Business, the Korea Employers Federation, and the Korea Federation of Medium-sized Enterprises?has also collapsed. To resolve inefficiencies caused by overlapping roles, voices calling for the integration of economic organizations are even emerging. Can FKI find its role again through a change of chairman?

[Asia Economy Reporter Park Sun-mi] Before the ink dried on FKI Chairman Huh Chang-soo's 2023 New Year's message stating, "We will strive to improve corporate structure and strengthen industrial competitiveness," he announced his intention to resign. The FKI, which desperately needs reform, has fallen into turmoil. To restore its status, which plummeted during the Park Geun-hye administration's state affairs manipulation scandal, the urgent task is to re-enroll the four major groups that withdrew as member companies, but finding a chairman to take on this role is not easy.

FKI plans to select a new chairman candidate to succeed Chairman Huh at the member companies' general meeting on the 23rd of next month. The general meeting of member companies is FKI's highest decision-making body and is held once a year. Until 2017, major decisions were made by corporate heads at the chairman's meetings held regularly every two months, but since the organizational downsizing reform under the 2017 FKI innovation plan, this role has been taken over by the general meeting of member companies.

The FKI Innovation Committee is involved in recommending candidates for the new chairman. The Innovation Committee, confirmed to be launched under the chairmanship of Lee Woong-yeol, Honorary Chairman of Kolon Group, on the 9th, will hold its first meeting as early as the end of this month or by early next month at the latest after completing its personnel composition. The Innovation Committee will consist of 7 to 8 members, including internal personnel such as corporate chairmen and external experts like university professors, to recommend new chairman candidates and pursue organizational and personnel reforms. During this process, internal conflicts are inevitable, including receiving collective resignations from executives below the managing director level.

This is not the first time Chairman Huh has expressed his intention to resign before the end of his term. Having served six consecutive two-year terms since 2011, he also announced his intention to resign in 2017, 2019, and 2021. At those times, he continued as chairman because no suitable successor was found. Inside FKI, there is hope that someone capable of re-enrolling the four major groups as member companies will take on the chairman position.

FKI is a private comprehensive economic organization with large corporations as its members. Until the Park Geun-hye administration, it played the role of the 'eldest brother' among economic organizations but lost influence after being implicated in the state affairs manipulation scandal. Currently, securing member companies suitable for its role as a private organization representing large corporations is urgent. Since LG started withdrawing in 2016, followed by Samsung, SK, and Hyundai Motor Group, all four major groups have left, and re-enrollment has not been achieved. The number of FKI member companies increased from 500 in 2014 to 619 in 2016 but has since shrunk to 420.

The phenomenon of 'passing over' FKI in economic organization meetings continues. At the end of last year, when President Yoon invited heads of economic organizations to a private dinner at Cheong Wa Dae's Sangchunjae, FKI was excluded. Chairman Huh was also unable to accompany President Yoon on his recent visit to the United Arab Emirates (UAE).

FKI's shrinking influence makes it difficult for anyone to take on the chairman position. Not only Kim Seung-yeon, Chairman of Hanwha Group, and Shin Dong-bin, Chairman of Lotte Group, but even Lee Woong-yeol, who chairs the Innovation Committee, is reluctant to assume the FKI chairmanship. While FKI has relinquished its position as the 'eldest brother' among economic organizations, the Korea Employers Federation, chaired by Sohn Kyung-shik of CJ Group, is showing signs of pushing for integration with FKI.

The Korea Employers Federation is a business organization focused on labor-management relations. It became independent from FKI in 1970 when labor issues emerged as a social concern. Although the two organizations have different characteristics, the Korea Employers Federation has developed into a comprehensive economic organization through its more than 4,000 member companies, including large and small businesses, creating an atmosphere for integration between the two. Chairman Sohn believes there is no need to operate two economic organizations with increasingly similar roles separately.