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| Hyundai Motor plant in Saint Petersburg, Russia / Courtesy of Hyundai Motor |
By Park Jae-hyuk
Growing tensions between Seoul and Moscow, after President Yoon Suk Yeol's controversial remarks on the Ukraine war, has prompted Korean companies operating in Russia to be wary of provoking the world's largest country ― by land area ― according to industry officials, Friday.
Amid growing concerns over the possibility of the Kremlin freezing Korean firms' assets in Russia, domestic conglomerates have remained cautious about any of their moves being considered friendly to Ukraine.
In particular, they have maintained their cautiousness due to the recent news concerning Tuesday's closed-door meeting between Ukrainian Ambassador to South Korea Dmytro Ponomarenko and high-ranking executives of Samsung, SK, Hyundai Motor, LG and Lotte.
Although the meeting was held a day before Reuters reported Yoon's remarks that Seoul may provide military aid to Ukraine if there is a situation that the international community cannot condone, the news of the meeting was published a day after the Reuters report.
The Korean Chamber of Commerce and Industry (KCCI) said the participants met at a hotel in Seoul along with KCCI Executive Vice Chairman Woo Tae-hee and Yoon Sang-jik, the secretary general of the World Expo 2030 Busan Bid Committee.
The Korean business lobby group also confirmed that the Ukrainian ambassador asked the nation's five largest businesses to participate in projects for the post-war reconstruction of his country.
However, a KCCI official emphasized that the five business groups' executives did not give a definite answer to the request.
"The meeting was actually not a special event," the official said. "The Ukrainian ambassador was just invited to one of our regular meetings with domestic company executives to support Busan's bid to host the World Expo."
In contrast to U.S. and European companies cutting ties with Russia after its invasion of Ukraine last year, Korean firms have maintained their operations in Russia, remaining cautious about condemning the invasion.
Hyundai Motor, for example, cited the shortage of automotive semiconductors, when it decided in March last year to halt the operation of its factory in Saint Petersburg. The factory is rumored to have been sold to a Kazakh company but the carmaker has reiterated that it is considering various options.
According to Russian news outlets, Hyundai Motor has continued its sales there by importing vehicles from the company's factory located in Kazakhstan after it finished selling all cars produced in Russia before the war.
"It will not be easy for Korean manufacturers to pull out of Russia, considering the fixed costs and sales networks they have built up there," said Jeong Min-hyeon, head of the Russia and Eurasia Team at the Korea Institute for International Economic Policy.
Last month, Russia also began to force foreign firms leaving the country to donate at least 10 percent of the value of their respective sales to the state budget. More than 150 Korean companies are operating in Russia, including Korea's leading conglomerates and food firms.
"We have yet to suffer any setback in our business in Russia," said an official of one of the Korean companies operating in Russia. "However, we have a contingency plan to cope with the worsening situation."
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