Foreign firms unfazed by presidential scandal

Foreign companies operating in South Korea generally shared views that the presidential scandal does not directly affect their business -- yet. However, if the political issue is prolonged, it may pose stronger risks as it could slow the country’s economic activity, the executives said.

Korea is currently reeling from a political scandal involving Choi Soon-sil, who is accused of peddling influence and interfering in state affairs as a secret adviser to President Park Geun-hye. 

Amid growing protests in Seoul demanding the president step down, foreign companies here have viewed the issue as a strictly political scandal with a wait-and-see attitude.

“I found the whole story very absurd. It seems very contradictory to this tech-savvy and advanced nation,” said an executive working for a German tech company. He added it took him a long time to understand what “the eight fairies” often cited in scandal coverage referred to.

The “eight fairies” are an alleged group of unofficial advisers who have enjoyed extensive access to the president.

“Still, it does not affect our business or future investment plan in the short run because the political scandal does not appear to affect our business directly for the time being. We will watch how the government will handle the issue,” he added.

Another official at a Korean unit of a California-based major IT firm said, “Currently, no talks are ongoing at the headquarters level, as they do not take this issue seriously. It seems there is a gap between how they view it and what we feel here.”

Experts said this is because the issue has stoked outrage among ordinary Korean citizens, though foreigners feel it is less relevant to them.

“Foreign companies and investment banks still appear to view the issue as a mere presidential scandal because they see the issue more objectively than emotionally,” said Kim Sung-tae, a researcher at the state-run think tank Korea Development Institute.

“However, things may change if all the facts (involving Choi) are disclosed and a government reshuffle is carried out,” Kim added.

Also, the way the government and political circles handle the scandal will be crucial, the observers said, citing how a prolonged scandal may hurt national credibility and slow economic activity.

“We have so far considered the issue as mere political gossip. But, if the gap in state affairs is prolonged and this leads to an economic slowdown, it would have a negative impact on the global companies doing business here,” said an executive working for foreign auto company.

Lee Min-wha, a professor at KAIST, said, “What companies dislike the most is uncertainty. If this political uncertainty lasts for long, companies -- whether local or foreign -- will find it hard to make decisions and this will have negative impacts on their business.”