December 22, 2024

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Tens of thousands of protesters fill the streets in front of the National Assembly in Yeouido in Seoul on Saturday ahead of the vote to impeach President Yoon Suk Yeol. (Yonhap)

From the shocking declaration of martial law to Saturday's impeachment of President Yoon Suk Yeol, foreign companies doing business in Korea have been cautiously monitoring the unfolding political crisis over the past two weeks.

Their primary concern, however, is not the domestic turmoil itself, but Korea's tricky positioning amid the ongoing US-China trade war, which is expected to intensify under Donald Trump’s second presidency.

“We have not really discussed the impact of the current political situation on our business. There is not much we can do, and we don’t see immediate threats to our operations,” a Seoul official at a multinational company said on condition of anonymity.

Many foreign firms echoed this sentiment, though some took brief precautionary measures following Yoon's botched martial law decree on Dec. 3. The next day, a tech firm repatriated all employees who were on a business trip here, while others adopted remote work for local staff.

What foreign firms find more troubling is how Korea will maintain its negotiating power with the incoming Trump administration while remaining on favorable terms with China.

"Our headquarters believe Korea will resolve its political issues well. For us, the priority is clear: ensuring safety, maintaining product quality and serving our clients without disruptions," said an official from a chip materials firm that has been doing business here for decades.

According to the official, material suppliers operating in Korea are especially concerned about whether local chipmakers will be able to receive the subsidies promised under the US CHIPS and Science Act, the chip industry support program signed into law by President Joe Biden.

"Our customers are these chipmakers, and if they are unable to move forward with their plans to build factories in the US due to a lack of subsidies, it will have a direct impact on our sales as well," the official explained.

Another supplier pointed out risks posed by the latest US trade curbs on China, which prohibit sales of cutting-edge High Bandwidth Memory chips to Asia's largest economy.

Korean chipmakers are dominating the lucrative AI memory chip market, and the US trade measure announced earlier this month has raised concerns that it could limit their growth.

"Our clients make HBMs, and we supply materials. So how the trade regulations affect our clients would also affect us," the official said.

For Chinese companies operating here, the latest political turmoil has been less of an issue than the government's policies and stance regarding China.

"As a Chinese company, our utmost concern is how the Korean government will position itself between the US and China. For us, Korea's stance is what will change the business conditions," said a Seoul official at a major Chinese tech firm.

To ease tensions, the Korean government is stepping up efforts to address the leadership vacuum. Prime Minister Han Duck-soo, who assumed the role of acting president following Yoon's impeachment on Saturday, has held a series of meetings with foreign businesses here.

On Wednesday, Han hosted a special reception with the Korean-German Chamber of Commerce and Industry and the French Korean Chamber of Commerce and Industry, reassuring the business community that the government remains committed to supporting their operations in Korea.

"Korean ministries, including the Trade Ministry, are working closely together with financial institutions to ensure a stable environment for foreign investors and foreign businesses," Han said.

After the vote to impeach Yoon, Han also held a phone call with President Biden on Sunday, during which they reaffirmed the “ironclad” alliance between the two countries.

By Jo He-rim (herim@heraldcorp.com)