Samsung-Hyundai partnership

Battery alliance between top two conglomerates offers win-win model

Samsung Electronics Vice Chairman Lee Jae-yong and Hyundai Motor Group Executive Vice Chairman Chung Euisun met on Wednesday. The two exchanged views on the supply of next-generation batteries for electric vehicles. This was the first time that the heirs-apparent of the nation's two largest conglomerates met to discuss business. The top-two business groups have had a rivalry based on starkly different corporate cultures.

It had been far from desirable for the two business giants to treat each other as if they were total strangers so far. Lee and Chung need each other more than any others. Samsung Electronics has jumped into the business of supplying electronic equipment for electric cars ― the global IT giant took over Harman International Industries for this purpose four years ago. In addition, Samsung SDI is competing with local and foreign rivals to expand its share in the global battery market. Samsung Electronics' securing of Hyundai Motor as a friendly force is a pragmatic decision.

For Hyundai Motor, too, Samsung SDI is a partner of utmost importance. Cars have come to be classified as electronic products ― nearly all global automakers have begun to take part in the annual Consumer Electronics Show in Las Vegas. At this year's event, Hyundai Motor showed a personal air vehicle (PAV) model together with Uber. Chung, at a town hall meeting with executives and employees last year, predicted his company's future business portfolio would be automobiles (50 percent), PAV (30 percent) and robotics (20 percent). For Hyundai Motor, the battery making affiliate of Samsung would be an indispensable partner.

The Lee-Chung meeting also falls in line with government policy. In a speech that marked the start of his fourth year in office last Sunday, President Moon Jae-in said, “The government will develop three industries ― system semiconductors, bio-health and futuristic vehicles ― as new growth engines.” The Samsung Group is a major player in the system semiconductors and bio-health sectors while Hyundai Motor is a pioneer in future cars.

For Korea to emerge as a leading country in the post-coronavirus world, the strategic alliance between Samsung and Hyundai is quintessential. Due to the COVID-19 pandemic, the world is now watching the emergence of enhanced economic nationalism. The Samsung-Hyundai alliance is a win-win model to prepare for the post-coronavirus economy in a preemptive manner.