Sohn says the five chaebol have begun talks on a second phase of restructuring covering the steel, shipbuilding, construction machinery and other sectors, with automobiles and telecommunications equipment down the road. But not everyone is impressed. We wanted them to get out of certain sectors and then focus on the remaining businesses. Except for Hyundai Oil's takeover of Hanhwa Energy from troubled Hanhwa Group, none of the September 3 agreements actually transfer businesses from one chaebol to another. Instead, they establish new companies with joint ownership and management, making a mockery of President Kim's vision - getting chaebol to focus on core strengths, taking over businesses that enhanced them and getting rid of businesses that don't, while shutting down redundant units with no profitable home.
Market analysts are understandably disappointed.
Those liabilities will not disappear after their combination. Moreover, many of the new consortia are in industries suffering from overcapacity. Lumping them together may create economies of scale, but unless those economies are stupendous, the combination will still have a hard time turning a profit without cutting capacity. That does not seem to be on the agenda. Then there is the question of execution.