Shinsegae heir’s anti-communist posts cause stock prices to plummet

Posted on : 2022-01-11 17:49 KST Modified on : 2022-01-12 15:05 KST
Shareholders are complaining of this newfound form of risk caused by public missteps by corporate leaders
A screen capture of an Instagram post by Shinsegae Group Vice Chairman Chung Yong-jin on Nov. 15. One of the hashtags reads: “I don’t like the Communist Party.”
A screen capture of an Instagram post by Shinsegae Group Vice Chairman Chung Yong-jin on Nov. 15. One of the hashtags reads: “I don’t like the Communist Party.”

Shinsegae Group Vice Chairperson Chung Yong-jin’s repeated remarks about “eradicating communism” are turning into a risk for the corporation itself.

In the wake of the politicized statements that Chung began making two months ago, Shinsegae share prices Monday were down by 6.8% from the day before, with a growing campaign to boycott Shinsegae affiliates.

The controversy started in mid-November when Chung posted a photograph of himself holding a red card wallet with the hashtag “I hate the Communist Party.” At the time, he explained that the hashtag was included without any particular intentions after others commented that the wallet’s red color was reminiscent of the Communist Party.

But some interpreted it as an expression of disgruntlement with the Chinese Communist Party, which had hurt the group’s investments amid its reaction to the deployment of a Terminal High Altitude Area Defense (THAAD) anti-missile system in South Korea, as well as a message of criticism toward the Moon Jae-in administration’s pro-Beijing attitude.

Rather than back down, Chung attracted even more controversy by continuing to make remarks about the Communist Party.

Posting a picture of himself wearing the uniform of his company’s baseball team, the SSG Landers, he added the hashtag, “I quite dislike soybeans. No backtracking.” The “soybeans” (“kong”) was a play on words, as it sounds similar to an abbreviated form of “communism” (“gong”) in Korean.

He further fueled the fire with last posts bearing the tag, “In sum, I hate communism.”

The situation reignited with an Instagram post early in the morning Sunday, where Chung wrote, “My ‘eradicating communism’ is purely directed at the ones up there [North Korea] who are threatening us.”

“Instead of denouncing me, we should be uniting beyond left and right in calling together for an end to communism rather than fighting,” he continued.

The controversy spilled over into the political world when People Power Party (PPP) presidential nominee Yoon Suk-yeol joined the fray, showing his support of Chung by posting an image of himself buying anchovies (“myeol-chi”) and soybeans (“kong”) at the superstore E-mart — both food items likely chosen because of their phonetic similarity to Korean word for “eradicate communism” (“myeolgong”).

Chung’s post on Sunday attracted 70,000 likes, as well as hundreds of replies in support.

“It’s great to see businesspeople who don’t care what the politicians think,” one person wrote.

“I support eradicating communism,” others added.

Another screen capture of an Instagram post by Shinsegae Group Vice Chairman Chung Yong-jin on Sunday. The cake decoration reads: “No. 1, No backtracking” while his caption speaks of “eradicating communism.
Another screen capture of an Instagram post by Shinsegae Group Vice Chairman Chung Yong-jin on Sunday. The cake decoration reads: “No. 1, No backtracking” while his caption speaks of “eradicating communism."

Chung’s remarks have also attracted a torrent of criticism online. A boycott of Shinsegae Group affiliates has gained steam as an image reading, “Boycott Chung Yong-jin. Don’t go, don’t buy,” has been circulating on the web.

Other messages calling for boycotts of affiliates E-mart and Starbucks Coffee Korea have been drawing support as well. After the prospect of a boycott was first mentioned online late last year, signs are now suggesting that it may turn into a reality.

The situation has translated into a steep dive for Shinsegae Group’s share prices. Shinsegae finished the day Monday at 233,000 won per share on KOSPI, down by 17,000 won (6.8%) from the day before.

Shinsegae International also experienced a 5.34% drop, finishing trading at 133,000 won per share. On Monday alone, 167 billion won in Shinsegae market capitalization went up in smoke, along with 53 billion won for Shinsegae International.

Shinsegae shareholders took to Naver stock trading forums to attribute the decline in share prices to “politicized statements” by the vice chairperson. They called on corporation owners to “refrain from political statements that have nothing to do with corporate management,” citing their “negative impact on company value.”

Concerns are also growing that the Chung firestorm could flash over to impact overseas investors as the story is reported in the foreign press, including the prominent Hong Kong-based South China Morning Post.

Industry observers described the situation as a new form of “owner risk,” a term used in Korea to refer to the negative impact on corporations stemming from their owner’s missteps in the public eye.

“The damage these misstatements inflict on the group as a whole could spiral out of control, outweighing any positive effect from the image of the vice chairperson actively communicating on social media,” said an executive at one major distribution company.

“Given that Shinsegae is currently investing actively in online areas, representative statements on social media stand to deal a major blow to the overall corporate image,” they noted.

Another distribution company official said, “On social media, you sometimes see situations where people mistake the positive response to their posts as being representative of the response of society as a whole.”

“At first, I thought it was a one-off sort of thing because of Chung’s free-spirited nature. But when I saw him keeping it up even as the controversy snowballed, I got the sense there might be some political intention behind it,” they added. Chung currently has around 750,000 Instagram followers.

Many within the Shinsegae Group are feeling rattled over Chung’s remarks.

“This seems to be a case where people online are reading too much into a post about the ‘Communist Party’ that was put up without any intentions behind it,” a Shinsegae official said.

“Vice Chairman Chung has communicated that he does not plan to make any more statements about ‘eradicating communism’ in consideration of the controversy,” they added.

In response to the growing furor over his remarks, Chung posted another Instagram message Monday afternoon in which he wrote, “Eradicating communism may just be politics for some people, but for me, it’s the reality.”

“I was just saying how I naturally feel both as a businessman and as a citizen of the Republic of Korea, who has to live through day after anxious day of not knowing when a missile is going to be launched at the country where I live,” he continued.

“I was born into a business family and will finish out my life as a businessman, so quit going on about ‘politics,’” he added.

His remarks read as a dismissal of the prospect that he might pursue a political career, a possibility that some had raised as the furor over his remarks spilled over into the political arena.

By Ock Kee-won, staff reporter

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