Kicking Away the Ladder
The Ladder Kicking Report began with Hanbo Steel, widely regarded as the starting point of Korea’s foreign exchange crisis. Hanbo Steel’s collapse dragged the entire Hanbo Group into bankruptcy, and all attempts at rehabilitation ultimately failed. The group’s assets were put up for auction by the creditor banks, and the report noted that the Mirae Group consortium had since acquired them. Mirae Group, with its heavy emphasis on heavy industry, had long needed a stable supply of steel. Its automobile, heavy machinery, and shipbuilding divisions consumed vast quantities of high-grade steel, yet successive governments had blocked any move into steelmaking to protect Pohang Iron & Steel. Hanbo Steel’s bankruptcy finally gave Mirae the opening it had long desired.
Yoo Jae-won found the acquisition sensible. Diversifying away from a single supplier like Pohang would strengthen Mirae’s competitiveness. The only blemish was the suspicion that Mirae had received preferential treatment during the bidding process, which could later invite criticism.
Next came Kia Motors. Jae-won had barely read a few lines when his eyes widened.
“What? Kia Motors is likely to go to Ilseong Motors?”
From Kia onward, the report diverged sharply from the history he remembered. In his previous life, Mirae Motors had acquired Kia and dominated the domestic market. This time, Ilseong Motors had emerged as the frontrunner.
“Yes. Initially, Mirae Motors was considered the strongest candidate because it offered the best terms, but someone at the top abruptly changed the decision.”
The report stated that Mirae had been the leading bidder until an unknown intervention handed the deal to Ilseong, which had bid a lower amount. Negotiations were now in full swing. Although the final price had not been disclosed, the creditor banks appeared quite satisfied.
“I see.”
The timing aligned with the period when Jeon Myeong-heon had launched his fierce attacks on the civilian government. When Jeon clashed with Cheong Wa Dae and sparks flew, a stray ember had apparently landed on Mirae Motors. Jae-won answered briefly while shaking his head. Watching Ilseong covet Kia made him wonder whether the group had learned nothing. One of the root causes of the foreign exchange crisis had been the reckless borrowing practices of the chaebols. Yet instead of selling off underperforming affiliates to restore financial health, Ilseong was now chasing an acquisition as burdensome as Kia. The more trouble Ilseong Group courted, the better it was for Jae-won; the explosive potential of Ilseong Electronics’ maturing dollar-denominated bonds would only grow. At the same time, a faint suspicion arose that Ilseong might possess some hidden card to survive the crisis. After all, the nation’s finest talent was concentrated there.
“Hmm. Next?”
Having finished his assessment of Ilseong, Jae-won moved on. Hwang Jae-hong, who had been waiting, immediately continued his briefing. The explanation lasted roughly thirty minutes. Even after hearing the entire report, Jae-won offered no comment. Hwang, accustomed to this, simply bowed and withdrew. His role ended here. Decisions about which companies to acquire and how to manage them belonged to someone else.
“Mr. Chairman, Vice Chairman Choi Kang-wook has arrived in the first-floor lobby and is taking the elevator.”
It was Choi Kang-wook.
“Understood. I’m coming out.”
While Hwang Jae-hong had been summoned to the study, Jae-won personally went to greet Choi at the entrance, a mark of genuine respect. The two men settled in the north-facing living room, which offered a prized view of both Namsan and the Han River. Few people were ever invited to this room, but Choi Kang-wook was one of the rare exceptions. After nearly a decade of working together, he had become Jae-won’s closest confidant, and the arrangement felt entirely natural.
“You look exhausted. I hope you’re still observing proper rest hours.”
With Korea’s difficulties mounting, demand for Choi’s services had surged, and the strain showed in the dark circles beneath his eyes.
“Of course. You needn’t worry. My face may look this way, but my body is overflowing with energy.”
Choi’s vigorous reply only made Jae-won more concerned; it sounded as though he were forcing himself. Yet Choi had long managed both the Korean operations of ID Group and delicate political coordination, so reducing his workload was impossible. Even the strict eight-hour workday enforced for ordinary employees did not apply to contract executives like him. Much of Choi’s real work—meetings with politicians and business leaders—took place after regular hours. Jae-won, mindful of this, paid special attention to Choi’s health. The tea now placed before them was made by grinding an entire root of wild ginseng.
They spoke lightly while finishing the tea. Only afterward did they turn to serious matters.
“As you know, the IMF will soon announce a change in its negotiating team, and new appointments will follow shortly.”
“Yes, I was already aware.”
Jae-won began with the IMF negotiations. Although the information was not classified, it was not something to be broadcast widely, so he had only mentioned the meeting itself without revealing the details.
“When you see the composition of the new IMF team, you’ll be quite surprised. It will be filled with experts from ID Investment.”
“Pardon? People from our side?”
Jae-won smiled at Choi’s astonishment and retrieved the contract he had signed with IMF Managing Director Camdessus from his desk drawer. Though written entirely in English, Choi now read it with ease. He had once struggled enough to attend an English academy with Kim Dae-seok, but years of practice had brought him to the level of fluent business-level conversation. Reviewing a dense legal document was no longer difficult.
“Ten billion dollars?”
“Yes. It’s the spoils I obtained in exchange for the contribution to the IMF. And all of it has been pledged for Korea’s benefit.”
“Good heavens, isn’t that excessive? Sixteen trillion won!”
“Ah, it wasn’t given outright. It will all be repaid later. It’s a loan. Besides, at last year’s exchange rate it was only about nine trillion won.”
At the current rate of 1,612 won per dollar the figure reached sixteen trillion, but a year earlier it had been roughly nine trillion.
“The crucial point is that the person who will wield the greatest influence over the IMF negotiating team is now you, Vice Chairman Choi.”
Jae-won returned to the real heart of the matter while Choi remained fixated on the sixteen trillion won.
“Pardon? Me?”
Choi’s shock was understandable. The IMF negotiating team currently carried unimaginable weight in Korea. Its proposals were treated as non-negotiable national imperatives; failure to implement them was seen as dooming economic recovery. In truth, this aura was largely a media fabrication. The IMF could be negotiated with, but the media had inflated its importance to conceal their own past mistakes. Jae-won found the situation useful. He intended to leverage that perception to enact reforms previously considered impossible—and he was entrusting that task to Choi.
“Yes. I’ll be returning to the United States soon.”
Jae-won’s purpose for this trip to Korea—the inauguration—had been fulfilled. Yet many assumed he would remain in Korea to help overcome the crisis, believing that having played a major role in electing President Jeon Myeong-heon, he would stay and reap the rewards like other kingmakers. They were mistaken. For Jae-won, operating from the United States offered far greater advantages than remaining in a small country like Korea. That did not mean he intended to abandon the situation entirely. Beyond placing the IMF team under his influence, he had prepared additional avenues of direct intervention.
“There are two more measures regarding the foreign exchange crisis.”
Jae-won pressed a specific button on the remote control resting on the desk. A white projector screen descended over the large glass window that had framed Namsan. The projector powered on, and soon the desktop of the Android operating system filled the screen. Jae-won connected his iWorks laptop, launched ID Presentation, and opened a confidential file stored in the Secure Area.
White Tiger Fund
Choi read the title aloud. In an elegant font, “White Tiger” stood out prominently, with “Fund” written smaller beneath it. The slide featured a large white outline of a tiger’s face against a blue background.
“It’s a turnaround fund I’m establishing. The size will be twenty billion dollars.”
The proceeds from liquidating ID Investment’s positions in major Nasdaq technology stocks totaled forty billion dollars. Ten billion had gone to the IMF; of the remaining thirty billion, two hundred billion would be allocated to the White Tiger Fund.
Choi set aside his surprise and focused on the explanation.
“Foreign economists and the Korean media keep saying Korea will collapse any day now, but that’s not how I see it. Once this crisis is overcome, many of the structural problems that have long plagued the Korean economy will be resolved at once. Growth that was previously suppressed will then explode. The potential is certainly there. China, just across the Yellow Sea, will continue growing at over ten percent annually, and the global economy will remain buoyant.”
Jae-won spoke with quiet confidence. Choi nodded along until one point prompted a question.
“Mr. Chairman, when we discussed expanding ID Technology’s production facilities, you were adamant that we would never build a factory in China.”
“Yes, I did say that.”
China offered cheap labor and presented itself as the world’s factory; countless companies were rushing to establish production bases there. Even within ID Group, some executives had argued that any new plant should be located in China. Explosive demand for the Tiffany phone had outstripped TG Computer’s capacity, and with the New Egg and iWorks series also in high demand, new subcontracting factories or entirely new plants were needed. Software packaging at the Deokjin-ri factory had likewise reached its limit. Multiple candidate sites had been evaluated, and company executives had strongly recommended China for its low labor costs. Jae-won’s firm refusal had killed the idea.
“If what you say is true, then China has fundamental problems. Can it really sustain ten-percent growth?”
China’s greatest risk was the dictatorship of the Communist Party. Policies swung wildly according to the Party’s circumstances, and international law was routinely ignored. Copyright was disregarded at the national level, and technology theft was commonplace. If ID Technology, whose strength lay in cutting-edge technology, built a factory in China, the probability of its proprietary technologies being completely stripped away was 99.99 percent.
“Of course it can.”
Labor-intensive industries would continue to profit handsomely from China’s low wages for the time being. Moreover, China’s own urbanization and industrial development would sustain high growth rates, so ten percent was not unrealistic.
“And more importantly, Korean companies are not the basket cases they appear to be from abroad. That’s why the White Tiger Fund will buy them. If a company has gone bankrupt but still has strong recovery potential, buy it immediately.”
“Pardon? Buy it? You mean I should?”
Choi’s face showed clear bewilderment as he asked again.
“Yes. I have work to do in the United States. Besides, if I stay in Korea, people will only grow more suspicious because of my relationship with Grandfather Jeon Myeong-heon. Use the two hundred billion dollars without restraint.”
“Pardon? The entire two hundred billion? I glanced at Hwang Jae-hong’s report as well, and even if we add up every company and piece of real estate on that list, the total still falls short of two hundred billion dollars.”
Jae-won answered simply.
“That’s true now. But what if one of the top five chaebols goes bankrupt?”
“Huk! Are you saying even one of Korea’s top five chaebols is in danger?”
“Yes. Daeho or Ilseong looks vulnerable. Among the major commercial banks, Cheil, Choheung, and Foreign Exchange Bank are also at risk.”
Jae-won had wanted to single out Daeho Group, but mentioning it too precisely might seem suspicious, so he included Ilseong as well. Choi, however, was not concerned with such nuances. The notion that a chaebol with massive octopus-like expansion could collapse was still difficult to imagine at this point in time. The failure of a major bank in the primary financial sector would be an entirely different matter from the collapse or exit of a small merchant bank.
“In any case, the White Tiger Fund will acquire promising companies and banks that come onto the market, normalize them, and then sell them.”
“Do you have no intention of holding on to them?”
Choi asked the question with a hint of hope. If, as Jae-won predicted, Daeho or Ilseong collapsed and the White Tiger Fund acquired their assets, those companies could be combined into a massive new conglomerate within Korea.
Jae-won paused briefly, then gave his answer.
“Anything unrelated to IT holds no appeal for me. Chimney industries are best left to chimney-industry specialists.”
The essence of ID Group was an IT company, and Jae-won never forgot that fact. Choi nodded, thinking that the answer was very much like his chairman. He was curious about the remaining ten billion dollars, but he trusted that Jae-won had already made plans and asked no further questions. After all, managing both the White Tiger Fund and the IMF negotiating team left him with no spare capacity.
After seeing Choi off, Jae-won began preparing for his return to the United States.
“Ah, refreshing.”
Jae-won watched President Jeon Myeong-heon’s passionate address once more, then closed his laptop. It was time to board his flight. Yet the sight of the president working so diligently to kick away the ladder that the privileged had long used to help one another made Jae-won’s steps feel remarkably light.