E-Mart bans golf paid for with company funds
Major corporations tighten budgets amid economic downturn
Accelerated crisis management due to economic recession
According to industry sources on the 24th, E-Mart, led by Shinsegae Group Chairman Chung Yong Jin, recently virtually banned golf paid for with company credit cards for all employees.
An E-Mart official explained, “The policy is to play golf with personal money, not company expenses, unless there is a clear reason related to work that can be proven.” In addition, the company has notified all executives to minimize the use of corporate cards. They have put restrictions in place so corporate cards can only be used when necessary for work.
E-Mart has been pouring efforts into improving profitability and reducing costs this year after posting its first-ever deficit last year (2023). The company has enforced voluntary retirement to reduce fixed costs and merged with its affiliate, E-Mart Everyday, a corporate supermarket (SSM).
In his New Year’s address, Chairman Chung emphasized profitability improvement and publicly stated that he would change CEO personnel according to performance. Shinsegae Engineering & Construction Co Ltd became the first target due to the decline in operating profit.
E-Mart, which accepted retirement applications until the 19th of this month, reportedly fell far short of the company’s initial expectations. An E-Mart official said the number of retirement applicants was in the tens, far less than the expected three-digit figure. As a result, efforts to save costs are spreading in other ways as the restructuring did not yield significant results.
Previously, Lotte Corporation also instructed all employees to refrain from playing golf during the week and to avoid including weekends in overseas business trips in a company-wide message titled Compliance with Basic Work Guidelines, delivered to its employees last March.
Experts analyze that the reason behind E-Mart of Shinsegae Group and Lotte Group, which are vying for the top spot in the domestic offline retail industry, restricting golf and corporate card use is not only because their main customer base has moved online but also because of the intensifying offensive from Chinese e-commerce companies, which has increased their sense of crisis.
In addition to the retail industry, SK Group, a major corporation, is reportedly refraining from golf. An SK official said, “Many executives are almost canceling their weekend golf games,” and added, “Internal golf gatherings where company employees compete are now hard to find.”
Furthermore, with a significant reduction in business promotion expenses, most executives have been unable to use the company’s corporate card at golf courses.
Some predict that SK Chairman Chey Tae Won prefers tennis over golf, and SK Supex Council Chairman Chey Chang Won does not play golf, which may have also influenced this.
In response to the ongoing economic downturn, SK revived the Saturday Executive Meeting for the first time in 20 years last February. The meeting, held every other Saturday, is attended by the CEO of major affiliates, led by Chairman Chey Chang Won, where they discuss the company’s outlook.
In response, Supex Council executives have returned to the flexible work system that allowed them to take two Fridays off per month and are now working five days a week. The active progress of business and equity sales and other restructuring puts executives on edge.
Major SK affiliates are known to be actively working to expand their businesses amid the downturn by establishing various task forces (TFs) to adjust their business portfolios as they enter 2024.
Samsung is reportedly refraining from golf as executives introduce a six-day work week in response to the economic downturn.
Executives from Samsung Electronics, Samsung SDI, Samsung Electro-Mechanics, Samsung SDS, and Samsung Display, among others, have agreed to work one day on weekends to participate in crisis management. Samsung’s financial affiliates are also expected to participate soon.
POSCO is also tightening its belt to overcome the prolonged downturn in business conditions. POSCO Group Chairman Jang In Hwa recently announced seven major future innovation tasks, including achieving steel sector facility efficiency and savings, with an annual cost of 726,153,130 USD starting this year.
Executives’ wage cuts are also being implemented. Considering the uncertain global business environment, POSCO has announced it will cut executive salaries by up to 20%. They are also considering abolishing the stock grant system, which provides company-owned stocks to executives for free.
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