[Start economy] Jung Yongjin is E-Mart, Jung Yu-kyung is a department store...Separation of Siblings in 'New World'

■ Host: anchor Lee Jung-seop, anchor Cho Ye-jin
■ Starring: Lee Jung-hwan, professor of economics and finance at Hanyang University

* The text below may differ from the actual broadcast content, so please check the broadcast for more accurate information. Please specify [YTN News START] when quoting.

[Anchor]
We deliver the latest economic news quickly and kindly. Start Economy, today we will be with Lee Jung-hwan, a professor at Hanyang University's School of Economics and Finance. Please come in. Shinsegae Group, ranked 11th in the business world, has made it official to separate E-Mart from department stores. This means that Chairman Chung Yong-jin and Chairman Chung Yoo-kyung will manage as siblings and then separate and manage the company separately, right?

[Lee Jung-hwan]
In practice, it is said that management was separated from the beginning. In 2011, Shinsegae can be said to be the parent company, but when the parent company released E-Mart separately, Chairman Chung Yong-jin ran E-Mart and became the chairman this time, and created a structure to operate Shinsegae, department store, or duty-free store. So, I can tell you that E-Mart and Shinsegae Department Store already had a structure in which they operated differently, and the highest point of each manager was Chairman Chung Yong-jin and Chairman Chung Yoo-kyung. But what it means to be in full swing is that Chairman Chung Yoo-kyung was originally the chairman this time and was the president before. It can be seen as a story that the president quickly promoted to the chairman without going through the vice chairman, and specified management separation as chairman Lee. If you try to separate the affiliates, you can clearly separate the affiliates only when the positions are in the same position, but you can understand that both Chairman Chung Yong-jin and Chairman Chung Yoo-kyung have completely separated the affiliates according to the chairman's position. So, in terms of management, it has already been divided since 2011, and you can think of it as not continuously interfering with the management itself. Nevertheless, it can be understood that while being promoted to the chairman, he declared a practical separation of management in the wake of Lee's promotion.

[Anchor]
I think it would be good to take a closer look at the reason why the division was officially declared in earnest this time. I think it will also be related to the growth of the group inside the Shinsegae.

[Lee Jung-hwan]
There seems to be a lot of room for interpretation. However, some people from outside focus on the fact that Chairman Chung Yoo-kyung was promoted without going through the vice chairman. Because the management performance was good, the management performance was recognized, and Shinsegae Department Store recently recorded the highest sales. Some say that the company's performance is good enough to record record-high sales, so some say that the company recognized such management performance and separated management faster than expected. And E-Mart is also difficult these days. With Temu and Ali, these competitors, the commerce market is changing, and although it is difficult due to this, we will maintain this trend as we increase operating profit and eventually achieve management efficiency. From Shinsegae's point of view, it can be seen that it is going under the great justification of maintaining this stance and pursuing more management efficiency. Nevertheless, as I said earlier, there are cases where the meaning of promotion is interpreted a little differently, so I think many people interpret that they gave the ball. There were many people who predicted that they would be promoted to vice chairman. If I get promoted this time, I thought I would become a vice-chairman from the president and go from vice-chairman to chairman step by step, but I think there are some people who give meaning to the fact that I went straight to the chairman.

[Anchor]
There is a mixture of interpretations, but it is not the first time that large companies have separated affiliates, but there have been cases in the past. But it has to go through a very complicated process, and this time, Shinsegae will also be the same, right?

[Lee Jung-hwan]
I'm saying it'll be easier than I thought. Originally, the division itself has a group company, but it is an issue under commercial law because it separates the company from the group company, but in Korea's Fair Trade Act, there is a bill that restricts investment between relatives. What that means is that the separation of affiliates itself is not necessarily profitable, but it is also made separately when the company's management deteriorates, but it is subject to the Fair Trade Act when separating management between relatives. In the Fair Trade Act, there was a structure that prevented more than 3% and prevented more than 3% from each other, but it has already been organized within Shinsegae. In the end, E-Mart and Chairman Chung Yong-jin have already exchanged stocks so that they do not make mutual investments. Since they exchanged stocks, Chairman Chung Yong-jin is 18% in E-Mart and Chairman Chung Yong-jin is 18% in Shinsegae. What that means is that we have already prepared step by step to avoid violating these fair trade laws, and in practice, management has been almost separated, and only declarations are left. But the last issue is how much the mother shares this. So, there may be issues such as how to distribute 10% each when both sides have it now, but it is true that we have already prepared a lot step by step and have been predicting that we will go this way since the separation of affiliates in 2011.

[Anchor]
We will see if this separation of affiliates can serve as a foothold for Shinsegae Group to grow to the next level. Let's move on to the next topic. Black and white chefs are very popular these days, and The Bourne, a restaurant franchise run by CEO Jongwon Baek, also applied for a public offering, and it was very popular.


[Lee Jung-hwan]
It has collected 11.8 trillion shares of Dubon Korea, but public offering shares are not the original shares, but new shares are generated, but Dubon Korea companies are not stocks traded on the stock market. While listing, they issue new stocks, and someone should buy them then. If someone buys and goes based on the price, the market is so confused and it's so uncertain what the actual price will be, so the securities company decides that it's a public offering. We can sell to some extent at this rate. So, from the perspective of the company, it is necessary to decide how much profit I will make when I sell stocks and how much investment I will receive, so we can say that we collect capital from outside through the decision of public offering. If you want to do this public offering, you have to gather investors, but investors pay the deposit. In a way, I think it's a story that I'm going to make a public offering by paying 50% of the public offering price. What it means to say that the amount of evidence has increased is that people want to buy a lot of each other because this stock is popular. That's why it won't be allotted. It's not all assigned, so 50% of them are selected and assigned. Then, you can understand that the rest goes through this process of distributing the money according to the ratio to those who paid a lot of evidence. So, the fact that a lot of deposits went into the stock market means that people are very interested in this stock, that they are interested in subscribing to the public offering, and that it became a box office success is a part that can positively affect the stock price in the future.

[Anchor]
I see. We'll continue our conversation. First of all, we were talking about the subscription to The Bone Korea public offering, but there were many ordinary investors. I did it and got it for a week. But now, employees say that there has been a shortage of subscriptions, so what is the background?

[Lee Jung-hwan]
Employees have the right to receive shares by talking about our stock ownership system. If you apply in advance, if the company sells stocks and it does well, if it is listed well, employees have to share it in a way, so there is a system in which employees can receive a separate public offering through the employee stock ownership system. However, if you ask what restrictions there are, we cannot sell them for a year if we receive them as our company's owner. So, it falls below the expected public offering price, and if this happens, you can lose money. Often, things that lose money can occur from the perspective of employees. In particular, employees may think that Netflix is overheating, and objectively, when grocery companies and food companies went public, the performance was not that good for a year. It went well when it was listed, but if you look at things like stock prices a year later, there are a lot of restrictions on raising sales, so there were certainly concerns about risk management and what would happen if the stock price fell, and looking at other data, if you think there is such a risk, you can understand that many things that have not gone from our stock price have actually been excluded as general public offering stocks. I think it's a risk side, there's definitely a restriction that it should be sold in a year, and if you look at other companies, the stock price wasn't that good, and I think I can evaluate these things as reflecting various things.

[Anchor]
In addition, there are various interpretations that concerns about the possibility of owner risk may have played a role because Jongwon Baek CEO is actively engaged in broadcasting activities. We'll continue to look at the New York Stock Exchange over the next night, but the stock price has closed down all at once.

[Lee Jung-hwan]
GDP is announced. With a GDP of 2.8%, the forecast is 3. It was very good up to 1%, but there is one aspect that it came out a little worse than that. As such, there was a little concern about the country's economy. Then there are situations of concern in the semiconductor field. Semiconductor companies such as Super Micro Semiconductor and AMD. Super micro semiconductors have come to be a big issue because there is an accounting fraud issue. In the case of AMD, the third-quarter performance was good, but the guidance was not so good that some companies in the semiconductor sector also had a slight decline in stock prices, and it was almost mixed, but there was a tendency to fall little by little.

[Anchor]
Anyway, indicators that the U.S. economy is on a soft landing continue to emerge, right?

[Lee Jung-hwan]
There are several indicators that are making a soft landing. If you look at the corporate performance in the third quarter alone, it's not as bad as expected. In the end, there are S&P 500 and performance announcements, but almost all of them are coming out more than expected. In other words, corporate management itself is not bad. And the US economic growth rate of 2.8% is very high. At a much higher level than Korea, Korea is still short of the US GDP, but at a much higher level than Korea, and foreign economic institutions such as the IMF raised their economic growth forecasts this year. It will be posted in July and August, and it will be better than expected this year. The actual game situation is not bad because it is a structure that is slightly away from there. In particular, there is an issue that consumption increased in the third quarter, and since the fourth quarter is the consumption season in the United States, it is not going in such a bad state due to expectations for consumption.

[Anchor]
I see. We've even looked at the New York stock market. So far, I have been with Lee Jung-hwan, a professor at Hanyang University's School of Economics and Finance. Thank you, professor.