-What kind of nonsense is that?
-Buy just because it got cheaper? What is this, some kind of flea market?
No sooner had I finished speaking than the team managers and department heads rose like a swarm of bees.
“That is exactly what I mean. It’s not because of an earnings shock, nor because our technology has no vision. Isn’t it simply the points that dropped because of taxes?”
-Simply, my ass! Because of that ‘simple’ tax, the KOSPI 4500 has collapsed. A tax that didn’t exist before is suddenly being imposed. How is that simple?
“What I’m saying is that there’s little uncertainty.”
-What?
“If our companies’ sales had worsened, or their technology had been overtaken, or there were no prospects for semiconductors, I wouldn’t be speaking so lightly either. But right now, it’s just a tax issue. There’s nothing wrong with the companies’ vision.”
To put it coldly, the past year had been abnormal.
By nature, stock prices don’t steadily trend upward in a straight line; a jagged upward trend is normal.
Although the KOSPI had fallen by 500 points in just a few days after the president’s address to the National Assembly, considering the gains it had recently shown, this was a healthy correction. Speaking objectively, there was no connection whatsoever between the financial investment income tax and the vision of our companies.
-Nonsense!
But the hardest thing in stocks is keeping your composure during a crash.
-All the experts are saying the same thing. One of the KOSPI’s biggest merits was tax treatment, and if that disappears, foreign investors will leave in significant numbers. To put it bluntly, can you only raise taxes on the rich in the stock market? If those rich people leave the KOSPI, the burden will ultimately be passed on to everyone. Even people who invest carelessly know that cause-and-effect relationship!
The head of the domestic team raised his voice as he looked at the division chief.
-Chief. At times like this, we need to take a conservative approach. I find the experts saying that even 4000 could collapse more credible. We should dispose of domestic assets and avoid the downpour for now. Otherwise, the 300 trillion won in profits we worked so hard to achieve could all vanish within a month.
I did not back down either.
“Chief, that would be like pouring oil on a burning house. With individuals, foreigners, and institutions all panic-selling right now, what do you think will happen to the market if even the pension fund disposes of assets?”
-Hey, Team Manager Lee! Are we some kind of market stabilization fund? Why do we always have to put out the KOSPI’s fires with our money?
“We’re not putting out fires. We’re buying at a low price. The market’s concerns about the financial investment income tax are excessive. It will settle down soon.”
-What kind of...
“Enough, everyone.”
As the heated argument continued, the division chief opened his mouth.
He looked at me once, then smiled bitterly.
“Team Manager Lee, I usually listen carefully to your opinions, but this time your logic seems weak. Whatever the circumstances, this is a tax being imposed on the securities market where there wasn’t one before. So how can you see any upward momentum?”
“Chief, do you remember two years ago?”
“...What?”
“When the KOSPI was stuck at 2000. The Boxpi days.”
I put strength into my voice.
“Back then, people said anyone who couldn’t escape the domestic market was a fool. They worshiped the NASDAQ like a god. So even though the capital gains tax on foreign stocks was far harsher than the financial investment income tax, every investor rushed to America.”
“...What are you trying to say?”
“Taxes are not the issue. It’s a textbook argument, but in the end, growth momentum is the greatest driving force of the stock market.”
Two years ago, this issue had already been proven.
For foreign stocks, heavy capital gains taxes were imposed once you earned more than 2.5 million won, yet individual investors all left for America. If you bought domestic stocks, you had to worry about losses; if you bought American stocks, you only had to worry about taxes. Of course people chose the latter.
“I believe domestic companies have sufficient upward momentum. The financial investment income tax has nothing to do with the semiconductor supercycle that lies ahead.”
“...”
“And a significant portion of this government announcement is aimed at R&D. If the taxes collected like that are used to pay proper salaries for master’s and PhD personnel and restore the domestic energy ecosystem, the prospects for domestic companies will actually become even greater.”
The division chief was silent for a while.
Perhaps sensing concern from that, the head of the domestic team rushed in at once.
-That makes no sense, Chief! I’m telling you, a tax that didn’t exist before is being imposed. This isn’t the time to recite textbook talk about corporate vision.
The division chief turned his head toward him.
“Department Head Kim. Then you refute him.”
-Pardon?
“Two years ago, we didn’t have the financial investment income tax, but America did. And our investors had a massive capital gains tax on foreign stock income. Then why did all the individual investors become Western stock investors?”
-That’s...
When he could not continue, the division chief turned his head toward everyone.
“Can anyone else explain this?”
*
[Ruling Party with 190 Seats Runs Wild! Despite Controversy, Tax Law Amendment Bill Introduced!]
[Opposition: “President Kim Is the Very Model of Shamelessness! He Claims to Care for People’s Livelihoods While Only Increasing the Tax Burden on the Public!”]
[Daehan Party Relay Hunger Strike, Day 40: “Someone Is Going to Die at This Rate. Step Down, Dictator!”]
[After Controversy, KOSPI Settles at 4400. Plunge Has Stopped, but Investor Anxiety Over Financial Investment Income Tax Remains...]
Overturning the public expectation that it would back down again this time, the Blue House pushed ahead with the financial investment income tax.
The next day. The tax law amendment bill submitted under the ruling party’s leadership contained various tax increases, including the financial investment income tax, and not a single one of them was easy to swallow.
-Dictatorial regime Kim Sangcheol, resign!
-Resign! Resign!
The opposition’s backlash was only natural.
The Daehan Party boycotted the plenary session and staged a hunger strike. They smashed up the National Assembly speaker’s office with crowbars, trying by any means to prevent the vote.
But they only had 110 seats.
On the day of the plenary vote, the tax law amendment bill passed through Yeouido unanimously, with all 190 of the 190 sitting members in favor. Now, an era had begun in which those with financial income of over 50 million won would have to pay a substantial amount in taxes.
“Welcome, Team Manager.”
While the world was in such turmoil, I avoided Yeouido and headed to the Asan Motors research complex in Namyangju.
When I arrived at the complex, Chairman Choi Seongjin greeted me with a bright expression.
“You didn’t have to come out. I’m already grateful that you made time despite being busy.”
“Not at all. Introducing our technology is one of my favorite duties. I’ll escort you this way.”
Asan Motors Namyang Research Center.
This was where every automobile from around the world gathered, the heart of Korea’s automobile market.
Following him toward the research center, an entirely different world awaited before my eyes. Ferraris, Lamborghinis, Porsches, and other cars that were hard to glimpse on the road were crouched here like miniature cars.
“Chairman, what are they doing over there?”
“Reversing.”
“By reversing, you mean... reverse assembly?”
“Yes. In truth, this Namyang research complex was built to reverse-assemble everything.”
“I know our automobile technology is quite advanced too. Do we still do reversing?”
“Of course we do. No matter how much the times change, there’s no easier way to catch up in technology than reverse assembly. Other countries are probably reverse-assembling our semiconductors.”
I nodded.
As far as I knew, Asan Group had also grown through reverse assembly. When the Gyeongbu Expressway was being built, they borrowed a large amount of heavy equipment from Japan, took it all apart, and soon built heavy equipment with their own independent technology.
As for Hoam Electronics, they started by disassembling radios and moved on to semiconductors.
“This is it. These are BYD’s Atos and Sealing, which recently landed in Korea.”
After a long walk, I stood in front of the cars in question.
“I assume the reversing is all finished on these too? How were they?”
Unfortunately, Chairman Choi’s expression was not bright.
“To be frank, I felt a tremendous sense of crisis.”
“A sense of crisis?”
“Yes. This is the specification comparison between the Ioniq and the Atos as evaluated by our researchers.”
He handed me the documents and continued speaking.
“To be truly blunt, there were almost no areas where I could say we clearly surpassed China’s technology. Of course, we are ahead in battery capacity, charging speed, energy efficiency, and driving range. But considering that the Atos came out as a mass-market model, I wonder whether it’s right to compare it with our flagship car.”
“So in the end... the issue is price?”
“Yes. With similar specifications, the Atos is only half our price. If electric vehicle subsidies are applied, it can even be purchased for under 30 million won.”
Chairman Choi’s face darkened sharply.
Since BYD’s entry into Korea, he had rarely had a day when he could sleep with his legs stretched out.
“Still, I heard BYD’s entry into Korea hasn’t produced any notable results yet.”
“That’s probably due more to national brand image than performance. A fundamental distrust of the country called China, perhaps? But I wonder how long that distrust will last if this low-price offensive continues.”
I smiled bitterly.
Every global society was forcing electric vehicles. Right now, it was through subsidies, but soon the era of penalties on internal combustion vehicles would begin. When an era arrived in which people had no choice but to use them, would they really be able to refuse cars at half the price?
“...”
Unfortunately, if my memory was correct, Asan Motors failed to protect its rice bowl.
Starting in Europe, where environmental regulations were far stricter than ours, its electric vehicle market share was overtaken, and in the end, it lost a significant portion of share even domestically.
In an era when people were forced to use electric vehicles, they ultimately chose the half-price car.
“...Team Manager. That is why I have one request to make.”
“Yes, please tell me.”
“I understand that the introduction of this tax law amendment is to secure seed money for finding future growth engines. But we are in urgent need as well.”
Strength entered his voice.
“If you think about it, electric vehicles are precisely the core of renewable energy, aren’t they? According to what our researchers have determined, this price would be absolutely impossible without subsidy intervention from the Chinese authorities. Of course, that isn’t all there is to it. Since they drive people who would have become millionaires if they’d been born in America under the 996 work system, this kind of integrated technology must have been born in a short time.”
“...”
“I am not going to say that we will grind people down to that extent. However, government subsidies are essential. When this R&D budget is organized, please provide institutional support for the electric vehicle sector as well.”
Chairman Choi Seongjin pleaded with me in an earnest voice.
At present, Asan Motors was in the middle of a massive bleeding competition. In response to BYD’s entry into Korea, it had lowered electric vehicle prices and poured enormous amounts of money into improving its technology.
Thanks to that, its retained earnings, which had amounted to 130 trillion won, had already fallen below 100 trillion. It was struggling with all its might to protect its market share.
I spoke to him as he pleaded again and again.
“Don’t worry. I will try to persuade them earnestly on that issue.”
“R-Really?”
“Yes. And due to various recent controversies, the KOSPI has fallen considerably, but our pension fund has decided to further increase its holdings in future-vision companies such as Asan Motors. If you ever need a paid-in capital increase or any other support... please tell us anytime.”