Hyundai makes a ‘Gangnam style’ bid to raise its global profile

Another one of finance minister Choi Kyung-hwan's plans to boost the economy has been to introduce a tax on mounting tax reserves at the chaebols, the giant industrial conglomerates that make up the lion's share of Korea's economy.

In the past five years, these have almost doubled to around €330 billion. So Choi is gearing up to tax corporate cash piles in order to encourage the chaebols to free up the money by paying higher wages and bigger dividends on shareholdings.

There were some raised eyebrows last month when Korea's biggest carmaker, Hyundai, paid 10.55 trillion won (€8.08 billion) in its winning bid to purchase a prime property in the posh Seoul district of Gangnam. Hyundai outbid its rival Samsung Electronics to buy the 79,342 sq m site from its owner, the state-run Korea Electric Power Corp (Kepco).

In fact, Hyundai paid more than three times the site’s appraised value. While Korean pop star Psy’s international hit in 2012 taught us “Gangnam style” is something eminently desirable in contemporary Korea, three times the value is quite the premium.

Hyundai has long fought to establish itself as an international brand equal in status to the BMWs and GMs of the world, so a top-notch corporate HQ is a key part of pushing those ambitions.

“The business centre will be our global control tower for the next century,” the company said.

The price of the bid also frightened investors, and Hyundai share prices fell by nearly 10 per cent after the deal.