Companies Cutting Overseas Workforce Despite Claiming to Prioritize Global Expansion

Uncertain Economic Environment Including Shrinking Consumer Sentiment, Slowing Demand, and Delayed Supply Chain Recovery

[Asia Economy Reporters Sunmi Park and Chaeseok Moon] Domestic conglomerates that announced plans to expand global investments worth trillions of won this year are unable to increase the number of overseas employees due to the aftermath of COVID-19, the Russia-Ukraine war, and an uncertain global economic environment. In fact, many companies are reducing their overseas workforce. Given the emergency management systems triggered by the slowdown in global economic growth, companies find it difficult to increase investment costs immediately, leading to a prevailing outlook that expanding overseas personnel next year will also be challenging.

Samsung Electronics has been reducing its overseas employees annually since peaking in 2017. The number of Samsung Electronics' overseas employees peaked at 224,213 in 2017, then dropped to 209,925 in 2018, 185,380 in 2019, 161,607 in 2020, and 155,547 in 2021. Meanwhile, the domestic workforce steadily increased from 96,458 in 2017 to 111,126 in 2021. The main reason for the reduction in overseas personnel is business withdrawal and restructuring.

The number of Samsung Electronics employees in China exceeded 20,000 in 2019 but shrank to around 17,000 in 2021 amid a growing trend of companies moving away from China. The withdrawal and production suspension of smartphone and PC factories in China caused a sharp decline in locally hired manufacturing staff. At the same time, the workforce in Southeast Asia, Southwest Asia, and Japan decreased from 120,000 in 2019 to about 94,000 in 2021, and Europe also saw a decline from 14,000 to 12,700.

Only the Americas and Africa maintained or slightly increased their workforce compared to previous years. A Samsung Electronics official explained, "The number of overseas employees is closely linked to the status of local manufacturing plants. When businesses or factories are withdrawn or production decreases, the number of local employees inevitably declines." They added, "The number of domestic employees dispatched overseas (expatriates) also rapidly increases during the initial stages of factory and business establishment but decreases again once the factory is completed or the business is withdrawn."

Samsung Electronics has recently faced difficulties in dispatching regional experts overseas, and many regions have undergone business restructuring, making it difficult to significantly increase overseas employees this year and next. Due to COVID-19 and other reasons, Samsung Electronics also suspended its 32-year-old global local workforce development program. About 100 employees selected at the end of 2019 and scheduled for overseas dispatch in 2020 remained on standby until recently but were notified of cancellation. This program sends employees with more than three years of service overseas for 1-2 years to learn not only the local language but also the culture. To date, it has trained over 3,500 regional experts in more than 80 countries, including the United States, China, and India.

Hyundai Motor Company, another leading domestic global company, is also no longer increasing its overseas workforce. Hyundai Motor's overseas employees peaked at 54,166 in 2018, then stood at 50,716 in 2019, 49,383 in 2020, and 50,325 in 2021, showing little change over several years. Compared to 2020, the number of overseas employees decreased in most regions except North America, including Europe, China, and India.

The main reason Hyundai Motor has not expanded overseas personnel is its inability to add new overseas factories amid the recent slowdown in global economic growth. Since a significant portion of overseas employees work in production roles at regional factories, a decline in automobile sales and production due to worsening global economic conditions and intensified industry competition inevitably leads to workforce reductions locally.

SK Hynix's overseas employees slightly increased from 7,617 in 2018 to 8,229 in 2021. However, during the same period, its domestic workforce grew by more than 4,000, effectively reducing the proportion of overseas personnel. Doosan's overseas workforce has continuously declined from 1,599 in 2019 to 1,314 in 2020 and 720 in 2021. Conversely, LG Electronics has steadily increased its overseas employees from 19,139 in 2019 to 20,907 in 2020 and 22,024 in 2021. The primary goal of companies is profit maximization. LG Electronics judged that increasing overseas production would benefit the company. On the other hand, companies reducing overseas personnel see layoffs as beneficial. Domestic companies find it difficult to reduce staff during domestic recessions, but overseas, they coldly close businesses and decisively lay off employees as needed.

At the beginning of the year, large corporations prepared aggressive global investment expansion plans in response to active incentive policies from various countries. However, in the current environment of high inflation, exchange rates, and interest rates, it has become difficult to execute overseas investment expansions that require large-scale employment. The two major risks hindering investment activities next year are the global economic slowdown and the continued rise in exchange rates. Choo Kwang-ho, head of the Economic Headquarters at the Federation of Korean Industries, explained, "Although overseas investment by domestic conglomerates is inevitable to respond to protectionist policies in the U.S. and Europe, the uncertain economic environment?characterized by weakened consumer sentiment, demand slowdown, and delayed supply chain recovery?continues, making it difficult to expand overseas investments as planned."

This content was produced with the assistance of AI translation services.