[CEONEWS = Jeon Young-seon] Nongshim’s abrupt acquisition of SEWOO, a long-time supplier of seasoning powder for its signature Shin Ramyun, has raised eyebrows across the industry. While the company officially cited supply chain stabilization and cost competitiveness as reasons, the prevailing interpretation points to a more calculated move—an attempt to mitigate risk amid an ongoing investigation by Korea’s Fair Trade Commission (FTC) over alleged submission of false data. This comes in the wake of years of accusations over insider transactions and opaque governance surrounding the conglomerate’s inner circle. The spotlight is now firmly on Chairman Shin Dong-won and his next move.
SEWOO Acquisition: A Veil for Covering Up False Disclosure Allegations?
On July 25, Nongshim Holdings announced it would acquire a 100% stake in SEWOO—worth approximately KRW 100 billion. SEWOO, which produces seasoning powders and traditional Korean sauces, has long been tied to the Shin family, particularly Chairman Shin's maternal relatives. Despite deriving over 60% of its revenue from transactions with Nongshim in 2021, SEWOO was excluded from the group’s list of affiliates in an apparent attempt to dodge FTC scrutiny.
Suspicious Timing—One Week After FTC Hearing
Industry experts are particularly suspicious of the acquisition’s timing. Just a week prior, on July 18, the FTC held a hearing to deliberate allegations that Shin Dong-won had submitted falsified group designation data. Companies exceeding KRW 5 trillion in assets must disclose detailed corporate relationships annually—including affiliate lists, cross-shareholdings, and internal transaction records. Omissions or false reports may result in criminal prosecution.
The prevailing view is that Shin deliberately left SEWOO and other related firms out of the submission to avoid regulation. The swift acquisition is therefore seen as an attempt to retroactively “clean up” the group’s governance footprint—an after-the-fact fix to a deeply structural issue.
Too Little, Too Late: Limits of Post-Crisis Responses
Nongshim’s move to formally integrate SEWOO may signal a gesture toward transparency, but it does not absolve the company from past misconduct. Should the FTC confirm the omission was intentional, criminal charges and public trust fallout are all but inevitable.
A History of Favoritism and Governance Loopholes
Nongshim has long funneled key operations—packaging, IT, logistics, and flour milling—through companies owned or heavily influenced by the founding Shin family. Notably, Yulchon Chemical and Nongshim Mifun have historically benefited from these arrangements, receiving large volumes of business through non-competitive internal contracts.
In 2022, Yulchon Chemical earned KRW 1.76 trillion—or nearly 40% of its revenue—from sales to Nongshim. Similarly, Shin Dong-ik, the Chairman’s brother, fully owns Nongshim Mifun, which sold over a quarter of its products back to the group.
A Warning Ignored: 2017 Economic Reform Report
A 2017 report by the Economic Reform Research Group explicitly warned that companies like Nongshim, just below the threshold for regulatory designation, were engaging in loophole-based internal dealing. Nongshim’s subsidiaries, including SEWOO, NDS (IT), and Nongshim Taekyung (ingredients), were all cited for being family-controlled shells with public interest conflicts.
Empty Justifications from Nongshim
Nongshim has defended itself, arguing that vertical integration is essential for product quality and proprietary control. But data tells a different story: 17.6% of Nongshim’s total revenue comes from internal transactions—far exceeding the 12.8% industry average. Moreover, most deals occur without competitive bidding, leading to growing suspicions of wealth tunneling and personal enrichment.
One particularly egregious case involves "Catchers," a laundry services company 100% owned by Shin Dong-yun, the Chairman’s brother. In 2024, it generated KRW 3 billion in revenue—most of it from Nongshim contracts—drawing regulatory scrutiny for suspected unfair support.
A Governance Trap of Its Own Making
The irony is glaring: Nongshim had previously spun off SEWOO to avoid regulation, yet continued business as usual. The current attempt to fold SEWOO back into the group only highlights the deceptive nature of earlier moves. As one industry insider noted, “Nongshim has effectively admitted SEWOO was always part of the family empire.”
Integrity in Words, Contradictions in Action
Chairman Shin has long espoused “honesty and integrity” as core values, citing a “farmer’s spirit” for the company’s future. But since his tenure began, violations and controversies have only increased—undermining public trust.
The Bitter Memory of the Price-Fixing Scandal
Nongshim’s involvement in the 2012 price-fixing scandal remains a major stain on its record. Though the Supreme Court later overturned the KRW 108 billion fine due to lack of direct evidence, suspicions of collusion persisted. At the time, Shin Dong-won was heavily involved in government relations, drawing criticism despite legal vindication.
Past Violations: Holding Company Law and Food Safety Scandals
In 2006, Nongshim was fined KRW 408 million for breaching Korea’s holding company law by illegally holding shares in its subsidiary MegaMart. The excuse of “clerical oversight” failed to resonate with the public.
Further, in 2021 and 2023, Nongshim faced global backlash after its exported cup noodles were recalled in Germany and Taiwan due to detection of the carcinogenic substance ethylene oxide. The company’s reassurances failed to silence critics who accused it of poor global quality control.
Performance Collapse and Stock Price Manipulation Suspicions
Performance-wise, Nongshim’s dominance has eroded. It lost its market cap crown to Samyang Foods and now posts a meager 1.7% operating margin—one-seventh that of its rival. Some observers speculate that Shin may be keeping share prices artificially low to facilitate inheritance tax reductions for his son, Shin Sang-yeol.
With low dividends, undervalued holdings, and no share buybacks, the group is accused of ignoring minority shareholders and undermining corporate value in favor of dynastic succession.
Toward Transparent Governance: FTC Power and Corporate Ethics Reform
Nongshim’s crisis illustrates a broader truth: evasive governance is ultimately unsustainable. Shin must pursue structural reform—not just to save Nongshim, but to set a precedent for all of corporate Korea. Several urgent reforms are needed:
Strengthening FTC Oversight Powers
The FTC should be empowered to detect de facto control even beyond narrow familial definitions. Penalties for false disclosures should be tougher, including increased fines and equity restrictions for offending owners.
Closing Internal Dealing Loopholes
Regulations should no longer rely solely on asset size. Any company with excessive internal transaction ratios should face disclosure requirements, even if it’s below the current KRW 5 trillion threshold.
Corporate Ethics and Internal Audits
Nongshim should create a Transparency Committee within its board to scrutinize intra-group contracts and family-related transactions. Whistleblower systems and stronger independent director roles must also be implemented.
Protecting Minority Shareholders
Korea must follow international standards—bolstering shareholder proposals, class action lawsuits, and stewardship codes. The era of unchecked dynastic control must give way to fiduciary accountability.
A Final Question for Chairman Shin Dong-won
The public and markets alike now ask: What is truly needed for Nongshim’s next 100 years? It is time for Shin to walk the talk—proving “honesty and integrity” not through slogans, but through decisive reform.
“Nongshim no longer belongs to the founding family alone—it is a public company owned by all shareholders.” Only through radical transparency and genuine accountability can Nongshim escape its legacy of controversy and rise as a truly global enterprise. Cutting ties with insider favoritism and choosing fairness over favoritism is the true path to upholding the "farmer's heart" the company once proudly proclaimed.
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