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61 Pages·2004·0.56 MB·English

Debates on Korean Chaebol
(Conglomerates) –

Acknowledgements of its Contributions
vs.
Attacks on its Concentrated Power
Dong Hyeon Jung
Dept. Of East Asian Studies
University of Delhi
4th Asian Leadership Conference
(Chosun Ilbo)
Asia’s Next Challenge: Good Growth, Smart Welfare

March 26-27, 2013
Criticizing Chaebol
Appreciating Chaebol
Focal points:
1. Need even more chaebols to
1. Unfair deals in favor of inter-
compete each other – prime
affiliates, undue
mover of success
inheritance, collusive ties with
2. Golden-egg bearing Geese; chaebol
government, monopoly
regulation is poisoning them
3. Initiated technology & development 2. Group-wide control by Owner-
of man-power managers with only fractional
4. Say people are unhappy because of equity, heading real estate
the dinosaur-like chaebol – no other
speculations
than populist rhetoric

Feedback from the floor
Before debate - Appreciated 47 vs. Critic: 53

After debate - 50 vs. 50
Chang, Chaebol killer
• The Korean debater against Chaebol, Chang Ha-sung,
teaches at Korea University and he, as a prominent
leader of a NGO, has borne brilliant fruits in
reforming the chaebols’ long-lasted misconducts
• Particularly, in protecting minority share holders’
interests, by urging the government and chaebol to
establish fair institutional governance and leading
campaigns to enact the “Law of class-action suit” and
“Law of representative election system of outside
directors” of the chaebol – those are remarkable
landmarks in Korean economic history
• He gained his nick name “Chaebol Killer”
Definition of Chaebol
• Economists define Korean Chaebol in various ways but
what is common in every definition is that it is a big
business conglomerate, comprising a large number of
diversified affiliate companies, controlled by an
emperor-like owner chairman whose power exceeds
his legal authority over the group-wide operation
• Government-chaebol cooperation was essential to the
subsequent economic growth and an astounding
growth rate began in the early 1960s
Growth of Chaebol
• That is to say, Korean chaebol were able to grow
because of two factors—foreign loans and special
favors given by the government
• Preferential interest rates, tax deductions, government
assurances for repayment, import quotas under
preferential exchange rates, supporting and
subsidizing exports were the main devices
• The General trading firm had been one of the most
remarkable export machines
• After 1987, chaebol began to go global (as labor
disputes and real-income rose steeply): now many of
them gained global brand
General Trading Firms & Export
EXPORT
Support on
contest
basis
General
General
Trading Firm
Trading Firm
Govern Collect
-Global marketing
various
ment
-Tech assistance
kinds of

products
for export

Small producers

Labor Disputes
4000
3749
3500

s
k 3000
a
e
r
b 2500
t
u
o 1873
2000
f
o
1616

r
e 1500
b
m
u 1000
N
234
322
500 276
235
144 121 88 85
0
19861987198819891990199119921993199419951996
YEAR
Source: Business Management
20years in Korea P. 26
Rise of Real Income
(1981-1993)
20
18,3
15
11,6
10
10,7
8,8
8,3
7,4
5 6,9
5,8
0
1981 1985 1987 1988 1989 1990 1991 1992 1993
-1
-5
Source: Korea Labor Institute, Labor Statistics, 1997