For decades, South Korea’s economy has been controlled by a handful of family conglomerates that possess enormous wealth and influence and are involved in almost every aspect of life in the country.
Because of their political heft, the chaebol, as these families are known, have long been a matter of enormous public interest. The marriages, deaths, separations, and legal troubles of these families have been chronicled in the South Korean press. Fictional chaebol families are depicted in Korean dramas. The Lee family of Samsung, the Koos family of LG, the Cheys family of SK, the Shins of Lotte and the Chungs of Hyundai are household names that have tightly controlled the reins of companies that are some of the country’s largest private sector employers.
Their power has increasingly come under scrutiny – both inside and outside South Korea – as an economic weakness, deepening inequality and promoting corruption.
Chaebol families have controlled South Korea’s largest companies for generations.
The chaebol system is a legacy of South Korean history. After the armistice that ended the Korean War in 1953, the country’s military dictators singled out a handful of families for private loans and financial support to rebuild the economy. Companies expanded rapidly and moved from one industry to another until they became sprawling conglomerates.
Even as companies grew in size, wealth and influence, and sold their shares on stock exchanges, they remained under family control – usually run by a chairman of the board who also served as family head. Sometimes, changes in leadership between generations have destabilized wealthy families, forcing companies to split or split into smaller groups.
More than two decades ago, during a family conflict, Hyundai split between the founder’s six children. The eldest son took over management of Hyundai Motor Company, which is now one of the largest companies in South Korea. Under Chung Eui-sun, the founder’s grandson, the family is still in charge of the global automaker.
These conglomerates make up a large part of South Korea’s economy.
South Korea’s rapid rise from postwar poverty to a major advanced economy within two decades was closely linked to the rise of the chaebol corporations. Their early successes boosted wages and living standards, and drove the country’s exports.
Total sales of the five largest conglomerates have consistently accounted for more than half of South Korea’s GDP in the past 15 years, and exceeded 70 percent in 2012, according to the book “The Chaebol Republic” by economist Park Sang-in. Their businesses also permeate life in South Korea – from hospitals to life insurance, from apartment complexes to credit cards and retail, from food to entertainment and media, not to mention electronics.
Chaebol families have close relationships with the political leadership.
The patronage of political leaders was crucial to the growth of chaebol companies into industrial conglomerates, particularly under the regime of Park Chung-hee, who came to power in a coup and ran the country for two decades until his assassination in 1979. For Mr. Park, the chaebol was a key part of his ambition to enrich Korea. South and manufacturing. To this end, his government directed money to companies that were cooperative with his agenda, protecting them from competition and saving them from public accountability.
While close ties between government and business have diminished in recent decades, political leaders still often turn to them for support or advice. In contrast, companies were sometimes protected as too vital to the economy to be broken up or scrutinized — something critics deemed unfair. Attack as a ‘Too old to be imprisoned’ problem.
This summer, rich heads Travel with the President of South Korea, Yoon Suk-yeol, is on a trip to Europe as part of South Korea’s bid to host the World Expo. They also accompanied him on his visit to the United States to meet President Biden and were Among the guests At a formal dinner at the White House.
Many scandals have tarnished their public image.
Chaebol companies became involved in political corruption cases.
One of the biggest political scandals in South Korea in recent years has exposed the close ties between political leaders and family-run conglomerates.
Park Geun-hye, the country’s former president, was ousted from office in 2017 and was later sentenced to prison after being convicted of bribery, abuse of power and other criminal charges. It turned out that Ms. Park and one of her close associates collected or requested bribes from three giant companies: Samsung, SK, and Lotte. Ms. Park was pardoned in 2021 after serving nearly five years of a 20-year prison sentence.
Lee Jae-yong, chairman of Samsung Electronics, the country’s largest company, was also sentenced to two and a half years in prison for his role. He was released on parole and then President Yoon pardoned him in 2022, a move that allowed him to return to running the company.