For decades, South Korea's economy has been dominated by a handful of family-owned conglomerates that possess enormous wealth and influence, influencing almost every aspect of the country's life.
Due to their political weight, the chaebol, as these families are known, has long been a matter of immense public interest. The South Korean press chronicles the marriages, deaths, estrangements and legal problems of these families. Fictional chaebol families have been depicted in Korean dramas. Samsung's Lee family, LG's Koos, SK's Cheys, Lotte's Shins and Hyundai's Chungs are household names who have firmly held the reins of companies that are some of the country's largest private sector employers.
Their power has been increasingly scrutinized – both inside and outside South Korea – as an economic vulnerability that deepens inequalities and fuels corruption.
Chaebol families have controlled South Korea's largest companies for generations.
The chaebol system is a legacy of South Korean history. After an armistice ended the Korean War in 1953, the country's military dictators anointed a handful of families to receive special loans and financial support to rebuild the economy. Companies expanded rapidly and moved from industry to industry until they became expanding conglomerates.
Even as companies grew in size, wealth, and influence and sold shares on stock exchanges, they remained under family control, usually led by a president who also presided as head of the family. Generational leadership changes have sometimes disrupted chaebol families, forcing companies to split or spin off into smaller groups.
More than two decades ago, during a family fight, Hyundai was divided among the founder's six children. The eldest son took control of Hyundai Motor, now one of the largest companies in South Korea. Under Chung Eui-sun, grandson of the founder, the family is still in charge of the global automaker.
These conglomerates make up a considerable part of South Korea's economy.
South Korea's rapid rise from post-war poverty to a major developed economy within a couple of decades was closely linked to the rise of chaebol companies. Its early successes boosted wages and living standards and boosted the country's exports.
The total sales of the five largest conglomerates have consistently accounted for more than half of South Korea's gross domestic product over the past 15 years, topping 70 percent in 2012, according to economist Park Sang's book “Chaebol Republic.” -in. Their businesses also permeate South Korean life: 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 had cozy relationships with political leaders.
Patronage from 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 led the country for two decades until his assassination. in 1979. For Park, the chaebol were a fundamental part of his ambition to enrich and industrialize South Korea. To that end, his government diverted funds to companies that cooperated with his agenda, protected them from competition, and exempted them from public liability.
While close ties between government and business have diminished in recent decades, political leaders still frequently turn to them for support or advice. In turn, the companies have sometimes been protected as too vital to the economy to be broken up or scrutinized, something critics have said. attacked as to “too big to go to jail” problem.
This summer, the chaebol bosses traveled with the president of South Korea, Yoon Suk Yeol, on a trip to Europe as part of South Korea's bid for the World Expo. They also accompanied him on his visit to the United States to meet with President Biden and were among the guests at a state dinner at the White House.
Several scandals have tarnished his public image.
Chaebol companies have been involved in cases of political corruption.
One of South Korea's biggest political scandals in recent years demonstrated the close ties between political leaders and family conglomerates.
Park Geun-hye, the country's former president, was ousted from office in 2017 and later sentenced to prison after being found guilty of bribery, abuse of power and other criminal charges. Ms. Park and a longtime confidant of hers were found to have collected or demanded bribes from three chaebol conglomerates: Samsung, SK and Lotte. Mrs. park was forgiven in 2021 after serving almost five years of a 20-year prison sentence.
Lee Jae-yong, president of Samsung Electronics, the country's largest chaebol, was also there sentenced to two and a half years in prison for his role. He was released on parole and then forgiven by Chairman Yoon in 2022, a move that allowed him to return to lead the company.
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