S. Korea’s woes go beyond chaebols
With economic growth faltering, South Korea’s conglomerates are once again in the spotlight.
Known locally as chaebols, these business groups were once credited with spearheading growth by promoting exports. In more recent years, however, they have come under fire for limiting the growth of smaller companies and accelerating the concentration of wealth in the hands of a small elite.
Presidential elections will be held on Dec 19, and all three candidates say they share a common goal of overcoming what they see as the unfair practices of these large business groupings. The chaebols have even been accused of squeezing their own suppliers to prevent them from growing.
If a subcontractor does well, say the critics, the conglomerate slashes prices or sets up its own subsidiary that makes the same product. In this way, genuinely innovative companies are stifled and the economy as a whole suffers.
Meanwhile, as exports continue to fall, the chaebols have lost one of the main arguments justifying their stranglehold on the economy.