Grandchildren run South Korea’s economy
NEW YORK — South Korea’s tycoons were relieved when the pro-business Park Geun Hye was elected last month as the nation’s 11th president.
The main criticism against her predecessor and party mate, Mr Lee Myung Bak, was that he was as beholden to corporations as leaders get. Ms Park’s win was seen as a victory for the economic system that raised Korea from devastation in the 1950s. Yet 60 years on, it is time to highlight the absurdity of this view. Returning to the past is no way to secure the future for Asia’s fourth-biggest economy.
There is much to admire about where South Korea is as 2013 begins. The 2.8 per cent growth forecast for this year is not scorching, but is quite respectable among nations in the Organisation for Economic Cooperation and Development. South Korea is a role model for middle-income nations and annual per- capita income is already more than US$30,000 (S$36,900), placing it among the world’s 30 most-prosperous nations.
Yet that success comes at great cost: A widening income gap, struggling small businesses and the highest suicide rate in the developed world. At the root of this paradox is the very engine that powered the nation. Its celebrated family-run conglomerates, the “chaebol”, have become for South Korea what too-big-to-fail banks are to the United States.
As love-hate relationships go, few rival the one that South Koreans have with their corporate overlords. No company personifies the success and peril of Korea better than the one Mr Lee Byung Chull founded in 1938. What started as a small grocery-trading firm is now the pride of 50 million Koreans. Today, the gadgets that Samsung Group’s electronics division sells in soaring numbers exemplify the can-do spirit that has Apple and Japan’s entire economy looking over their shoulders.
Some go so far as to refer to their country as the Republic of Samsung. It is possible, after all, to live a Samsung-only life. You can work at Samsung, live in one of its apartment buildings in Seoul’s glitzy Gangnam district, pay for your Galaxy phone with a Samsung credit card, invest in your future with its financial-services units, get your health checked at one of its medical centres, blow off steam watching Samsung- owned sports teams, use its travel agencies and even buy a latte at a Starbucks outlet owned by the retailer that is run by the nephew of Samsung Chairman Lee Kun Hee.
When South Koreans gush about the “Miracle on the Han River”, the pivotal role of top corporate names such as Samsung, Daewoo, Hyundai, LG or Lotte is sure to come up. If only there were more recognition given to how these giants also left the nation’s economy dangerously top-heavy.