Chaebol Structure

“Chaebols” are conglomerate family-controlled businesses in South Korea. Typically, these groups have strong ties to the government. This system originated in the 1960s. You might picture a little family business, but that’s not quite what we’re talking about here. LG Group, Samsung, and Hyundai are among the biggest and most well-known.

A complaint against this structure is that it keeps small businesses from developing in the same area. Can you imagine trying to compete with Hyundai? Another concern is that this structure places too much of the economy on one business, and makes the economy too dependent on that business. Samsung, for example, is estimated to represent 20% of GDP (gross domestic product).

Because the Chaebols support so much of the GDP, the companies are sometimes considered to be granted too much support from the government. In December 2016, heads of Samsung and Hyundai both were questioned relating to the corruption charges against then President Park. In 2017, South Korea’s president Park Geun-hye was sentenced to 24 years in prison for bribery, coercion, and abuse of power. As part of that investigation, Jay Y. Lee, head of Samsung, was sentenced to 5 years in prison for bribery. He was accused specifically of making payments to an associate of the president to smooth the way to a merger with Samsung affiliates. He appealed and had the conviction suspended in February 2018. Citizens of South Korea were angry during the scandal, calling for President Park’s removal from office.

So...yeah. We're not the only country with a controversial prez.