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S. Korea's antitrust chief calls conglomerates precious assets of economy

All Headlines 15:27 March 13, 2019

BELGRADE, March 13 (Yonhap) -- South Korea's antitrust chief has called conglomerates, known here as chaebol, precious assets of Asia's fourth-largest economy.

Kim Sang-jo, head of the Fair Trade Commission (FTC), said Tuesday he likes chaebol and that such big businesses will continue to remain a key part of the economy, as they have been in the past.

Chaebol are large industrial conglomerates that are run and controlled by their owner or their owner's family. These businesses include Samsung Electronics Co. and Hyundai Motor Co.

Still, Kim said chaebol have caused adverse effects on the economy, citing their concentration of economic power.

The top 10 chaebol's total assets constitute around 80 percent of South Korea's gross domestic product, while the number of people directly employed by them stands at about 940,000, just a fraction of total number of workers, the regulator pointed out.

"It means the growth of chaebol does not lead to the overall development of the Korean economy, and economic concentration deters the growth of SMEs, which create most jobs," Kim said in a speech in Belgrade, referring to small and medium-sized companies.

S. Korea's antitrust chief calls conglomerates precious assets of economy - 1

Kim was also critical of chaebol's governance, saying the so-called owners of the chaebol dominate the whole group using pyramid shareholding structures, even though they are minority shareholders with an average 5 percent stake.

Chaebol have been credited with driving South Korea's economic growth in recent decades by spearheading exports.

Nevertheless, they have long been criticized for awarding lucrative business deals to their affiliates, which critics claim has distorted fair market competition and stripped smaller companies of business opportunities.

South Korea has been trying to level the playing field for small and medium-sized companies in a country where family-controlled conglomerates have dominated the economy for decades.

entropy@yna.co.kr
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