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(EDITORIAL from Korea Herald on Dec. 12)

All Headlines 07:07 December 12, 2019

Kim Woo-choong's legacy
Undaunted spirit of challenge, entrepreneurship he showed must be encouraged to weather current crisis

The evaluation of former Daewoo Group Chairman Kim Woo-choong, who died Monday, is mixed, but his entrepreneurship and spirit of challenge are really some big shoes to fill.

The iconic driving force behind South Korea's outstanding growth from the 1960s to the 1990s was a dauntless businessman.

He crisscrossed every nook and cranny of the world including remote parts of Africa and countries in the socialist blocs. His global performance played a decisive role in the establishment of diplomatic ties between Korea and many of those countries.

His tireless business activity inspired young people. The title of his 1989 autobiography, "The World Is Still Wide and There Are Many Things to Do," has become one of the most quoted aphorisms in Korea. It has electrified young people and aspiring entrepreneurs.

But in the end, his "world management" vision failed to materialize. It crumbled under a sudden external force -- the Asian financial crisis, which hit Korea so hard that it had to be bailed out by the International Monetary Fund in late 1997.

The rise and fall of the group, which mirrored Kim's eventful life, is at once a paragon to emulate and a bad precedent to shun.

Kim started his business in a cramped office with five employees and 5 million won (US$4,190) in capital money in 1967 when he was 30 years old. He devoted his energies to expanding the business and his performance was brilliant.

Daewoo Group grew by leaps and bounds, and was the nation's second-largest conglomerate in terms of assets in 1998. It had 41 subsidiaries. More than 300,000 employees worked in 396 foreign branches. It accounted for 14 percent of Korea's exports.

When companies based in developed economies hesitated to enter difficult markets, Daewoo did not. It became one of the biggest multinational corporations headquartered in an emerging economy.

Suspicions linger over murky back-scratching relations between business conglomerates including Daewoo and the government in the period of rapid state-led industrialization. However, for all the suspicions, it would be hard to deny the pivotal role of Kim's thoroughgoing entrepreneurship in diversifying Daewoo Group quickly.

And yet in the Asian currency crisis, the legendary success of Daewoo Group vanished like a sandcastle. Its staggering debt was exposed together with a huge amount of window dressing.

The crisis revealed the dark side of his management. His aggressive borrowing propelled the explosive growth of the group, but it turned into a poison. When liquidity became tight and further borrowing impossible, the group could not keep standing.

Eventually, all of its subsidiaries were dissolved through out-of-court debt restructuring. The whole of Daewoo Group disintegrated in August 1999.

However, the undaunted spirit of challenge and entrepreneurship he put into action is a valuable lesson no matter what the economic conditions. There are concerns that entrepreneurship is fading away, with business groups coming under the control of third- or fourth-generation descendants of the founders.

According to a recent survey by the Korea Enterprises Federation, 81 percent of companies plan to either maintain the status quo or enter austerity mode next year. Overall, the Korean economy is lethargic. One of its great risks is the disappearance of business vitality buttressed by entrepreneurship and the spirit of challenge.

Korea has developed by bearing adversity and overcoming crises, and at the center of its growth were businesspeople replete with entrepreneurship like Kim. To reinvigorate the Korean economy, entrepreneurship and the spirit of challenge must be encouraged.

The Moon Jae-in administration should ask itself what it can do to revive entrepreneurship rather than trying to tighten its grip over businesses. Even when warnings of two straight years of sub-2 percent growth are flashing, a wide array of obstacles to businesses are still there.

It is the responsibility of political leaders and the government to create and foster an atmosphere and systems for entrepreneurship.

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