Chaebol (alternatively Jaebol, Jaebeol) ['ʨɛːbəl] refers to a South Korean form of business conglomerate. Hanja is the Korean name for Chinese characters. More specifically it refers to those Chinese characters borrowed from Chinese and incorporated The Revised Romanization of Korean is the official Korean language Romanization system in South Korea. McCune-Reischauer romanization is one of the two most widely used Korean language Romanization systems along with the Revised Romanization of Korean, which South Korea, officially the Republic of Korea and often referred to as Korea ( Korean: 대한민국 tɛː A conglomerate is a large Company that consists of seemingly unrelated Business sections The Korean word means "business group" or "trust" and is often used the way "Big Business" is used in English.

There are several dozen large Korean family-controlled, government-assisted corporate groups which fall under this definition, and have played a major role in the South Korean economy since the 1960s. South Korea, officially the Republic of Korea and often referred to as Korea ( Korean: 대한민국 tɛː The Economy of South Korea is the third-largest in Asia and the 13th-largest in the world by GDP ( PPP) as of Some have become well-known international brand names, such as Samsung, Hyundai and LG. A brand is a collection of Images and ideas representing an economic producer more specifically it refers to the descriptive verbal attributes and concrete symbols such as a The Samsung Group ( Korean:, Samsung Guerup) is South Korea 's largest company or Chaebol and the world's largest conglomerate Hyundai refers to a group of companies and related organizations founded by Chung Ju-yung in South Korea.

The chaebol were powerful independent entities acting in the economy and politics, but sometimes they cooperated with the government in the areas of planning and innovation. The government worked hard to encourage competition among the chaebol in certain areas to avoid total monopolies.

The role of big business extended to the political arena. In 1988 a member of a chaebol family, Chong Mong-jun, president of Hyundai Heavy Industries, successfully ran for the National Assembly. Other business leaders also were chosen to be members of the National Assembly through the proportional representation system. Hyundai even played a role in the slight thawing of relations between North and South Korea since 2000. Hyundai refers to a group of companies and related organizations founded by Chung Ju-yung in South Korea. North Korea is the commonly used short form name for the Democratic People's Republic of Korea (or DPRK) a State located in East Asia,

The top 10 largest chaebol in Korea in 2004 by total revenues were Samsung ($89. The Samsung Group ( Korean:, Samsung Guerup) is South Korea 's largest company or Chaebol and the world's largest conglomerate 1 billion), Hyundai Motor Company ($57. The Hyundai Motor Company, a division of the Hyundai Kia Automotive Group, is South Korea ’s largest and the world’s fifth largest automaker in terms of units 2 billion), LG ($50. 4 billion), SK ($46. SK Group ( Hangul: SK그룹 에스케이그룹 is the 3rd largest conglomerate ( Chaebol) in South Korea. 4 billion), Hanjin ($16. The Hanjin Group is a Korean conglomerate, or Chaebol. The group is a holding company that includes a shipping company Hanjin Shipping 2 billion), Hyundai Heavy Industries ($10. Hyundai Heavy Industries Co Ltd (HHI is the world's largest shipbuilder company headquartered in Ulsan, South Korea. 5 billion), Lotte ($6. Lotte Group is a large South Korea - Japan Chaebol ( conglomerate) 3 billion), Doosan ($4. Doosan Group is a South Korean conglomerate quoted on the Korea Stock Exchange. 5 billion), Hanhwa ($4. Hanwha ( formerly known as Hankook Hwayak ( is one of the largest conglomerates, or Chaebol, in Korea. 4 billion), and Kumho Asiana ($2. Kumho Asiana Group is a large South Korean Chaebol (conglomerate with subsidiaries in the Automotive, Industry, Leisure 8 billion). [1]

Management structure

Samsung Group Headquarters Building

Some chaebol are one large corporation, while others have broken up into loosely connected groups of separate companies sharing a common name. The Samsung Group ( Korean:, Samsung Guerup) is South Korea 's largest company or Chaebol and the world's largest conglomerate A corporation is a separate legal entity usually used to conduct business Even in the latter case, each is almost always owned, controlled, and/or managed by the same family group.

South Korea's chaebol are often compared with Japan's keiretsu business groupings, the successors to the pre-war zaibatsu. For a topic outline on this subject see List of basic Japan topics. A is a set of companies with interlocking Business relationships and shareholdings. is a Japanese term referring to industrial and financial business conglomerates in the Empire of Japan, whose influence and size allowed for control over significant While the "chaebol" are similar to the "zaibatsu" (both words are cognates, from the same Chinese word), there are major differences between chaebol and keiretsu:

• Chaebol are still largely controlled by their founding families, while keiretsu are controlled by groups of professional managers.
• Chaebol are centralized in ownership, while keiretsu are more decentralized and connected by cross-shareholdings.
• Chaebol often formed subsidiaries to produce components for exports, while large Japanese corporations often employed outside contractors.
• Chaebol are prohibited from owning private banks, partly in order to increase the government's leverage over the banks in areas such as credit allocation. In 1990, government regulations made it difficult for a chaebol to develop an exclusive banking relationship. Keiretsu have historically worked with an affiliated bank, giving the affiliated companies almost unlimited access to credit, although this is no longer a universal feature of keiretsu.

History

South Korea's economy was small and predominantly agricultural well into the mid-20th century. Agriculture refers to the production of goods through the growing of plants and fungi and the raising of domesticated Animals The study of agriculture However, the policies of President Park Chung Hee spurred rapid industrialization by promoting large businesses, following his seizing power in 1961. The President of the Republic of Korea is according to the Constitution head of state chief executive of the government and commander-in-chief of the armed forces Park Chung-hee ( November 14, 1917 – October 26, 1979) was a former ROK Army general and the autocratic dictator of the Republic is a process of social and economic change whereby a human group is transformed from a Pre-industrial society into an industrial one Government industrial policy set the direction of new investment, and the chaebol were to be guaranteed loans from the banking sector. In this way, the chaebol played a key role in developing new industries, markets, and export production, helping place South Korea as one of the East Asian Tigers. In Economics, an export is any good or Commodity, Transported from one country to another country in a Legitimate fashion South Korea, officially the Republic of Korea and often referred to as Korea ( Korean: 대한민국 tɛː The term Four Asian Tigers or East Asian Tigers refers to the Economies of South Korea, Hong Kong, Singapore

Although South Korea's major industrial programs did not begin until the early 1960s, the origins of the country's entrepreneurial elite were found in the political economy of the 1950s. Very few Koreans had owned or managed larger corporations during the Japanese colonial period. After the departure of the Japanese in 1945, some Korean businessmen obtained the assets of some of the Japanese firms, a number of which grew into the chaebol of the 1990s. These companies, as well as certain other firms that were formed in the late 1940s and early 1950s, had close links with Syngman Rhee's First Republic, which lasted from 1948 to 1960. Syngman Rhee or Yi Seungman ( March 26, 1875 – July 19, 1965) was the first president of South Korea. It was alleged that many of these companies received special favors from the government in return for kickbacks and other payments.

When the military took over the government in 1961, military leaders announced that they would eradicate the corruption that had plagued the Rhee administration and eliminate injustice from society. Some leading industrialists were arrested and charged with corruption, but the new government realized that it would need the help of the entrepreneurs if the government's ambitious plans to modernize the economy were to be fulfilled. A compromise was reached, under which many of the accused corporate leaders paid fines to the government. Subsequently, there was increased cooperation between corporate and government leaders in modernizing the economy.

Government-chaebol cooperation was essential to the subsequent economic growth and astounding successes that began in the early 1960s. Driven by the urgent need to turn the economy away from consumer goods and light industries toward heavy, chemical, and import-substitution industries, political leaders and government planners relied on the ideas and cooperation of the chaebol leaders. The government provided the blueprints for industrial expansion; the chaebol realized the plans. However, the chaebol-led industrialization accelerated the monopolistic and oligopolistic concentration of capital and economically profitable activities in the hands of a limited number of conglomerates.

Park used the chaebol as a means towards economic growth. Exports were encouraged, reversing Rhee's policy of reliance on imports. Performance quotas were established.

The chaebol were able to grow because of two factors-- foreign loans and special favors. Access to foreign technology also was critical to the growth of the chaebol through the 1980s. Under the guise of "guided capitalism," the government selected companies to undertake projects and channeled funds from foreign loans. The government guaranteed repayment should a company be unable to repay its foreign creditors. Additional loans were made available from domestic banks. In the late 1980s, the chaebol dominated the industrial sector and were especially prevalent in manufacturing, trading, and heavy industries.

The tremendous growth that the chaebol experienced, beginning in the early 1960s, was closely tied to the expansion of South Korean exports. Growth resulted from the production of a diversity of goods rather than just one or two products. Innovation and the willingness to develop new product lines were critical. In the 1950s and early 1960s, chaebol concentrated on wigs and textiles; by the mid-1970s and 1980s, heavy, defense, and chemical industries had become predominant. While these activities were important in the early 1990s, real growth was occurring in the electronics and high-technology industries. The chaebol also were responsible for turning the trade deficit in 1985 to a trade surplus in 1986. The current account balance, however, fell from more than US$14 billion in 1988 to US$5 billion in 1989.

The chaebol continued their explosive growth in export markets in the 1980s. By the late 1980s, the chaebol had become financially independent and secure-- thereby eliminating the need for further government-sponsored credit and assistance.

By the 1990s, South Korea was one of the largest NIEs, and boasted a standard of living comparable to industrialized countries. The category of newly industrialized country ( NIC) is a socioeconomic classification applied to several countries around the world by Political scientists

President Kim Young-sam began to challenge the chaebol, but it was not until the Asian financial crisis in 1997 that the weaknesses of the system were widely understood. Kim Young-sam (b 20 December 1927 in Geoje, South Gyeongsang) was the first civilian President of South Korea since a series of Dictatorships The Asian Financial Crisis was a period of Financial crisis that gripped much of Asia beginning in July 1997 and raised fears of a worldwide economic meltdown ( Of the 30 largest chaebol, 11 collapsed between July 1997 and June 1999. The chaebol were heavily invested in export-oriented manufacturing, neglecting the domestic market, and exposing the economy to any downturns in overseas markets. Manufacturing (from Latin manu factura, "making by hand" is the use of tools and labor to make things for use or sale In competing with each other, they had built up unsustainable overcapacity—on the eve of the crisis South Korea, with a population only ranked at #26 in the world, had seven major automobile manufacturers.

Many of the chaebol had become severely indebted to finance their expansion, not only to state industrial banks, but to independent banks and their own financial services subsidiaries. In the aftermath of the crisis when they could not service their debt, banks could neither foreclose nor write off bad loans without themselves collapsing. The most spectacular example came in mid-1999 with the collapse of the Daewoo Group, which had some US$80 billion in unpaid debt. This article is about the Chaebol Daewoo Group For the Korean auto company Daewoo Motors that is associated with Chevrolet, see GM Daewoo. The United States dollar ( sign: $; code: USD) is the unit of Currency of the United States; it has also been At the time, it was the largest corporate bankruptcy in history. Bankruptcy is a legally declared inability or impairment of ability of an individual or organization to pay their Creditors Creditors may file a bankruptcy petition against

Investigations also exposed widespread corruption in the chaebol, particularly fraudulent accounting and bribery. In the broadest sense a fraud is a Deception made for personal gain or to damage another individual Accountancy or accounting is the measurement statement or provision of assurance about financial information primarily used by Lenders managers,

Reforms

Under President Kim Dae-jung, elected in the wake of the crisis, the government made several efforts to reform the economy. Kim Dae-jung (Born December 3, 1925, kim tɛdʑuŋ is a former South Korean president and the 2000 Nobel Peace Prize recipient

• Instead of competing in every industry, the chaebol were pressured to focus on core businesses and spin off unrelated enterprises.
• The chaebol were to decentralize their management and encourage the hiring of professional managers.
• Accounting regulations were strengthened to limit the ability of chaebol to hide losses and debt at underperforming subsidiaries.
• A crackdown on antitrust laws and inheritance taxes would impede the ability of families to retain control over their chaebol. Estate tax and Death duty redirect here Inheritance tax, estate tax and death duty are the names given to various taxes which

Both Kim and his successor, Roh Moo-hyun, have had mixed success. Roh Moo-hyun (nomuʝʌn (born in August 6, 1946 in Kimhae, Gyeongsangnam-do, South Korea is a former President of South Korea The chaebol continue to dominate South Korea's economy. Hyundai and SK Group have been implicated in separate scandals involving both presidents. Also, Samsung President Lee Kun-hee resigned amid charges of tax evasion and breach of trust in April of 2008.

The Federation of Korean Industries, a consortium of chaebol, has taken a leading role in resisting changes.

Marriages within chaebols

(Korean) A diagram of marriages between chaebols

Families of large chaebols are closely connected with marriage chains interlinking each other.

See also

• Economy of South Korea
• Family business
• Holding company
• List of Korea-related topics
• List of South Korean companies
• Vertical integration
• Cabal
• The Hongs
• Mega Corporation

Notes

References

This article contains material from the Library of Congress Country Studies, which are United States government publications in the public domain. The Economy of South Korea is the third-largest in Asia and the 13th-largest in the world by GDP ( PPP) as of A family business is a business in which one or more members of one or more families have a significant ownership interest and significant commitments toward the business’ overall well-being A holding company is a company that owns part all or a majority of other companies' outstanding Stock. This is a list of articles on Korea -related people places things and concepts This is a list of major companies based in South Korea. Please note that the list is highly incomplete and does not have thousands of companies of different sizes In Microeconomics and Management, the term vertical integration describes a style of Management control. A cabal is a number of people united in some close design usually to promote their private views and interests in a church, State, or other community often The Hongs (Chinese 行 were major business houses in Hong Kong with significant influence on patterns of Consumerism, Trades Manufacturing " Megacorporation " is a term popularized by William Gibson derived from the combination of the prefix Mega- with the word Corporation. The Country Studies are works published by the Federal Research Division of the Library of Congress ( USA) freely available for use by researchers The federal government of the United States is the central United States Governmental body established by the United States Constitution. The public domain is a range of abstract materials &ndash commonly referred to as Intellectual property &ndash which are not owned or controlled by anyone

• Beck, Peter M. "Are Korea's Chaebol Serious About Restructuring?" Presentation at the Korea 2000 conference, May 30, 2000. Korea Economic Institute of America

• "Unfinished Business," The Economist, April 17, 2003

• "Web site: South Korean conglomerates," The Economist, December 11, 1997

• Whitmore, Stuart and Nakarmi, Laxmi. The Economist is an English-language weekly news and International affairs publication owned by The Economist Newspaper Ltd and edited in London Events 69 - After the First Battle of Bedriacum, Vitellius becomes Roman Emperor. Year 2003 ( MMIII) was a Common year starting on Wednesday of the Gregorian calendar. The Economist is an English-language weekly news and International affairs publication owned by The Economist Newspaper Ltd and edited in London Events 359 - Honoratus, the first known Prefect of the City of Constantinople, takes office Year 1997 ( MCMXCVII) was a Common year starting on Wednesday (link will display full 1997 Gregorian calendar "Guide to the Groups: The pecking order of the top 20 chaebol," Asiaweek, October 10, 1997. Asiaweek, the English edition was a News magazine focusing on Asia, published weekly by Asiaweek Limited a subsidiary of Time Inc Events 680 - Battle of Karbala: Shia Imam Husayn bin Ali, the grandson of the Prophet Muhammad, is decapitated Year 1997 ( MCMXCVII) was a Common year starting on Wednesday (link will display full 1997 Gregorian calendar
• S.Korea's Samsung president resigns over corruption scandal