Are Chaebol Groups still necessary for the economy of South Korea, or are they obsolete?

(수완뉴스=정종호) Chaebol groups should be obsolete and are not necessary in modern day’s Korean economic stability or growth. Chaebol, also called as conglomerates, is a corporation that is made up of a number of different businesses. In a conglomerate, a company asserts its power over a number of smaller companies, which are mostly in a separate business form.

 

Oligopoly in the national economy prevents the entry of new SMEs (Small and Medium sized businesses) into the market; therefore, Korea is currently dealing with less competition in markets. It is impossible for a small scale company to compete with the conglomerates that have already taken over the market. 

 

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Furthermore, competition is made even harder because chaebols take over small companies. For example, the SPC group which is the food vendor of South Korea, umbrellas brands like Paris Croissant, Paris Baguette, Baskin Robbins, Queen’s Park, Dunkin Donuts, Passion 5, Pascucci, and Jamba Juice. Since all of these major brands are linked into SPC, no other food vendor in South Korea can equally compete against this big player. This is exactly what the Chaebol groups are doing at an even larger scale than SPC group.

 

Chaebols are doing more harm than good. Contrasted to before, chaebols are currently taking over our political structure through collusion. Meaning, the companies have competed in a corrupt competition. SK, a Chaebol group in Korea, recently was criticized for its collusive acts. The CEO of the company has been tried and convicted for bribing the government in an attempt to take advantages over the market system of Korea. Just to clarify what collusion is, collusion is an illegal and therefore secretive agreement between two or more parties to limit open competition by deceiving others of their legal rights, or to obtain an objective forbidden by law by gaining an unfair market advantage.

 

While it may be a fact that chaebol groups make up the majority of economic stability in Korea, we should take a moment to think about whether this is normal, right or just. What about failure of small and medium sized business that have paid the price? Let me draw a comparison: is it right for the winners of a war to disregard their veterans and casualties? Now that Korea has gained economic stability, we need to think more about the process rather than the result. Before, Korea might have needed a boost for the economy. Not now. Now, we need to let small and medium sized business live, too.

 

There are not sufficient number of Chaebols to compete each other. If Chaebols are there to compete against each other, we need even more Chaebols since they are the prime movers of success. Having more of mediocre sized companies, which currently are limited due to the overwhelming power of Chaebols, would be the only way to fill the needed amount of competitors to compete each others.

 

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Lastly, Korea has risked too much. Recent survey shows that 10 largest oligopolies in South Korea is setting 80% of South Korea’s GDP, showing how dominant chaebol influence is. This implies that almost all of South Korea’s GDP depends solely on chaebol. What if something were to happen to chaebols? South Korea is looking at ultimate pitfall. In a nutshell, probably every sacrificed SMEs and I believe that the national economy is big enough to nurture more SMEs, and not increase few dominant Chaebol groups.

 

Before, chaebols might have been necessary to revitalize the lagging Korean economy. They were necessarily one of the biggest causes for Korea to experience rapid economic growth: the miracle of the Han river. However, their role in today’s Korea is no longer needed. Not only that, they are actually detrimental to Korea’s current state of affairs.

Chaebol groups have grown to become monsters that no governmental or institutional body can control; they’ve become oligarchies that control both Korea’s economy and Korea’s government.

 

Can Korea now really assert itself to be a democratic country? Can Korea be said to promote competition in the market? Ultimately, Chaebols are the exact reason why that South Korea is subject to such hypocrisy.

 

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