What you need to know about the Chaebol families that dominate South Korea’s economy

For decades, South Korea’s economy has been dominated by a handful of family-run conglomerates that possess outsized wealth and influence and play a role in almost every aspect of life in the country.

Because of their political weight, the chaebol, as these families are known, have long been a matter of great public interest. The marriages, deaths, estrangements and legal troubles of these families are chronicled in the South Korean press. Fictional chaebol families have been depicted in Korean dramas. The Lee family of Samsung, the Koos of LG, the Cheys of SK, the Shins of Lotte and the Chungs of Hyundai are household names that have firmly held the reins of the companies that are among the largest employers in the private sector of belong to the country.

Their power is increasingly under scrutiny – both inside and outside South Korea – as an economic vulnerability, widening inequality and fueling corruption.

Chaebol families have controlled South Korea’s largest companies for generations.

The chaebol system is a legacy of South Korea’s history. After an armistice ended the Korean War in 1953, the country’s military dictators anointed a handful of families for special loans and financial aid to rebuild the economy. The companies expanded rapidly, moving from industry to industry until they turned into sprawling conglomerates.

Even as the companies grew in size, wealth and influence and sold shares on the stock exchanges, they remained under family control – usually led by a chairman who was also the head of the family. Changes in generational leadership have sometimes thrown chaebol families into disarray, forcing companies to split or split into smaller groups.

More than twenty years ago, Hyundai was divided among the founder’s six sons during a family dispute. The eldest son took control of Hyundai Motor, now one of South Korea’s largest companies. Under Chung Eui-sun, the founder’s grandson, the family still controls the global automaker.

These conglomerates make up a significant portion of the South Korean economy.

South Korea’s rapid rise from post-war poverty to a major developed economy in a few decades was closely linked to the rise of chaebol companies. Their early successes boosted wages and living standards and boosted the country’s exports.

According to economist Park Sang-in’s book “Republic of Chaebol,” the combined sales of the five largest conglomerates have consistently accounted for more than half of South Korea’s gross domestic product over the past fifteen years, and in 2012 more than 70 percent. Their activities are also reflected in South Korean life – from hospitals to life insurance, from apartment complexes to credit cards and retail, from food to entertainment and media, not to mention electronics.

Chaebol families have had cozy relations with the political leaders.

The protection of political leaders was crucial to the growth of chaebol companies into industrial conglomerates, especially under the regime of Park Chung-hee, who came to power in a coup and ruled the country for 20 years until his assassination in 1979 For Mr. Park, the chaebol were an instrumental part of his ambition to enrich and industrialize South Korea. To that end, his government sent money to companies that cooperated with his agenda, protecting them from competition and shielding them from public accountability.

Although close ties between government and business have diminished in recent decades, political leaders still often turn to them for support or advice. In turn, the companies have sometimes been portrayed as being too important to the economy to be broken up or scrutinized – something critics have argued. attacked as a “too big to end up in jail” problem.

Chaebol will start working this summer traveled with the South Korean president, Yoon Suk Yeol, traveling to Europe as part of South Korea’s bid for the World’s Fair. They also accompanied him on his visit to the United States to meet with President Biden and they were among the guests during a state dinner at the White House.

Several scandals have tarnished their public image.

Chaebol companies have been entangled in cases of political corruption.

One of South Korea’s biggest political scandals in recent years has exposed the close ties between its political leaders and family conglomerates.

Park Geun-hye, the country’s former president, was removed from office in 2017 and later sentenced to prison after being convicted of bribery, abuse of power and other criminal charges. Ms. Park and a longtime confidante were found to have collected or demanded bribes from three chaebol conglomerates: Samsung, SK and Lotte. Ms Park was pardoned in 2021 after serving almost five years of a 20-year prison sentence.

Lee Jae-yong, chairman of Samsung Electronics, the country’s largest chaebol, was also sentenced to two and a half years in prison for his role. He was released on parole and later pardoned by President Yoon in 2022, a move that allowed him to return to running the company.