samsung lg decline in south korea, samsung, lg… Are family-owned companies on the decline in South Korea? – samsung and lg know are family owned big companies on decline in south korea
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Many family owned houses behave as if they are above the law. Similar ambiguity exists in the context of government. In the last two decades, governments have also tried to limit the dominance of chabel or these groups. Korea has one of the world’s heaviest wealth taxes, as high as 65 percent, concentrated on wealthy families. Institutions such as the Korea Corporate Governance Improvement (KCGI) Fund and the National Pension Service hold shares of chabble companies. She has been playing an active role in protecting the interests of minority shareholders and opposing decisions of family-owned conglomerates that favor them.
While governments widely protect successful business conglomerates and contribute to their success, it is also common to reduce prison sentences for relatives of Korea’s big business conglomerates. Family ownership of companies tends to be a strain for medium-sized industrial economies such as Korea. At the domestic level, there is a dangerous effect of Chable. Korea follows an export-oriented development strategy with heavy subsidies for more than 30 years. Here the mid-1990s was the most important time for Chable’s economic success. But the Asian financial crisis of 1997 overshadowed their position. In 1997, 10 of the top 30 companies went bankrupt and were closed by 2003.
Among them was the Daewoo company, which was in fourth place. In addition, the competition from China in the manufacturing industry has also kept the rest of the chain companies tight. The future of many such companies has become uncertain. However, Samsung still remains strong. In Korea, the founders of technology and media companies such as Google, Naver and Kakao have already pledged to adopt professional management, rejecting perceptions of dynastic intentions. However, factors such as low-cost international competition in legacy industries, active government investors, high inheritance and wealth taxes, and unethical behavior by members of such companies, as well as the uncertain succession of third-generation family members, are some of the factors that affect Korea’s performance. Chabal points towards the end of the era.
(Michael Carney, John Molson School of Business, Montreal, Canada)
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