Chaebol — how legalized nepotism performed an economic miracle in South Korea

Today, South Korea is one of the leaders of the world economy, and Seoul looks like a megacity from a fantastic movie. But half a century ago, the country was unrecognizable. Dilapidated gray buildings, bad roads, dirt and dust, through which gloomy people dressed in anything make their way. What should have happened to make an economic miracle of this magnitude happen, and even in a short time? And you need to thank chaebol — a family business that was once visionarily supported by the state.

The names of South Korean corporations Hyundai, Samsung, LG, Lotte Group are thundering all over the world today. But few people know that these companies once appeared as small firms created by members of the same family. In Korea, they are called chaebols and this is a real economic phenomenon.

It all started after the bloody and destructive Korean War. The country literally lay in ruins and poverty and hunger reigned in towns and villages. At this difficult time, the South Korean government decided to bet on large companies. But in the 50s, big business simply did not exist and it was necessary to create it urgently.

To do this, the government has developed a special program for promising entrepreneurs. These people were given profitable government loans, and in addition, provided with stable budget orders. Additionally, tax incentives have been introduced for such companies. Among the first participants of the program were Lee Byung-chul, the founder of Samsung, and Jung Joo-yeon, the creator of Hyundai.

Interestingly, the tech giants were doing very strange things at that time. For example, Samsung sold dried fish, rice and other products. Hyundai Automobile concern was a modest auto repair shop on the outskirts. But the support of the state played its role, and small firms turned into corporations with multibillion-dollar turnover.

Such companies were called chaebol. At first there were a lot of them, but no more than 30 have survived to this day. But these are huge, rich companies that make the country a name in the world and largely form the GDP of South Korea. Modern chaebol is not just a big business. These are conglomerates consisting of dozens of companies operating in a variety of fields.

The same Samsung, known here for its electronics, is engaged in construction, medical technology, automotive and many others. But diverse interests are not the only feature of chaebols. They differ from ordinary companies in that all management positions are held by members of the same family. The business is inherited, and outsiders cannot be at the helm.

It seems that everything is in order and the citizens of the country should be happy with everything. But this is not the case. Chaebols constantly cause discontent in society and criticism in the press. Many people believe that leadership positions should be distributed based not on the surname, but on business and professional qualities. Many modern managers of companies are treated unimportantly, considering them stupid and "overindulged".

These accusations are not always groundless. Relatively recently, the South Korean press relished the story involving the young head of Daelim Group. The man, barely taking up the post after his father's retirement, felt like a god. One day he demanded from his driver that he remove the rearview mirror in the cabin. The top manager didn't like that their eyes sometimes met.

There are other disadvantages that annoy everyone. In such companies, promotion is possible only in low-level positions. Everything that is higher is distributed among relatives and friends. At the same time, not only professional qualities are not important, but also the specialty. In addition, chaebols have become a real hotbed of corruption, where family bonds of mutual responsibility operate.

There are disadvantages on a global scale. Since there are few chaebols and the country's economy is based on them, the collapse of any of them turns into a catastrophe. This happens rarely, but this option should not be completely excluded.