LG Corporation is going to hold a shareholder meeting to approve the appointment of new chairman after Koo Bon-moo passed away. The fourth-generation leader of the LG Group is the adopted son of the former president and chief executive o
LG Corporation is going to hold a shareholder meeting to confirm the appointment of new chairman after Koo Bon-moo passed away. The fourth-generation leader of LG Group is the adopted son of the former president and chief executive of LG Electronic.
So far, such major corporations of Korea as LG, Samsung, Hyundai or Hanjin have experienced the transition of leadership when their leaders are getting aged.
CHAEBOL FAMILY DYNASTY
The term "chaebol" was first used in English in 1984, which means a large industrial conglomerate that is run and controlled by an owner or family in South Korea. A chaebol often consists of a large number of diversified affiliates, controlled by an owner whose power over the group often exceeds legal authority.
Chaebols dominate the economy, culture and politics of Korea. Korea has a lot of chaebols, but the most powerful and wealthy are the big four: Hyundai Motor Company, SK Group, Samsung and LG.
Thanks to the contribution of the chaebols, South Korea has emerged from a poor country after Civil War to the 11th-largest GDP in the world (World Bank 2016). Within a few decades, many chaebols have become the world's leading brands.
DEVOLUTION IN CHAEBOL FAMILY:
In South Korean, each chaebol can be considered a family-controlled corporate groups. The contribution of chaebols to the Korean economy is so great that the presidents of these are as famous as the first-class actors and actresses. They are absolutely powerful leaders.
Key positions are often given to the relatives of the founder / president of chaebol. Especially the chairman position will not be transferred until the formers died. Thus, “Prince” of Samsung - Lee Jae - Joong is still the vice president of Samsung Electronics, although his father is no longer able to operate due to severe illness.
Basically the activities of chaebols are as follows: The family members hold the shares of a subsidiary within the corporation, then this company holds the shares of others which share the same parent company. All the companies in chaebol are very closely related. Therefore, in order to inherit what fosterfather left behind, Mr. Koo Kwang Moo will have to pay nearly USD1 billion in inheritance tax (accounting for 50-60% of all shares for major shareholders). This is how Korean government controls the revolving power in chaebols.
Chaebols have too much power and manipulate many sectors in the economy. They received many incentives from the government such as tax breaks, low interest loans, wrapped up in front of every competition… However, they are manipulating the economy, eliminating competition, squeezing small companies and not giving much to society.
Recently, chaebols has received a lot of criticism from public opinion from descendants known as spoiled princesses and princes who are not able to run a business.
"The first generation of leaders are self-made entrepreneurs, their children are born in sufficient condition and they don’t try their best to improve their management qualification." – Mr Park Sang – In - Prof.of Economics