By Kim Tae-gyu
Staff reporter
What if the Samsung Group, the foremost conglomerate by any measure, were to move out of Korea? Then a fourth of the country's overall corporate profits made by listed companies would be taken with it.
According to data of the Korea Exchange (KRX) on Sunday, Samsung Group's 12 affiliates listed to the Seoul bourse netted a total of 12 trillion won ($10.3 billion) in net profits last year.
This amounts to 25.1 percent of 47.7 trillion won, the combined net income from 565 corporations listed on the main bourse, up by 7.4 percentage points from 17.7 percent in 2007.
The proportion of Hyundai-Kia Automotive Group, the No. 2 player, almost doubled in the aftermath of the global financial crisis from a mere 6.4 percent in 2007 to 12.2 percent last year.
The nation's five largest chaebol, including SK, LG and Lotte on top of Samsung and Hyundai, carved out 60.9 percent of corporate profits last year, up 21.5 percentage points from 39.4 percent in 2007.
``The proportion of sales and market capitalizations of the conglomerates have not risen so fast over the past two years in the wake of the economic downturn,'' said an official at the KRX.
``However, the portion of their profits rocketed as profitability in the info-tech and automobile industries dramatically improved thanks to the demise of some of their rivals over the recession.''
Indeed, Samsung and Hyundai are touted as examples of the largest beneficiaries of the economic slump because the bottom lines of their flagship subsidiaries ― Samsung Electronics and Hyundai Motor ― dramatically improved.
Samsung Electronics, the world's primary producer of memory chips and flat-panel displays, racked up more than 7 trillion won in net profits last year because some of its competitors had to shut down from financial distress.
Along with its sister company Kia Motors, Hyundai Motor also expanded its market share across the world, thus earning the largest amount of profits in its history last year.
Even though the snowballing profitability of domestic companies is fine, some market observers point out that the overly high reliance on a handful of flagship entities should be addressed.
``Many mention concerns on the monopolistic status of chaebol companies in the profits of Korea Inc. as the overreliance is feared to make the country vulnerable to an outside shock. Think of what will happen should a big player collapse,'' a Seoul analyst said.
``It is not desirable for a certain group to expand their business horizons over the top. They might end up choking entrepreneurship and venture start-ups. As you know, we have hardly seen any newly-emerging big players here. That is the downside of the concentrated economic power.''
Chaebol is Korea's sprawling conglomerates in which founding families exercise almost unchecked control despite small direct shareholdings. Samsung or Hyundai-Kia Automotive groups are clear examples.
Most of the country's chaebol have decades of company history and the ownership has been transferred from its founders to their offspring. Korea already faces the massive rise of the third-generation tycoons, who are the grandchildren of their founders. Samsung's Lee Jae-yong, chief customer officer (CCO) is one example, while Hyundai's Vice Chairman Chung Eui-sun is another.
As the only-son of Samsung Group's virtual owner Lee Kun-hee, officially chairman of Samsung Electronics, Jae-yong is dubbed heir apparent of the group.
In comparison, new enterprises have struggled to get into the game. During the first decade of the new millennium, only a couple of new groups of Mirae Asset and STX have managed to make their presence felt.