Chaebol must seek key to survival in co-prosperity
When former President Kim Dae-jung tried to tame family-controlled conglomerates in 1998, the chaebol resisted, saying they had never seen or heard such regulations elsewhere in the world. The answer from Lee Kyu-sung, Kim’s first finance minister, was, ``We have very weird corporate entities never seen or heard of in the world.”
The situation has improved little, or even worsened, from 14 years ago. Just look at the business giants’ response to the so-called win-win index ― which gauges their performance in co-prospering with small suppliers based on a latter’s survey ― released by a quasi-governmental panel Thursday.
Major chaebol and their lobby group say this is only to force large businesses to toe the government line by labeling them as obedient and disobedient groups to its policy.
Of course, the unparalleled indexing and opinion polls on smaller firms have some technical problems, such as calculating chaebol’s cooperation, mainly in terms of financial contribution, while ignoring structural differences among industries. Most of all, the 56 chaebol affiliates, which were ranked in four groups, deserve compliments for positively responding to the project. Many others didn’t even cooperate.
Yet this should be a reason for supplementing polling methods, not one for stopping it, as argued by some pro-chaebol media outlets.
Would the government ― and the infamously pro-business Lee Myung-bak administration at that ― do this if the situation wasn’t that bad? Many people doubted whether the Commission on Shared Growth would last when its first chairman, former Prime Minister Chung Un-chan, quit a few months ago, complaining about chaebol’s outright noncooperation and the Lee administration’s rapidly-waning support. Such doubts will turn into reality if this stops at a one-time event.
Which also shows why the government and its party must not operate the panel and index-maker as just a means of checking political opponents’ attempts to capitalize on anti-chaebol popular sentiment in this election year.
Few Koreans would question chaebol’s contribution to the country’s economic development and their ever-enlarging importance on the national economy. It is also true these family-based business groups have become victims of their hard-driven success.
Foreign watchers say the number one reason for the ``Korea discount” ― factors leading to the underestimation of the Korean economy ― is not North Korea but chaebol and their poor corporate governance, which they rank third from bottom in Asia, ahead of only Indonesia and the Philippines. At home, a 2011 survey by the Korea Trade-Investment Promotion Agency (KOTRA) asked about the most urgent task for Korea to attain $2 trillion in trade: 26 percent cited co-prosperity of large and small businesses first, even eclipsing job creation (20 percent) and resolving economic polarization (11.4 percent).
It should come as little surprise, given what some ― if not most ― chaebol have done, ranging from poaching and squeezing small suppliers and fixing prices to more outright irregularities of embezzlement and tax evasion.
The pro-chaebol newspapers are right to say what’s more important is not disgracing large businesses but strictly implementing related laws and regulations ― if only they really meant it, not wanting to discontinue the image-tainting indexing. If the pro-chaebol papers’ argument is to have a modicum of sincerity, they should have criticized the government when it slapped fines in only 66 of 3,500 cases of price fixing in 2010 with the average penalty amounting to just 2.3 percent of illegally earned income.
Chaebol reform has long become an obligation, not an option, for the Korean economy to survive, let alone prosper. Any political group that can bell the cat with the least damage to all deserves to run the next administration.
Chaebol must also change themselves lest they should face the fate of dinosaurs under an asteroid named national backlash.