ed Culture of sharing
Chaebol’s jungle capitalism will backfire
Profit-sharing may be anti-capitalistic. The time may come when Korea has no other choice but to adopt the concept unless the widening polarization between small and large companies subsides.
Former prime minister and noted economist Chung Un-chan has been waging a lonely crusade to introduce the concept. He says the disparity has become serious enough to threaten social instability.
He says that many subcontractors are struggling to stay afloat while chaebol put up record earnings. Chaebol sometimes take over small-sized developers of killer technologies. One-percent chaebol corners 99-percent of small and medium-sized firms.
Their woes have deepened under the Lee Myung-bak administration. It scrapped business areas off limits for chaebol. The Fair Trade Commission has become a toothless tiger as it has been negligent in monitoring unfair business practices
The Federation of Korean Industries, the mouthpiece for conglomerates, balks at the proposal of transferring parts of earnings among partner firms.
The federation contents that no country in the world has institutionalized what it calls the anti-capitalist concept. What the FKI fails to mention is the fact that no country in the world other than Korea has seen such a strong concentration of wealth in the hands of a few conglomerates.
The word chaebol is now in wide use and is even in English dictionaries. It is a unique family-run business empire that has grown under state sponsorship and sacrifices of taxpayers. Such names as Samsung, Hyundai, LG, SK and POSCO would not have become global household names without a variety of tax, fiscal and regulatory incentives over the past five decades.
Profit-sharing is not easy to implement. It is difficult to set rules on how much income should be shared between assemblers and suppliers. The concept of “excessive” profit is quite fuzzy, controversial and subject to arbitrary interpretation. In the capitalist world, there are no such terms as excessive profits or excessive competition. An in-depth study on the concept appears necessary.
However, chaebol’s blind self-defense may backfire. IT mogul Ahn Cheol-soo is popular partly for his critical view on the winner-takes-all business practices.
Anti-chaebol sentiments may be sweeping during the general and presidential elections. The next president might be forced to adopt draconian anti-chaebol policies. Chaebol must take a voluntary step of seeking ways to prosper together with their parts suppliers before it is too late.
Politicizing chaebol may sap entrepreneurial spirits. However, tycoons need to pay attention to the criticism that they are the power refusing to change.
Prospering together ― assemblers and suppliers ― would become possible only when chaebol voluntarily stop their predatory business practices. Profit-sharing is not an attempt to extort their earnings for non-conglomerates. It is a grow-together program for upgrading the competitiveness of subcontractors.
Sharing is the key word in the era of Capitalism 4.0. Through sharing, Korea can reduce economic polarization. Job-sharing will ease unemployment problems. Sharing love through donations will make society warmer. Sharing power between leaders and people will further promote social cohesion. Jungle capitalism only deepens social disharmony.