Several major South Korean family companies – like LG, Hyundai and Samsung – are under pressure because of their tight relationship with the Korean government. The close ties allegedly prohibit new companies from succeeding and also open the gate to corruption.
Government indirect shareholder
It all started in the 1960s, when the then-president decided to hand several major projects, often financed with government-backed loans, to a number of companies in an attempt to modernize the country. This strategy basically turned the government into an indirect shareholder at each of these companies.
Now, the Korean population wonders whether these close ties should persist, with several politicians calling them a remnant of a past that should remain in the past. They also feel the five largest family-owned businesses have a stifling grip on South Korea’s economy, basically strangling the life out of smaller and new companies.
Moreover, in December 2016, Korean president Park Geun-hye was impeached following information she was involved in a major corruption scandal. Samsung and several other companies apparently paid money in exchange for several favours. Samsung’s vice-chairman, Jay Y. Lee, vehemently denies all allegations against him.
