For decades, South Korea's economy has been dominated by a handful of family-run corporations that wield enormous wealth and influence, influencing nearly every aspect of life in the country.
Because of their political importance, the chaebol, as these families are known, have long been the subject of great public interest. The South Korean press reports on these families' marriages, deaths, estrangements and legal problems. Korean dramas portrayed fictional chaebol families. The Lee family of Samsung, the Koos of LG, the Cheys of SK, the Shins of Lotte and the Chungs of Hyundai are household names that have a firm grip on the companies that are among the country's largest private employers.
Its power has come under increasing scrutiny both inside and outside South Korea as it represents an economic vulnerability that exacerbates inequalities and encourages corruption.
Chaebol families have controlled South Korea's largest companies for generations.
The chaebol system is a legacy of South Korean history. After the Korean War ended with an armistice in 1953, the country's military dictators gave a handful of families special loans and financial support to rebuild the economy. Companies expanded rapidly, moving from industry to industry until they developed into sprawling conglomerates.
Even as companies grew in size, wealth and influence and sold shares on stock exchanges, they remained under family control – usually headed by a chairman who also served as head of the family. Generational changes in leadership have sometimes unsettled chaebol families and forced companies to split up or split into smaller groups.
More than two decades ago, Hyundai was divided among the founder's six sons during a family dispute. The eldest son took control of Hyundai Motor, now one of South Korea's largest companies. Under Chung Eui-sun, the founder's grandson, the family continues to run the global automaker.
These conglomerates account for a significant portion of South Korea's economy.
South Korea's rapid rise from postwar poverty to a large developed economy within a few decades was closely linked to the rise of chaebol companies. Their early successes raised wages and living standards and boosted the country's exports.
According to economist Park Sang-in's book “Republic of Chaebol,” total sales of the five largest conglomerates have consistently accounted for more than half of South Korea's gross domestic product over the past 15 years, exceeding 70 percent in 2012. Their businesses also shape South Korean life – from hospitals to life insurance, from apartment complexes to credit cards and retail, from food to entertainment and media, not to mention electronics.
Chaebol families had close ties to the political leadership.
The patronage of political leaders was crucial in the development of chaebol companies into industrial conglomerates, particularly under the regime of Park Chung-hee, who came to power in a coup and ruled the country for two decades until his assassination in 1979. For Mr. Park, the chaebol were an integral part of his drive to enrich and industrialize South Korea. To this end, his government funneled funds to companies that cooperated with his agenda, shielding them from competition and sparing them from public accountability.
Although close ties between the government and businesses have diminished in recent decades, political leaders still often turn to them for support or advice. In return, the companies have at times been shielded as too important to the economy to be broken up or investigated – something critics have attacked as a “too big to jail” problem.
This summer, chaebol heads traveled with South Korean President Yoon Suk Yeol on a trip to Europe as part of South Korea's bid for the World Expo. They also accompanied him on his visit to the United States to meet with President Biden and were among the guests at a state dinner at the White House.
Several scandals have tarnished her public image.
Chaebol companies have been implicated in political corruption cases.
One of South Korea's biggest political scandals in recent years highlighted the close ties between political leaders and family businesses.
Park Geun-hye, the country's former president, was removed from office in 2017 and later sentenced to prison after being convicted of bribery, abuse of power and other crimes. Ms. Park and a long-time confidant were found to have collected or solicited bribes from three chaebol conglomerates: Samsung, SK and Lotte. Ms. Park was pardoned in 2021 after serving nearly five years of a 20-year sentence.
Lee Jae-yong, chairman of Samsung Electronics, the country's largest chaebol, was also sentenced to two and a half years in prison for his role. He was paroled and later pardoned by President Yoon in 2022, allowing him to return to running the company.
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