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By Mara Reynolds
If you’ve never heard the terms “hypermarket” or “chaebol,” you’re not alone. But it might be time to add them to your vocabulary.
Chaebol is often translated as “wealth clique” from Korean, but can be more accurately translated as “monopoly.” Under an official policy of “guided capitalism,” families of “entrepreneurial elites” received significant financial support from the South Korean government following the Japanese colonial era. With this support the chaebol (as they were later dubbed) re-established the South Korean economy on the world stage by creating vast conglomerates of businesses through which ownership and positions of power have been passed down (often to first-born sons) for generations. Together, the several-dozen families running the chaebols of today dominate local economies and make up almost the entirety of the nation’s stock market.
Founder of the Samsung group Lee Byung-chul, passed significant ownership and chair positions to his son Lee Kun-hee, who has since appointed his son successor. Despite being (reportedly) hospitalized for a heart attack since 2014 with almost no verified information emerging about him since, Lee Byung-chul has been the wealthiest man in Korea 11 years running, and is considered “the most well-known and influential person in South Korea.” His estimated worth according to Forbes currently tops 19 billion dollars.
Lee Byung-chul’s sister, Lee Myung-Hee became chair and majority holder of the spinoff Shinsegae group; her son Chung Yong-jin was appointed CEO in 2010. Both are worth 1 billion dollars, according to Forbes.
Shinsegae runs E-Mart, the largest retailer in South Korea, which recently added New Leaf and New Seasons Markets to its subsidiary, Good Food Holdings. E-Mart runs a series of hypermarkets and “super supermarkets” across South Korea and is increasingly entering into online sales. Hypermarkets are enormous department stores that also contain grocery stores and other vendors you might find in an old-fashioned mall–but it’s all technically one store.
Despite significant government support enabling this vast accumulation of wealth and capital, the chaebols have been plagued with scandal and have only somewhat recently been subject to regulation.
A 2012 New York Times article on the negative impacts of chaebol on small businesses noted: “To ordinary South Koreans, never was the hunt by the chaebol for new sources of profit felt more acutely than when they saw the chaebol opening shops in their neighborhoods.” Even then, the South Korean Government was beginning to enact restrictions on the chaebol’s rampant growth. The article continues:
At Parliament, rival political parties have submitted a number of “economic democratization” bills, calling for various restrictions aimed at checking the unruly behavior of the chaebol.
Huh Chang-soo, chairman of the Federation of Korean Industries, which speaks for the chaebol, said in July 2012 that he could not “understand what they meant by ‘economic democratization.’ ” When the chaebol came under pressure to “share profit” with their subcontractors last year, Lee Kun-hee, the chairman of Samsung, said he had never heard of the concept and did not know “whether it’s used in a socialist, capitalist or Communist country.”
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