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Chaebol (재벌) is South Korea’s wealthy or large business families dominate the South Korean economy and have a huge influence on both the economy and investment. It can be said that Chaebol holds almost every business in the country except for commercial banks. Although the business is expanding across the country, wealth is only within the family, with each affiliate having their family members as a large shareholder.
After World War II, Korea became a battleground between the United States and the Soviet Union. At that time, the U.S. injected a large sum of money during the Korean War. Under the leadership of Rhee Syng-man at that time, he focused on military development, and the army-related industry grew, which was the beginning of the Chaebol.
Later, General Park Chung-hee made a coup d’état, reforming the policy to drive the economy by industrial sectors. Divide development among many potential entrepreneurs, which fell to the Chaebol group.
The government injected U.S.-funded budgets into those industries and launched trade barrier measures to support businesses that help the government. The South Korean economy has grown with Chaebol until now.
Chaebol mainly consists of 5 companies which are Samsung, SK Group, Hyundai, LG Corporation, and Lotte with 47 affiliates that are ranked in Korea’s top 50 companies.
According to the Bank of Korea, the total income of five South Korean chaebol companies in 2019 accounted for 44% of the year’s GDP. Moreover, it is also reported that Samsung Electronics’ 2021 revenue alone accounted for 14% of South Korea’s GDP in 2021.
Samsung was founded in 1938 by Lee Byung-chul. Samsung in Korean means 3 stars, intending to make the company powerful and long-lasting like the stars in the sky, because the star is a symbol of longevity. It started as a small trading company before expanding its business to textile, insurance, securities, and retail, till the production of black and white TVs that was a turning point for Samsung.
Until the 1990s, Samsung was seen as a major player in the global electronics market. The company became a leader in memory chip manufacturing and entered the mobile phone industry. Samsung’s Galaxy series which is a flagship gained huge popularity in the 21st century, strengthening its position as a key player in the smartphone market, and becoming one of South Korea’s largest and most influential group of companies in the world. Currently, Lee Jae-yong, Samsung’s third-generation heir, has officially taken over as CEO.
Hyundai Motor Group is a giant business group in South Korea founded in 1967 by Chung Ju-yung as a construction company. Later, it started to expand to other industries, including the automotive sector. Hyundai Motor was founded in 1967 until becoming a major player in the automobile manufacturing market before the first car model was introduced in 1975.
In recent years, Hyundai has expanded globally by acquiring Kia Motors in 1998 and has become one of the world’s largest automotive group of companies with a focus on innovation, sustainability, and a wide range of vehicles. Currently, Chung Eui-sun, the only son of Chung Ju-yung, is serving as president of Hyundai’s company.
SK Group is a South Korean giant business group founded in 1953 by Choi Jong-kun. Initially, it started as a textile company but has diversity. Over the years, SK has expanded to a wide range of sectors including energy, chemicals, telecommunications, and others including SK Innovation, SK Telecom, and SK Hynix. The group has played an important role in South Korea’s economic development and is recognized for its innovation and global business operations. The eldest son, Chey Tae-won, serves as chairman of the company to continue administering SK Group.
LG, formerly named Lak-Hui Chemical Industrial Corp, was founded in 1947 by Koo In Hwoi, the company’s first product is “Lucky Cream” (Lak Hui Cream), a Korean cosmetics brand.
LG’s business has diversified over the years, including electronics, chemicals, and telecommunications industries. What especially made LG’s reputation is LG Electronics related to consumer electronics and home appliances. The fourth-generation heir Koo Kwang-mo is now taking over.
Lotte Corporation was founded in 1948 by Shin Kyuk-ho. It started as the gum and sweets manufacturing business, then expanded its business into various sectors such as food and beverage, retail, chemicals, and entertainment. Currently, Lotte Group is recognized and known for its business group of department stores, hotels and entertainment venues, and parks, and is also South Korea’s fifth-largest economic power Chaebol. Currently, Shin Dong-bin, the youngest son of Shin Kyuk-ho, has taken over as CEO of Lotte Corporation.
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