Lesson One South Korea Outline South Korea Fast

Lesson One : South Korea Outline South Korea Fast Facts History Korean Capitalism (Chaebol) Foreign Investment Policy Korean culture and management North Korea The New Capitalist Mini case: Samsung Electronics

Economic Development, Corporate Growth & Business-Government Relations Before 1960 s (Chung-hee Park regime) 1970 s After 1980 s • Under Japan’s rule (1910 -1945) • Split into a Southern half (under USA influence), Northern half (under Soviet influence) • Korean war (1950 -1953): Deprived of the autonomous achievements and leadership in for the previous 50 years • Authoritarian government, rapid economic development: concentration on specific sectors + preferential treatment from the Government • =>Basic industry (cement, petroleum, light, Textiles and footwear) • => Heavy industries (steel and ship building) (late 1960 s) • => advanced assembly industries: automobiles and electronic (1970 s) • Double digit annual growth rates; Korea moved from developing economy => emerging economy • Numerous business groups (chaebol) emerged, they expanded into numerous technologically unrelated industries. • Moved into technologically advanced fields, i. e. semiconductors, cellular phones and digital displays • Financial crisis and structural reform: Chaebol’s limits • Reforms and Improvements

Korean Capitalism (Chaebol)

Chaebol Power

Korean Capitalism (Chaebol) Chaebol Large enterprises that composed of many corporations Technically Groups of Companies Complex Web of Cross company Ownership to maintain tight management control of their group companies

Samsung

Korean Capitalism (Chaebol) FARS Family Alumni Regional State

Korean Capitalism Problems Unequal distribution of Wealth Family Feuds Similar Minded Educated Management Civil Right Issue Impeded development of small and medium-sized businesses in South Korea

Foreign Investment Policy Swing attitude * First 1962 Before 1984 1997 financial crisis Must be approved by the government in some invested areas. Allow foreign investments in a large scale. After financial crisis Continued restrictions on foreign companies, many foreign companies were forced to leave the country.

Management (South Korea) Shaking Chaebols Reduce the government's pervasive involvement Encouraging innovation and entrepreneurship Opening the door to immigrants

Management Hybrid Korean Confucianism Japanese Management Well-structured corporate ranks Managerial procedures US Management Competition Performance Orientation

CSR & Corporate Citizenship During the authoritarian period: the chaebol showed a high degree of CSR toward the public due to the influence of the government Since the government retreated from controlling the business sector: firms have increasingly been criticized for only maximizing their profits Many Koreans have ambiguous feelings about the chaebol. While they are proud of their achievement and success, they also accuse the chaebol for being selfish and irresponsible Now, many chaebol owners are willing to share their wealth with the Korean public. p. 250, 251 (spotlight on CSR)

South Korea v. s North Korea South Republic of South Korea Democracy (Civil Law) Strong Confucianism Influence One part of the Global market US$ 31, 700 (28/181) North Democratic People’s Republic of Korea Communism (Civil Law) Great Leaders of North Korea Juche (self-reliance) US$1, 800 (160/181)

Corruption Index South Korea 46, North Korea 175 out of 177 countries in Global corruption Index 2013.