How powerful are Korean chaebols
Inside Korea: Hanjin Group (2/3)About "Nut Rage" and other signs of decay
"I hope you can handle this: She was serving macademia nuts in a bag instead of on a plate. I´m serious, I´m not making this up."
Anderson Cooper, the famous US television journalist, pokes fun at a certain Cho Hyun-ah on his program on CNN. But not just him: In December 2014, the South Korean caused laughter and smiles around the world.
Beats for the chief steward
The daughter of the CEO of Korean Air had hit the chief steward with her briefcase in a company-owned aircraft, brought him to her knees and finally ordered him out of the plane. Only because he had dared to serve Cho's macadamia nuts in their plastic packaging instead of in a bowl as prescribed. The media soon gave the scandal its own name:
"She will forever be known as the person behind nut rage. The case is popularly known as nut rage ... facing a handful of charges over the so called nut rage incidence."
In South Korea, however, the "nut-rage" incident sparked less laughter than public excitement. The population saw it as further evidence of how morally depraved the so-called chaebol families are. Chaebols, that's what the Korean-style conglomerates of companies are called, explains Christoph Heider, Head of the European Chamber of Commerce in Seoul:
"Chaebols are groups of companies that are held together through cross-shareholdings - not, as we are more familiar with in Europe or Germany, that you have a holding company, which then has the corresponding subsidiaries. The chaebols are active in different industries means you don't necessarily have a core business or core business that you focus on. "
In addition, the chaebols are all huge family dynasties - now in the third generation. The five largest of them - Samsung, LG, Hyundai, SK and Lotte - subscribe for more than half of the Korean stock index.
Cho Hyun-ah's family only belongs in the second division. Her father Cho Yang-ho heads the Hanjin Group, which, in addition to the Korean Air airline, operates a logistics company and a hotel network, among other things. The group has invested in many business areas, including as the owner of the Wilshire Grand Center, which was completed in 2017 and is the tallest building in Los Angeles at 335 meters. In addition, over 60 years ago the Hanjin Group founded an aviation university in Goyang, South Korea, which teaches students in space technology and flight logistics, among other things.
The main line of business, however, is Korean Air: With a fleet of 166 aircraft serving destinations in 44 countries, it is the largest Korean airline. It employs over 20,000 people and generated net income of $ 850 million in 2017.
The problem of the third generation of companies
Chaebols like the Hanjin group once embodied the national pride of a country that has slaved its way from a bitterly poor agricultural state to the eleventh largest economy. However, the third generation of family dynasties is particularly conspicuous for violating the law and abuse of power. Like the Cho family from the "Nut-rage" scandal.
Last April, Cho Hyun-ah's younger sister had to answer in court for losing her composure at a company meeting and throwing a glass of water at an employee. At the same time, a video recording of the mother of the Cho sisters appeared. You can see the elderly lady on the construction site of a company hotel in anger attacking an employee.
US author Geoffrey Cain has been researching the Korean chaebol families for years. He says:
"The Hanjin family is notorious for their bad behavior. The third generation of chaebols is simply out of control, there have also been other scandals, for example with the Hanhwa group. This problem particularly affects the chaebols, who are not so well known internationally The founding families behave like capitalist aristocrats and can basically do what they want. A look at the files shows that the courts usually let them go in the end. "
Incidents like the "Nut-rage" scandal have shaken the attitude of Koreans towards their corporate elite. Author Cain describes it as a kind of love-hate relationship:
"The fact is that the chaebols have more power in South Korea than ever before. South Koreans depend on them for their jobs - and yet they hate the chaebols because they have so much power."
The acceptance of the chaebols is falling
Especially among the political left, the attitude has prevailed that the large conglomerates of the country benefit immensely from tax breaks, but no longer give them back enough to society.
When he took office in May 2017, South Korean President Moon Jae-in promised to curtail the dominance of the chaebols, as they would prevent an economic middle class from flourishing. So far he has not had any notable success in this area.
"I would not restrict the economic power of the chaebols, but the Korean government has to be strong enough to launch laws that may be against the chaebols - if it is in the general interest of the country," says Christoph Heider from the European Chamber of Commerce in Seoul.
However, US author Cain does not believe that President Moon will reform the chaebol. They are too powerful for that. Still, he predicts a bleak future for Korean conglomerates:
"The structure of the chaebols - and with it the structure of what made South Korea economically successful - has practically remained the same for the past 30 years. Just imagine if America, Germany or England were still targeting exactly the same thing Trust the economic model as they did in the eighties. "
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