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Concentration of Economic Power on 30 Largest Chaebols Eases for 4th Consecutive Year
Economic Power Concentration Eased
Concentration of Economic Power on 30 Largest Chaebols Eases for 4th Consecutive Year
  • By Michael Herh
  • February 19, 2018, 08:15
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The ratio of assets of the top 30 largest conglomerates to Korea’s GDP has been on a steady decline for four years.
The ratio of assets of the top 30 largest conglomerates to Korea’s GDP has been on a steady decline for four years.

 

The concentration of economic power on chaebols compared to Korea’s GDP has been easing for the past four years.

According to a report titled “Changes in Concentration of Economic Power on Chaebols and Implications” by the Economic Reform Research Institute on January 18, the ratio of assets of the top 30 largest conglomerates (excluding government-run companies) to Korea’s GDP had increased prospectively since 1987 but from 2013 to 2016, the percentage was on a steady decline for four years.

The ratio of assets of the 30 largest conglomerates to Korea’s GDP rose from 55.3 percent in 1987 to 91.83 percent in 1998, but then dropped to 59.29 percent in 2002 due to the effects of a foreign currency crisis. The ratio began to rise again in 2003 and rose to 104.5 percent in 2012 but began to drop from 2013 and slid to 100.31 percent in 2016. The concentration of economic power on chaebols compared to Korea’s GDP was the first since the financial crisis (1999-2002) which gave rise to the moribund Korean economy.

The concentration of economic power on top-level Chaebol owner families peaked 2014 and since then, subsided. The ratio of combined assets of Samsung and two business groups which spun off from Samsung, Shinsegae, and CJ to Korea’s GPD rose from 12.32 percent in 2001 to 27.48 percent in 2014, but dropped to 26.18 percent in 2016.  

The concentration of economic power on the top ten chaebols also fell to 84.36 percent in 2016 after recording 87.17 percent in 2014. The ratio of chaebols’ sales to entire industry sales was also on a downward spiral in the period from 2013 to 2016 in line with the gradual easing of the concentration of economic power compared to Korea’s GDP. The ratio of chaebols with more than five trillion won in assets to Korea’ GDP touched 39.68 percent in 2008 and then rose to 44.6 percent in 2012, but since then, had gone downhill only to hit 38.95 percent in 2016.

However, as the concentration of economic power on chaebols compared to the nation's total assets and total corporate assets is still intensifying, so it seems still premature to say that the concentration of economic power on chaebols has been clearly eased. The percentages of assets of chaebols with more than 5 trillion won in assets and the 30 largest chaebols in the nation’s total assets swelled to 7.31 percent and 5.52 percent in 2017 from 5.09 percent and 4.41 percent in 2008, respectively. Besides, the percentages of assets of chaebols with more than 5 trillion won in assets and the 30 largest chaebols in total assets of all Korean companies jumped to 12.04 percent and 9.10 percent from 8.42 percent and 7.30 percent, respectively.