Economic Concentration
The Korean economy’s dependence on the 30 largest conglomerates, including the Samsung and Hyundai Motor Groups, has increased steadily since 2009.
On Sept. 29, the Korea Development Institute (KDI) published a report on the proportion and market dominance of major business groups, in which the 55 groups that had been subject to cross shareholding restrictions in 2010 were statistically analyzed.
According to the report, the manufacturing sales ratio of the 30 conglomerates increased from 35 percent to 45.5 percent between the 1980s and 2010, when the sector employed 16.2 percent of overall Korean workers. “This is because a very small number of super-large companies have grown rapidly since the late 2000s in the main industries such as semiconductors, automobiles, and mobile phones, while the others have remained in stagnation,” said analyst Lee Jae-hyung, who wrote the report.
The reliance is relatively lower in the service industry, though. The 30 business groups accounted for 16.1 percent and 4.4 percent of the entire service sector sales and employment, respectively. This is because they cannot do banking businesses in the service industry, and food, lodging, and personal service businesses are more suitable for small firms and owner/operators.
In the meantime, the degree of monopoly or oligopoly has been found to be higher in those sectors where the groups are currently doing business. The market share concentration is 51.8 percent in the markets where the groups are found on the top three sales list, whereas the percentage is 43.9 percent on average in the others.
At present, the business groups’ subsidiaries are enjoying the highest market share in 23.7 percent of industrial sectors. These account for 48.5 percent of all entire industrial sales. This means that the groups are focusing more on relatively larger industries. In all industries, the 55 conglomerates represent 29.1 percent of sales and 8.0 percent of employment. They are found in 626 industrial segments, or 55.3 percent, of the total.