Anger and Envy in the Chaebol Republic
Those who think South Korea is ready to turn on its powerful conglomerates are missing the point: This is a country both exasperated by its wealthy, and obsessed with them.
- BY SE-WOONG KOO
SEOUL — It was the tantrum that launched 1,000 think pieces.
The world was riveted last December by the spectacle of “nut rage”: the saga of Korean Air heiress and vice president Cho Hyun-ah and her ill-fated macadamia-nuts package that ended in Cho resigning from her post and receiving a 12-month prison sentence. The outburst from Cho, the daughter of the airline’s chairman and part of the powerful South Korean family businesses known as the chaebols, captured international attention, spawning a flurry of headlines all marveling at the display from a member of the South Korean version of royalty and wondering whether perhaps the country had finally grown disenchanted with these mighty clans.
What few noticed at the time was that, while nut rage was dominating headlines around the globe, South Koreans were simultaneously caught up in a very different story about another chaebol heiress: Lim Se-ryong, the eldest daughter of the Daesang Group’s honorary chairman. The very same week Cho was dispatched to a women’s correctional facility in southwestern Seoul, South Koreans went into a frenzy over the revelation that Lim, the ex-wife of Samsung Electronics Vice Chairman Lee Jae-yong, was in a relationship with A-list actor Lee Jung-jae.
South Korean media, including the staid wire service Yonhap News, generated some 1,650 articles about Lim and her lover over a span of two days after the story broke Jan. 1, according to a review of the popular South Korean search engine Naver. Lim and Lee’s dates were photographed, given prominent space in various publications, and subjected to endless scrutiny, from the brands of coats Lim wore (Valentino and Céline), to her bag (Hermès) and car (Porsche), to where she lives (an “ultra-luxe residence” in the coveted Cheongdam area of Seoul) and where they ate (“a casual French restaurant” she owns). (Popular searches on Daum, another major search engine, in the days after the story broke included “Lim” and “bag” and “Lim” and “coat.”)
Abundant ink has been spilled in Western media in the weeks and months that have followed, pondering whether the country’s widespread condemnation of nut rage is a sign that attitudes in South Korea may finally be shifting when it comes to the chaebols, which have dominated the national economy for decades. But the vastly different treatment in the media of these two women — Cho and Lim — over very different incidents suggests something else: that South Korea’s relationship with these families remains as complicated as ever, laden with resentment, envy, and aspiration in a country still reconciling itself with its newly rich status.
The chaebols owe their current fortunes to the policies of Gen. Park Chung-hee, South Korea’s long-ruling dictator, from 1961 to 1979, and the father of the current president, Park Geun-hye. Many credit the elder Park for spurring the development of modern South Korea; he did so in part by selecting certain businesses — the likes of Samsung, Hyundai, and Daewoo — to receive generous loans and contracts for public projects, all while quashing demands for better working conditions and higher wages to keep labor costs low.
But as South Korea has developed into one of the world’s richest countries, the once widely accepted policies and practices that have kept the chaebols at the top of the country’s business world have grown increasingly controversial: Chaebol families, for instance, pass down shares in their vast empires from one generation to another, often through byzantine ownership structures, and have their hands in myriad industries ranging from construction to manufacturing to retail, prompting accusations of monopolizing too many economic sectors and stifling competition and creativity. The chaebols’ chunk of the national economy has also raised alarms that these powerhouses may have grown too big: Sales from the country’s top 10 chaebol groups equaled nearly 80 percent of South Korea’s GDP in 2011, according to one report.
Then there is the imperiousness of the so-called “third-generation chaebol” — princelings and princesses like Cho who receive elite educations abroad and get parachuted into plum jobs seemingly as part of their birthright, generating a sense of what Jamie Doucette, a Korea specialist at the University of Manchester, calls “a chaebol aristocracy.” (Cho, a Cornell University graduate, was vice president of in-flight service at Korean Air and held other titles within her father’s business empire, the Hanjin Group, which includes the airline.) That Cho does not appear to be completely remorseful — though she has apologized for her conduct and to the victims, she’s also in the process of appealing her criminal conviction and has been accused on social-networking sites of faking contrition — hasn’t helped the conglomerates’ image problem.
Some polls from the past couple of years suggest that South Koreans have formed a decidedly unfavorable view of the superrich, with a large majority calling the current tax policy unfairly beneficial to the rich and expressingdiscontent over what they see as impunity of the rich and powerful. Mindful of voter sentiments, even President Park, a conservative whose policies have emphasized deregulation, briefly paid lip service to the idea of “economic democratization” during her election campaign.
Yet the coverage from news outlets like the BBC, which, for example,reported that South Korea was debating “whether the downside of nepotism and hereditary leadership is the right way for the future,” has missed something crucial about South Korea’s feeling toward the chaebol families, whose abundant wealth and lavish lifestyles have turned them into celebrities in what is still a newly rich country that places a premium on prosperity and success.
While opinion pages lament chaebol corruption and abuse of power, lifestyle sections gossip shamelessly about members of this class in prose tinged with a sense of voyeurism — especially when society weddings roll around.While opinion pages lament chaebol corruption and abuse of power, lifestyle sections gossip shamelessly about members of this class in prose tinged with a sense of voyeurism — especially when society weddings roll around. Like Cho, Lim is the daughter of a business tycoon, whose family built its fortune on MSG sales. Lim’s maternal grandfather is the founding chairman of the Kumho Asiana Group, which controls Korean Air’s main rival, Asiana Airlines. Her own family wealth, coupled with her former marriage to the Samsung heir, has made her something of a celebrity in South Korea even after the union ended in divorce.
The country’s ubiquitous television soap operas are often centered on the lives of fictional chaebol clans that at times come across as both loathsome but also unimaginably privileged. Although chaebol characters are often portrayed as ruthless and greedy, they also exercise enviable power and enjoy limitless funds in their everyday lives, showing ordinary citizens — some of whom have taken to self-deprecatingly calling themselves “Muggles” after the non-magical humans in Harry Potter novels — what material success can make possible in contemporary South Korea.
These conflicted attitudes often reveal themselves in the country’s policies toward the chaebols. Over the years, South Korea has seen a parade of chaebol chairmen go in and out of courthouses facing charges on myriad economic crimes, but a serious judicial outcome is still considered unusual. The punishments facing the SK Group and CJ Group CEOs, who were sentenced in 2013 and 2014 and are serving prison times of four and three years, respectively, for white-collar crimes, came as something of a shock because they marked a shift from the convention.
More typical is the example of Samsung Chairman Lee Kun-hee, who five years ago received a presidential pardon on his conviction for tax evasion on the grounds that he was “vital to helping win the Winter Olympics for the city of Pyeongchang,” which won hosting rights for 2018. Or even the proposal, which came at the height of Cho’s Korean Air scandal last December, in which Finance Minister Choi Kyung-hwan and ruling Saenuri Party Chairman Kim Moo-sung casually floated the idea — with the taciturn support of the presidential office — of bestowing a gift of pardon on convicted chaebol CEOs currently behind bars as a way of overcoming the economic crisis ostensibly gripping South Korea.
The idea went nowhere, given the current national mood — in the last few months, surveys on chaebol pardons have put public opposition at anywhere between 50 and 69 percent. But that doesn’t mean that the reign of the chaebols is coming to an end.
Even if a growing number of South Koreans feel hostile toward the chaebols, a sizable segment of job seekers still aspires to work for them, making it fiercely competitive to land a position at these supposedly detested companies. Whenever top chaebol firms make job announcements, they collectively attract hundreds of thousands of applications. And getting hired by Samsung remains so prestigious that a whole industry has grown to help applicants study for the required “Samsung Aptitude Test.” South Koreans live in chaebol-built apartments; wash and dress themselves in chaebol-made and -imported products, bought at chaebol-run shops; and subsist on chaebol-processed food, while watching imaginary chaebol families on television. They are, in other words, citizens of a chaebol republic in which the companies and the families who control them may be seen as villains, but are also providers of jobs, comfort, and fantasies.
Lim Se-ryong’s now-famous Valentino coat, originally priced at $3,690 in the United States (or just above 4 million won), is too costly for most South Koreans. But in the wake of her very public romance, numerous knockoffs have proliferated at price points ranging between $60 (65,700 won) and $210 (230,000 won). It’s as good a sign as any that though it may be trendy at the moment here in South Korea to bash the chaebols, trying to join them never goes out of style.
JUNG YEON-JE/AFP/GettyImages
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Again with the comments of "South Korea has developed into one of the world's richest countries". Forget it, I can't read anymore.
Why? What is there shameful of the truth? South Korea used to be poorer than Nigeria in the 1950s, now they're richer than Spain, and will become richer than England, Japan, France, and Germany combined in 2050s. What gets you?
Got sidetracked at the "reconciling itself with newly rich status". What is rich? Is Mexico rich, since it has a higher GDP than South Korea? Is 45th in the world per capita GDP rich? Seems very subjective status they've placed on themselves, is the second most overworked country in OECD and one of the lowest welfare states the definition of rich? First I look at the writer of the story and that tells me everything. I digress, I will continue reading.
South Korea is rich because they're annual individual GDP is $32,000. Mexico is $9,000. Obviously Mexico isn't a rich country. Japan is $37,000. China is $7,000. United States is $42,000. You should be able to tell the difference!
@rkc37617 I have read some of this writer's pieces in Korean Expose-he is NOT a cheerleader for the current status quo in South Korea. He brings a very balanced view to this article that gives a pretty decent snapshot into society's complicated relationship with these companies. If you haven't been to South Korea before, it is hard to describe the scope of how much influence the chaebol's have over the economy here.
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