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To: Haim R. Branisteanu who wrote (92575)	7/16/2012 8:02:28 PM
From: elmatador	Respond to of 217825

China is a big S. Korea. The chaebol are the large, conglomerate family-controlled firms of South Korea characterized by strong ties with government agencies. The name, which means business association, is properly pronounced jay BOL but the spelling pronunciation chay bol is considered acceptable by Korean speakers. There were family-owned enterprises in Korea in the period before 1961 but the particular state-corporate alliance came into being with the regime of Park Chung Hee (1961-1979). Park modeled this arrangement on the zaibatsu system which developed in Japan during the Meiji Era. There were significant differences between the zaibatsu and the chaebol, the most significant of which was the source of capital. The zaibatsu were organized around a bank for their source of capital. The chaebol in contrast were prohibited from owning a bank. The Park regime nationalized the banks of South Korea and could channel scarce capital to industries and firms it saw as necessary for achieving national objectives. The government-favored chaebol had special privileges and grew large. This gave the impression of economic success for the chaebol that was not always valid. In some cases chaebol grew not because they were profitable but merely because they could borrow vast funds. When the international economy took a downturn these debt-ridden businesses were in trouble. In 1999 one quarter of the manufacturers in South Korea did not earn enough to meet the payments required for their debt. In recent years there has been the growth of mid-sized corporations which are outside of the chaebol arrangement. For example, Appeal Telecom was started by a former employee of Samsung, Lee Ga Hyoung. Appeal Telecom is manufacturing and marketing cell phones and has risen to the top in its field. In Germany the mid-sized corporation make a great contribution to the economy and there is no reason that such firms could not be an important element of the South Korean economy. Given below are the histories of some of the major chaebol. The record of the membership in the top ten gives a snapshot of the business history of the South Korea chaebol. applet-magic.com

To: Haim R. Branisteanu who wrote (92575)	7/16/2012 8:03:18 PM
From: elmatador	2 Recommendations Read Replies (3) \| Respond to of 217825

Here is how SAMSUNG grew: Samsung was once the largest of the chaebol. It was created by Lee Byung Chull, the son of a wealthy landowner. He grew up in a Korea occupied by Japan. He had a classical Chinese education in his early years, but when he was ten he was sent by his family to a primary school in Seoul. His university education was at Waseda University in Tokyo. He dropped out before completing his degree and returned to Seoul and did nothing for a few years. At 26 he used inherited money to start a rice mill in his home town. The venture was not particularly successful and he moved to Taegu and started a trucking and real estate business which he named Samsung, which means "three stars." The business went bankrupt in a credit squeeze that resulted from the Japanese invasion of Manchuria. But Lee went back into business and by the end of the war in 1945 Samsung was flourishing. He added domestic and international trading to the trucking and real estate business that he had started in. Samsung Trading Company was one of the ten largest trading companies in Korea when the Korean War broke out. Lee escaped from Seoul after the North Korean invasion and set up operations in Pusan. The business grew by leaps and bounds due to the war. In 1953 Lee started the first sugar refining company in Korea, which he called Cheil ("first") Sugar. Cheil Sugar was highly profitable and in 1954 Lee setup Cheil Wool Textile Company. Samsung's companies benefited from the import-substitution policy that the government pursued. Domestic producers were encouraged and imports were discouraged. By the end of the 1950's Lee had acquired control of several commercial banks and insurance companies. In 1961 Park Chung Hee carried out a military coup d'etat and immediately staged an anticorruption campaign. Lee was in Japan at the time and initially refused to return to South Korea because he knew he, as the richest man in South Korea, would be a prime target of Park's campaign. Later Lee returned to Seoul and struck a deal with Park that became the model for South Korea's chaebol. Samsung would be allowed to remain in business but it would have to be the vehicle for carrying out the development projects that Park wanted. Park was somewhat of a puzzle when he siezed power. When American government officials found that Park in his younger days had not only joined a communist cell, but had been, in fact, the organizer of the cell, they thought that the Communists had taken control of South Korea. Park had a fondness for collectivist-type slogans such as "Enrich the Nation and Strengthen the Army!" and "Steel is National Power." Lee offered to donate most of his wealth to the government and accept expropriation of his bank shares. Also he agreed to gain the cooperation of other businessmen in promoting Park's development projects. The chaebol benefited greatly from this arrangement but the nature of the economic system of South Korea was closer to a centrally planned socialist state than the capitalism that it purported to be. The success of Samsung or any of the other chaebol in selling products cannot be taken to be proof of their success in profit making. It could just as well be a result of the South Korean government subsidizing in one way or another a money-losing venture. Samsung however has been a well managed and economically successful business. By the late 1960's Lee chose electronics to be the focus of Samsung's manufacturing. In 1977 Samsung put Korean engineers to work dismantling color television sets from the United States, Europe and Japan to see how they could be copied. It took about three years for Samsung to to go into production of color television sets. In 1979 Samsung started making VCR's and in 1980 microwave ovens.