Not necessarily undeserving, conglomerates have become something akin to a public enemy under the Moon Jae-in administration.
They are under fire for bad corporate governance and cultures, worsening the economy in general and generally beingthe root of all evil.
We can agree with the first point. Just look at Korean Air. It’s not only chaebol kids who have horrific attitudes, but it’s true that the heirs and heiresses aren’t making it easy for the companies to build good and solid governance.
At the same time, their presence in Korea is also so immensely influential that they dominate whatever industry they enter. That means that while it makes sense to beat some sense into them, they still cannot be overlooked, and they still play a pretty major role in the economy.
If the figures are right, just 5,000 more people were employed in July, which is much, much lower than the 300,000 of last year. Some 150,000 people -- mostly men -- in their 40s lost their jobs. Many of these men then started their own businesses, but 9 out of 10 are struggling.
It’s not a rosy situation, but it can also be an opportunity in disguise, because it’s a chance for the government to lay down their guns for a while and prod conglomerates into becoming healthy benefactors.
One way is by getting them to more aggressively support startups. Right now, for every 200 startups created by China, Korea has one. Even considering the population difference, it’s not exactly encouraging. Koreans are still afraid to mess up, opting for stability instead. If this culture continues, no government can make things better.
New businesses create not only new jobs and new money, but they also bring a certain vigor to society. Even if the government has to spend more to jump start the community, that’s what it has to do.
And this is where the conglomerates come in. Last week, the founder of one of Korea’s top startups told me that it was time for us to put past grievances toward them aside and think with our heads.
“Whether we like it or not, we need to get them to the table to negotiate whatever we can,” he said. The bigwigs need to make investments, create funds and in general, get the fire going.
Korea has but two unicorns: Coupang and Yello Mobile. Unicorns are startups valued at $1 billion or more before they go public. So like the mystical one-horned horse, they are nearly nonexistent, but they are found much, much more frequently in countries like the US and China.
Last year, CB Insight data showed that out of 186 unicorns in the world, Coupang ranked 25th. Uber was No. 1.
Stumped by heavy oversight -- one startup founder who shall remain nameless declared that all the smartest people go into civil service, and that these smart people put their brains together to come up with watertight regulations that squeeze the life out of everything -- daunted by conglomerates and suffering from failure-phobia, Koreans may have lost some of their steam for new businesses.
It’s high time to get their groove back, and this cannot be done unless the government uses its head and coaxes bigger companies into jumping into the waters in earnest to fund startups and undergo M&As to generate the desperately needed energy into the country.
North Korea can wait while the South gets back on its feet. Besides, it is hard to believe that Pyongyang would want to reunite with a struggling, pressed-for-money sibling.
Kim Ji-hyun
The writer is the managing editor of The Investor, a Korea Herald company.
