The inter-affiliate trading of South Korea’s top 30 conglomerates dipped last year for the first time since 2008, data showed Monday, amid growing calls for reining in the economic dominance of family-controlled conglomerates.
The move appears to represent the commitment by conglomerates, known as chaebol in Korea, to share its growth with small businesses, which account for 99 percent of all enterprises in South Korea.
Chaebol have long been criticized for awarding lucrative business deals to their affiliates, which critics claim distorted fair market competition and stripped smaller companies of business opportunities.
The combined inter-affiliate trading of conglomerates came to 160.1 trillion won ($141.8 billion) in 2012, down 1.66 percent, or 1.7 trillion won, from 2011, according to the data compiled by Chaebul.com, which tracks the country’s conglomerates.
It is the first time that the combined inter-affiliate trading of the country’s 30 chaebol declined since 2008, said Jeong Sun-sup, the head of Chaebul.com. He said the move comes as chaebol began to award business contracts to small and medium companies amid calls to narrow the wealth divide and promote fair competition between conglomerates and smaller companies.
Inter-affiliate trading accounted for 12.8 percent of chaebol’s total revenues of 1,250.1 trillion won last year, down 0.94 percentage points from 2011, the Web site said.
The top 30 chaebol’s inter-affiliate trading had been on the rise since 2008 when it stood at 101.6 trillion won, surpassing 100 trillion won for the first time.
The Web site said 17 out of 30 chaebol cut their inter-affiliate trading last year.
Samsung Group, South Korea’s largest chaebol, slashed its inter-affiliate trading by 4 percent last year, though its revenue increased.
Samsung’s inter-affiliate trading stood at 28.2 trillion won in 2012, compared with 35.3 trillion won in 2011. It marked the largest decline among the top 30 chaebol.
Samsung’s revenue jumped to 312.5 trillion won in 2012, from 270.8 trillion won in 2011, according to Chaebul.com.
In 2011, Samsung Group sold its procurement service arm iMarket Korea.
OCI Co., South Korea’s polysilicon maker, saw its inter-affiliate trading drop to 800 billion won in 2012 from 1.5 trillion won in 2011.
Meanwhile, inter-affiliate trading of Hyundai Motor Group stood at 35 trillion won in 2012, up from 32.2 trillion won in 2011, according to Chaebul.com.
In April, the world’s fifth-largest carmaker vowed to drastically cut its inter-affiliate trading, a move Hyundai said would offer new business opportunities worth 600 billion won per year to small and medium companies. (Yonhap News)
