Debate over how to curb the size and power of Samsung and other family-run conglomerates has become the key issue in South Korea’s Dec. 19 presidential election, with polls showing that about three in four voters say they feel negatively about the country’s few behemoth businesses. Candidates are sparring over how far to go to constrain them.
Samsung draws the greatest scrutiny because it is by far the largest chaebol — the Korean term for corporate groups that were jump-started with government support — and because it is wildly prosperous as the rest of the economy slows down. The conglomerate contributes roughly a fifth of South Korea’s gross domestic product.
Some Koreans call the country “The Republic of Samsung.”
Famous globally for its electronics, Samsung would be one of the largest conglomerates in almost any country. But within its tiny home country, the size of Virginia, it acts more as a do-everything monolith, building roads and oil rigs, operating hotels and amusement parks, selling insurance, making not only the world’s best-selling smartphone, the Galaxy, but also selling key components to Apple for the iPhone — even as the two battle in a series of lawsuits.
In its domestic market, Samsung is far ahead of Apple. Only one in 10 South Korean smartphone users has an iPhone. (Samsung holds about 33 percent of the global smartphone market, while Apple accounts for about 17 percent. In the United States, Apple controls 34.3 percent of the smartphone market. )
Critics say Samsung elbows into new industries, knocking out smaller businesses, limiting choices for Korean consumers and sometimes colluding with fellow giants to fix prices while bullying those who investigate. They also see in Samsung the picture of closed-door wealth, a family affair in which Chairman Lee Kun-hee is passing power to his son.
“You can even say the Samsung chairman is more powerful than the South Korean president,” said Woo Suk-hoon, host of a popular economics podcast. “Korean people have come to think of Samsung as invincible and above the law.”
A reversal of opinion
That sentiment has intensified in recent years, a period during which Samsung has obstructed price-fixing investigations — drawing only minor fines — and seen its chairman indicted for financial crimes, only to receive a presidential pardon “in the national interest,” as a government spokesman put it.
South Korea ranks poorly among democratized countries in corruption rankings, and the traditionally cozy ties between government and the biggest companies were widely seen as the enabler of the country’s economic rise.