The miracle of the Han River created by chaebols since the middle of the last century has turned a poor and backward country like Korea into one of the most developed countries in Asia.
The miracle of the Han River created by chaebols since the middle of the last century has turned a poor and backward country like Korea into one of the most developed countries in Asia. This is also a source of inspiration for Vietnamese businesses.
“Make a change from yourself”,
“Let’s ignore quantity to focus on quality”,
“Change everything but your wife and children,” President Lee Kun Hee repeated over and over during the “iron conference” that gathered more than 200 senior Samsung executives from around the world in Frankfurt, Germany in 1993.
No one was allowed to go out to eat or even go to the bathroom during the 10-hour closed-door meeting.
President Lee Kun Hee’s rage stems from his “behavior” trip to Los Angeles. Here, the third son of the founder of Samsung was angry when he witnessed the company’s booth covered in dust in an electronics center while competitors such as Sony and Phillips were placed in a good location. Best.
After a three-day, three-night emergency meeting in Frankfurt, a Declaration was released that would later be considered Samsung’s Bible, directly inspiring hundreds of thousands of employees to drive growth. on all fronts of the group.
Lee Kun Hee is the second generation of leaders of Samsung, taking over the position of chairman of the group thanks to the “former vice president” after his father, founder Lee Byung Chul suddenly passed away in 1987.
Until Lee Kun Hee closed his eyes last year, this president left his only son, Crown Prince Lee Jae Yong, a powerful electronics empire worth $62.3 billion and two parts. empire to two daughters in a huge fortune acquired by the Lee family, known as chaebol in Korea.
Chaebol and the miracle of the Han River
In 2020, Samsung Electronics reported full-year revenue of $215.8 billion, or about 13.4% of South Korea’s GDP.
But this is only part of the Samsung empire, which was split in 1987 into Samsung Group, Shinsegae Group, CJ Group and Hansol Group.
Up to now, the Lee family empire is still the largest chaebol in Korea, holding the power to dominate the economy, politics and society in the land of kimchi. Chaebol, a Korean compound word for tycoon, but understood to be family corporations controlled by a small number of giants in Korea.
There are four largest chaebols in the Republic of Korea today: Samsung, LG, SK and Hyundai. These chaebols rose to become the sharp claws of the Korean dragon during the so-called ‘Miracle of the Han River’.
The family that controls Samsung is still the largest chaebol in South Korea.
It all started in 1961 when Major General Park Chung Hee took over as chairman of the Supreme Council for National Reconstruction in a military coup. General Park then became President of South Korea for four consecutive terms and began the period of hard labor under this dictator.
Until Park Chung Hee was assassinated in 1979, the chaebol continued to grow unceasingly thanks to a capitalist-oriented policy, promoting the export of electronic goods while banning the import of televisions and coffee in order to ‘tighten tights’. austerity’ in the country…
The government’s preference for chaebols at that time was summed up by the late Daewoo chairman Kim Woo Choong in the famous quote: “If we didn’t have the technology, we could go buy it. If we don’t have the money, we can borrow and repay it when we have it.”
Constructive government, execution chaebol became the guideline for Korean economy at that time. Hyundai from a construction company has brought Korea to become the 5th largest country in the world in terms of car production, Samsung, which is a fruit and vegetable group and sugar cane, has grown to become an exporter of memory chips and panels. number one screen in the world.
Of course, the rise of the chaebol was also a failure for the others. Samsung became strong, causing Motorola to split, Nokia biting to sell the mobile business and forcing another chaebol, LG, to give up the phone business in the US.
Not only dominating the economy, chaebols also manipulate the Blue House. Lee Myung Bak, the 10th President of South Korea, was sentenced to 17 years in prison, including charges of accepting bribes of $5.9 million from Samsung Group. Thanks to that, the late president Lee Kun Hee was pardoned in 2009 despite being convicted of white-collar crimes, which are crimes that do not use violence to gain financial benefits.
Deposed President Park Geun Hye, the daughter of dictator Park Chung Hee, was also sentenced to 20 years in prison for accepting bribes through her confidant Choi Soon Sil. The incident caused Crown Prince Lee Jae Yong to also be sentenced to 30 months in prison for bribing Ms. Park to secure control of Samsung.
The 64 chaebol now make up 84.3% of South Korea’s gross domestic product but create only 10% of jobs, according to a 2020 report published in the prestigious Korean newspaper Hankyoreh.
This partly reflects the hatred, disgust and fear of the Korean people when it comes to chaebol clans, which cannot be collapsed according to the famous American theory of ‘Too big to fail’.
Lessons for other countries and inspiration for Vietnam
Chaebol has always been criticized by Western scholars for its economic manipulation and hereditary transfer of power. Tax incentives, loan rescheduling, financing and special projects for chaebol have turned Korea into a dragon in less than half a century with an average annual economic growth rate. over 10%.
Of course, not only experienced success, chaebol also left painful failures. In 1999, Daewoo, a giant chaebol just behind then-Hyundai, declared bankruptcy and left a record $50 billion in debt.
The formula for using chaebol to boost exports and economic growth can be copied, but it needs to be customized to suit each country and each specific situation.
Korea’s period of rapid growth since the mid-20th century is also known as the Miracle of the Han River.
In Vietnam, the translated book titled “Lee Kun Hee” has been read by many Vietnamese business leaders. This book is now considered an inspiration for Vietnamese businesses. Vietnam’s large enterprises not only operate in one line of business, but also begin to encroach on many different fields.
Large corporations like Viettel are no longer traditional telecommunications groups but have turned into technology corporations with many new industries such as military equipment manufacturing, telecommunications equipment manufacturing… and recently, jumping into the field. the toll area does not stop.
Vingroup – a corporation originating from real estate has jumped into many fields such as healthcare, education, retail and started to declare itself as a technology corporation when jumping into the field of manufacturing cars and smartphones. This is probably the most obvious chaebol model in Vietnam.
Along with models like Viettel, Vingroup, there are many Vietnamese businesses that are expanding into many industries, especially in the technology field such as VPbank, MB, VietJet… develop strongly in the country with the desire to expand abroad to bring surplus value to Vietnam.
However, to repeat the feat of the Korean people requires the wise will of the leader, the determination of the collective with a corporate culture with its own identity to create the most core value, which each business needs. such as Viettel, Vinamilk or Vingroup need to find a separate solution for themselves before the urgent and fundamental change required in this 4.0 era. We hope that in the not too distant future, Vietnam will have chaebols like Korea with the Government’s burning determination for a powerful Vietnam.