WASHINGTON, April 20 (Yonhap) — South Korea’s large family-owned business groups should heed growing calls for economic democracy, the country’s chief economic policymaker said Saturday, adding that creating fairer business conditions has already become a national consensus.
“When it comes to the issue (of economic democracy), it is not a new agenda…If corporations in South Korea map out their management plans without respect to the issue, their strategies are flawed,” South Korean Finance Minister Hyun Oh-seok told reporters here. “They should adapt to the trend, and they should regard it as a consensus,” he said.
South Korea, now Asia’s fourth-largest economy, has shown remarkable economic successes over the past half-century on the back of a strong industrial policy. At the same time, however, there has been criticism that fairness has been relegated to the sidelines in the Korean economy, thus creating a chronic social divide and allowing some players to have big sway in all economic activities and be engaged in unfair practices.
Against this backdrop, South Korean President Park Geun-hye, who was sworn in early this year, is pushing to establish fairer market discipline and put more emphasis on helping smaller firms.
Her signature economic policy initiative has drawn widespread public support, though it rang alarm bells across corporate boardrooms as a sign of a possible overhaul of sprawling conglomerates.
Economic democracy in South Korea calls for, among other things, reducing concentration of economic power in the hands of conglomerates and strengthening regulations meant to ensure fair business practices.
Last week, Park’s nominee for chief of the country’s antitrust watchdog said that he supports a ban on additional cross-shareholding among affiliates of large business groups in South Korea in order to stave off irregular management transfers.
Cross-shareholding is a tactic frequently used by business groups that enables a handful of the owner’s family members to control the entire business group with small stakes.
Some large business groups are also under fire for engaging in such unfair business activities as forcing price cuts on suppliers and stealing workers and technologies developed by small and medium-sized companies by using their market power.