Fair Trade Commission (FTC) Chairman Kim Sang-jo. [Photograph by Namkung Jinwoong = timeid@ajunews.com]
SEOUL -- The head of South Korea's anti-trust watchdog urges a proper mental attitude among third-generation offsprings of South Korean conglomerate owners as public anger mounts over an arrogant behavior by the youngest daughter of Hanjin Group patriarch Cho Yang-ho.
South Korea's family-run business groups, known as chaebol, were once described as the engine of prosperity and credited for powering the post-war economic miracle, despite their autocratic leadership and dynastic succession practices.
Fair Trade Commission (FTC) Chairman Kim Sang-jo agreed the first and second generation of chaebol owners should be recognized as "protagonists" of the South Korean economy. "They were entrepreneurs in our economy."
"However, the problem is in the third generation," he said in an interview. "It's hard to get as much evaluation as their grandfather and father, and they know that they cannot be managers who are judged by their competitiveness in the current system."
Korean Air senior executive Cho Hyun-min [Cho Hyun-min's Facebook]
Changes are "irreversible", Kim said, warning third-generation offsprings could lose their status unless they meet the demands of society.
Acting as President Moon Jae-in's advance guard for reforming chaebol, Kim has urged chaebol to enhance corporate governance, protect the interests of minority shareholders, and reduce their dominant role in South Korea's economy.
However, Kim ruled out any revolutionary steps in reforming chaebol and said the government supports voluntary steps. "I believe we can achieve our goals of reforming our economic structure and chaebol when we find the direction from the perspective of evolution rather than revolution," he said.
He vowed to create a different culture so that government officials and businessmen can talk "freely". "In fact, South Korea is a country lacking the experience of mutual communication."
Kim has put top conglomerates -- Samsung, Hyundai Motor, SK and LG -- under strict surveillance as part of efforts to restrain their economic concentration. He wants Samsung to set an example by creating a transparent decision-making structure.
"As any companies would be the same, I hope Samsung will increase the openness of its board, create a transparent decision-making structure and transform it into a system in which management and major shareholders are responsible for decision-making," he said.
"It may be difficult, but (Samsung) will have to present its won reasonable direction to the market on the issue of solving conflicts of interest caused by the combination of finance and industry."
The previous growth model that led to South Korea's economic success has lost its momentum, Kim said, adding the government is trying hard to establish a new economic order such as income-driven growth because there is no new model yet to replace old models.
"Change is not going to happen in a short period of time. It is time for overshooting that emphasizes the government's role at the beginning," the FTC chief said, expressing worries that the economy may not be able to make timely decisions.
Companies are expected to create obstacles to economic innovation if they cannot fulfill their responsibilities, Kim said. "The key is to decide and be accountable. The Korean economy is now in dire need of such a decision."
reporter
Lim Chang-won
cwlim34@ajunews.com
