With just ten families controlling 60 percent of GDP, Korea’s family-owned “chaebol” conglomerates have enjoyed their privileges for decades—that may be about to end.
For decades, a small circle of powerful family-controlled conglomerates has stood at the center of South Korea’s economy. Commonly known as the chaebol, these business empires — including Samsung, Hyundai, and LG — were instrumental in transforming Korea into a major industrial power. Yet the very dominance that once fuelled national growth is now raising serious questions about fairness, accountability, and the future of corporate power in the country.
One of the clearest symbols of this tension is Lee Jae-yong, heir to Samsung. After being convicted on charges including bribery, fraud, and embezzlement connected to a major political scandal, Lee was sent to prison. Nevertheless, in August 2022, he received a special presidential pardon before completing his sentence. Authorities defended the move by arguing that Samsung, as one of Korea’s most important corporations, needed his leadership to remain globally competitive. Soon after his release, he returned to a senior leadership role.
This episode reflected a broader reality in South Korea: the chaebol are often treated as both indispensable national champions and deeply problematic centres of inherited privilege. On the one hand, many Koreans admire their role in building the country’s prosperity and continue to view employment within these corporations as a mark of success. On the other, there is widespread resentment toward the concentration of wealth and power within a handful of families, many of whom are seen as operating above the law.
The Korean government itself has long displayed this same ambivalence. Over the past twenty years, policymakers have introduced measures intended to restrain the dynastic power of the chaebol. South Korea imposes some of the world’s highest inheritance and estate taxes, especially when family control of a corporation is at stake. Institutional investors such as the National Pension Service and activist funds like KCGI have also become more assertive, pushing back against decisions that appear to favour controlling families at the expense of minority shareholders.
Yet these efforts to limit chaebol influence have been matched by repeated acts of protection. It has become almost routine for prominent chaebol family members to receive reduced sentences, suspended terms, or pardons after conviction. This creates a public impression that the justice system treats elite business families differently from ordinary citizens.
The issue is especially complex in a country like South Korea, where large business groups have historically been crucial to export growth and international competitiveness. Strong conglomerates can give a mid-sized economy global reach. But concentrated corporate ownership also comes with risks: reduced competition at home, weakened social mobility, and economic systems that favour inheritance over merit.
South Korea’s development model from the 1960s through the mid-1990s depended heavily on export-led industrialisation, much of it built around state-supported conglomerates. The chaebol flourished during this era. However, the Asian financial crisis of 1997 exposed the fragility of highly leveraged business groups. A number of major chaebol collapsed in its aftermath, including Daewoo, once one of the country’s most powerful conglomerates. Later, rising competition from China further weakened many firms in traditional manufacturing sectors.
The story of Hanjin illustrates how vulnerable some chaebol have become. Best known as the parent group of Korean Air Lines and Hanjin Heavy Industries, the group became internationally notorious after the 2014 “nut rage” incident, in which a family executive abused her authority during a flight over how macadamia nuts were served. The scandal damaged the family’s reputation and reinforced public anger over elite arrogance.
At the same time, Hanjin made major strategic miscalculations. It invested heavily in shipbuilding infrastructure, including a massive facility in Subic Bay, Philippines, hoping to capitalise on global demand for giant container ships. But competition from lower-cost Chinese rivals proved overwhelming. In 2019, the Philippine operation collapsed into bankruptcy, resulting in huge job losses and underscoring the dangers of overexpansion in a changing global market.
Shortly afterward, shareholder activism intensified. KCGI expanded its stake in Korean Air and challenged the Cho family’s control. When Chairman Cho Yang-ho died in 2019, the family also faced a substantial inheritance tax burden, further weakening its hold over the group. In this sense, estate taxation has become one of the most effective tools for disrupting the hereditary succession model that has long defined the chaebol.
Of course, not all chaebol are in decline. Samsung remains one of the world’s most important technology firms, and groups such as Hanwha have shown resilience and adaptability. At the same time, a newer generation of Korean technology companies — including Naver and Kakao — has taken a different path. Their founders have publicly distanced themselves from dynastic succession and signalled support for more professionalised corporate governance.
Taken together, these trends suggest that South Korea may be entering a new corporate era. Global competition, activist investors, tougher governance expectations, heavy inheritance taxes, and repeated scandals involving family heirs are all putting pressure on the old chaebol model. The system that once symbolised Korea’s rise may now be approaching a turning point.
The chaebol are unlikely to disappear anytime soon. But the age in which a handful of elite families could dominate Korea’s economy with minimal restraint may be slowly drawing to a close.
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