1. Korean Chaebol : Global or Globalized
Korean Chaebol : Global or Globalized? By Jasper Kim, JD Associate Professor and Department Chair, Ewha GSIS

2. Which One Is More Global?
Company A
85% of revenues outside home country
Subsidiary offices in countries
80,000 + employees, most outside home country
95%+ management are expats
Company B
70-75% revenues outside HQ country (30 NA, 40 EU, 20 Asia, 10 ROW)
Offices in 85+ cities,
in 50+ countries
~10,000 employees worldwide
20-30% expats or

3. What Makes a Company Global?
Decision distributed
to those who are in
best position to make
them
Standard process/
System to facilitate
decision making
Seamless exchange
of information
Common
Language,
Culture
One global talent pool

4. Let’s Look at Company A&B Again
Most major decision made at HQ and then “ orders sent” to subsidies
One system and policies (e.g., HR) for home country ; rest of the world done as needed
“One way” narrow-casting from HQ individuals to their fellow countrymen
Trying to grow “local” talent but management pool is all in home country
No common language;
English used when needed
Company B
HQ provides direction and guidelines; individual locations make pertinent decisions
Common systems (HR, Finance, IT)
Networked info flow; key data, information available to all
Global talent review
English as common
language
Decision
Making
System/
Processes
Information
Flow
Talent
Pool
Common
Language

5. Korean Companies Should Care
Commoditization of manufactured products (e.g., electronics)
Web 2.0 creating informed consumers, as well as potential detractors and evangelists; local consumer insights critical
War for talent never ended, and more complicated than before, e.g.,
Global mobility
Changing value systems and needs
Local supply/demand imbalances
Risk of being “squeezed in the middle”
Paradigm that brought rapid growth through ’90’s no longer valid
Fast follower
Mfg led
Value-oriented proposition
Export sales orientation
Lack of trust with “outsiders”

6. What Can You Do to Prepare and Do Your Part?
Cultural “Chameleon”
Team leader
Initiative taker-
“make mistakes and ask for forgiveness”
Use logic and commons sense
Obligation to dissent
Cultural preservationist
Team member
Good soldier
Blind appeal to emotion
Avoid confrontation
NOT

7. Largest Companies in the World (Annual Revenue, 2008)
Gross national income (GNI) in US$ Atlas method: GNI is the sum of value added by all resident producers plus any product taxes (less subsidies) not included in the valuation of output plus net receipts of primary income (compensation of employees and property income) from abroad. Data are in current U.S. dollars, converted from countries’ respective national currencies using the Atlas method, which uses a three-year average of exchange rates to smooth effects of transitory exchange rate fluctuations. (GDP & GDP per capita growth rates, however, are calculated from data in constant prices and national currency units, not from the Atlas method estimates). The World Bank favors the Atlas method for comparing the relative size of economies and uses it to classify countries in low, middle and high-income categories and to set lending eligibilities in order to reduce short-term fluctuations in country classification.
Purchasing power parity gross national income (PPP GNI): This measure is GNI converted to international dollars using purchasing power parity. An international dollar has the same purchasing power over GNI as a U.S. dollar has in the United States. The World Bank favors this measure for accurate measurement of poverty and well-being; in effect, it substitutes global prices for local measured prices, thereby more accurately reflecting the real value of the good or service in question. This is especially true of non-tradable services (haircuts are the example) which are assumed to produce the same level of welfare from one country to another, but which vary widely in their measured local price.
Gross domestic product (GDP) in current prices: GDP is sum of gross value added, at purchaser prices converted at market exchange rates to current U.S. dollars, by all resident producers in the economy plus any product taxes (less subsidies) not included in the valuation of output. It is calculated without deducting for depreciation of fabricated capital assets or for depletion and degradation of natural resources. GDP is equal to GNI less net receipts of primary income. Value added is the net output of an industry after adding up all outputs and subtracting intermediate inputs. The World Bank does not use this measure for classification of countries into income groups or poverty levels, as it is subject to distortions caused by short-term exchange rate fluctuations, policies and interventions. However, GDP measured in constant, local currency units provides the basis for estimates of overall economic growth.

8. Largest Companies in the World (Market Value, 2009)
Gross national income (GNI) in US$ Atlas method: GNI is the sum of value added by all resident producers plus any product taxes (less subsidies) not included in the valuation of output plus net receipts of primary income (compensation of employees and property income) from abroad. Data are in current U.S. dollars, converted from countries’ respective national currencies using the Atlas method, which uses a three-year average of exchange rates to smooth effects of transitory exchange rate fluctuations. (GDP & GDP per capita growth rates, however, are calculated from data in constant prices and national currency units, not from the Atlas method estimates). The World Bank favors the Atlas method for comparing the relative size of economies and uses it to classify countries in low, middle and high-income categories and to set lending eligibilities in order to reduce short-term fluctuations in country classification.
Purchasing power parity gross national income (PPP GNI): This measure is GNI converted to international dollars using purchasing power parity. An international dollar has the same purchasing power over GNI as a U.S. dollar has in the United States. The World Bank favors this measure for accurate measurement of poverty and well-being; in effect, it substitutes global prices for local measured prices, thereby more accurately reflecting the real value of the good or service in question. This is especially true of non-tradable services (haircuts are the example) which are assumed to produce the same level of welfare from one country to another, but which vary widely in their measured local price.
Gross domestic product (GDP) in current prices: GDP is sum of gross value added, at purchaser prices converted at market exchange rates to current U.S. dollars, by all resident producers in the economy plus any product taxes (less subsidies) not included in the valuation of output. It is calculated without deducting for depreciation of fabricated capital assets or for depletion and degradation of natural resources. GDP is equal to GNI less net receipts of primary income. Value added is the net output of an industry after adding up all outputs and subtracting intermediate inputs. The World Bank does not use this measure for classification of countries into income groups or poverty levels, as it is subject to distortions caused by short-term exchange rate fluctuations, policies and interventions. However, GDP measured in constant, local currency units provides the basis for estimates of overall economic growth.

9. Largest Companies in the World (Profit, 2008)
Gross national income (GNI) in US$ Atlas method: GNI is the sum of value added by all resident producers plus any product taxes (less subsidies) not included in the valuation of output plus net receipts of primary income (compensation of employees and property income) from abroad. Data are in current U.S. dollars, converted from countries’ respective national currencies using the Atlas method, which uses a three-year average of exchange rates to smooth effects of transitory exchange rate fluctuations. (GDP & GDP per capita growth rates, however, are calculated from data in constant prices and national currency units, not from the Atlas method estimates). The World Bank favors the Atlas method for comparing the relative size of economies and uses it to classify countries in low, middle and high-income categories and to set lending eligibilities in order to reduce short-term fluctuations in country classification.
Purchasing power parity gross national income (PPP GNI): This measure is GNI converted to international dollars using purchasing power parity. An international dollar has the same purchasing power over GNI as a U.S. dollar has in the United States. The World Bank favors this measure for accurate measurement of poverty and well-being; in effect, it substitutes global prices for local measured prices, thereby more accurately reflecting the real value of the good or service in question. This is especially true of non-tradable services (haircuts are the example) which are assumed to produce the same level of welfare from one country to another, but which vary widely in their measured local price.
Gross domestic product (GDP) in current prices: GDP is sum of gross value added, at purchaser prices converted at market exchange rates to current U.S. dollars, by all resident producers in the economy plus any product taxes (less subsidies) not included in the valuation of output. It is calculated without deducting for depreciation of fabricated capital assets or for depletion and degradation of natural resources. GDP is equal to GNI less net receipts of primary income. Value added is the net output of an industry after adding up all outputs and subtracting intermediate inputs. The World Bank does not use this measure for classification of countries into income groups or poverty levels, as it is subject to distortions caused by short-term exchange rate fluctuations, policies and interventions. However, GDP measured in constant, local currency units provides the basis for estimates of overall economic growth.

10. South Korea: Overview Official Name The Republic of Korea (ROK)
Population (CIA, 2009)
48.5 million #25
Area (CIA, 2009)
99,313 sq km #108
Monetary Unit
(July 19, 2010)
Won
1,214.5 KRW/USD
GDP (IMF)
$929.1 billion USD (2008, nominal, 15th)
$1,342.3 billion USD (2008, PPP, 13th)
GDP Growth Rate (IMF)
2008: 2.2%
2009: -1.0%
GDP per capita (IMF)
$19,136 (2008, nominal, 42th)
$27,692 (2008, PPP, 33th)
GDP by sector (2007)
agriculture (3.0%),
industry (39.5%)
services (57.6%)
Inflation (%, 2008)
4.7
U. Rate (%, 2008)
3.2
Source: BBC, CIA, World Bank, CBC, BOK

11. Korea’s Major Trade Partners (2006)
(US$ mil.)
Rank
Country
Exports
Imports
Total
Trade 1
China
81,985 (1)
63,028 (1)
145,013 2
United States
45,766 (2)
37,219 (3)
82,985 3
Japan
26,370 (3)
56,250 (2)
82,620 4
Saudi Arabia
4,026
21,164 (4)
25,190 5
Germany
11,543
13,534 (5)
25,077 6
Taiwan
13,027 (5)
9,967 (8)
22,994 7
Hong Kong
18,654 (4)
2,142
20,796 8
Singapore
11,949
6,860
18,809 9
Australia
4,691
13,232
17,923 10
UAE
3,705
12,656
16,361
So, when we add the absolute value of export and import,
We can know the total trade volume with other countries and
This table comes up with 10 largest trading partners in terms of trade volume.
You can see that China, US, Japan are the most important partners of Korea,
(Source: MOFAT (2008), Major Economy Trade Statistics, Feb. p.10, original source from KOTIS as of Feb. 28, 2008)

12. Korea’s Major Import & Export Items
Export Items (Outflow) 1. Automobiles 2. Semiconductors 3. Shipbuilding 4. Computer & Computer Related Items
Import Items (inflow) 1. Fuel 2. Timber 3. Steel 4. Semiconductor components 5. Computer components 6. Petrochemicals 7. Liquefied Natural Gas 8 . Coal

13. Korea’s Automobile Companies
Hyundai Motors
World’s fifth largest automaker in terms of units sold per year.
In 1998, after a shake-up in the Korean auto industry caused by overambitious expansion and the Asian financial crisis, Hyundai acquired rival Kia Motors.
Kia Motors
Korea’s oldest and 2nd largest auto manufacturer
Kia's bankruptcy in 1997 resulted in the company being acquired in 1998 by South Korean rival Hyundai Motor Company

14. Korea’s Semiconductor Companies
Samsung Electronics
focuses on 4 areas: Digital Media, Semiconductors, Telecommunication Networks, and LCD Digital Appliances.
World's largest memory chip and second largest semiconductor manufacturer
Hynix (formerly Hyundai Electronics)
The world's sixth largest semiconductor company
The world's second-largest maker of memory chips
Holds the largest share in the Chinese market
인텔, 삼성전자, TI, 도시바, TSMC, ST, Qualcomm, Renesas, Sony, Hynix
삼성전자, 하이닉스, 엘피다(일본), 마이크론, 키몬다(독일, 파산), 난야 테크놀로지, 프로모스, 파워칩

15. Korea’s Shipbuilding Companies
Daewoo Shipbuilding
& Marine Engineering
One of the largest shipbuilders in the world and one of the "Big Three" of Korea
Hyundai Heavy Industries
World's largest shipbuilder, producing 10% of the world's ships
현대중공업, 대우조선해양, 삼성, STX, 현대 미포조선, 성동(10위)

16. Korea’s Electronics Company
Samsung Electronics
World's largest electronics company, largest Korean company & the flagship subsidiary of the Samsung Group
Global market leader in more than 60 products, including Semiconductors
In 2005, Samsung surpassed Japanese rival Sony for the first time to be rated as the new leading and most popular consumer electronics brand.
At the end of 2007, Samsung Electronics exceeded the $100 billion mark in annual sales for the first time in its history.
2009, 매출 136조, 영업이익 11조

17. Chaebol in Korea Definition List of Chaebols Characteristics
Pros & Cons
Conclusion

18. = + Etymology wealthy clan Chaebol (* Zaibatsu) chae(財, wealth)
bol(閥, clique)

19. Definition Chaebol: a business group consisting of companies
in many diversified (often unrelated) business areas
which are owned and
managed by family members or relatives

20. List of Chaebols (KFTC, 2010)
(Korea Fair Trade Commission, )
Rank
Chaebol
Owner
No. of Subsidiaries
Combined Assets
(Tril. Won) 1
Samsung
Lee, Kun-Hee 67
192.9 4
Hyundai Automotive
Chung, Mong-Goo 42
100.8 5 SK
Choi, Tae-Won 75
87.5 6 LG
Koo, Bon-Moo 53
78.9 7
Lotte
Shin, Gyeok-Ho 60
67.3 8
POSCO
POSCO Inc. 48
52.9 10 GS
Huh, Chang-Soo 69
43.1 11
Hyundai Heavy Industries
Chung, Mong-Joon 16
40.2 12
Kumho Asiana
Park, Sam-Goo 45
34.9 13
Hanjin
Cho, Yang-Ho 37
30.4 14 KT
KT Inc. 30
27.1 15
Doosan
Park, Yong-Gon 29
26.8

21. List of Chaebols (KFTC, 2010)
(Korea Fair Trade Commission, )
Rank
Chaebol
Owner
No. of Subsidiaries
Combined Assets
(Tril. Won) 16
Hanhwa
Kim, Seung-Yun 48
26.4 19
STX
Kang, Duk-Soo
20.9 20 LS
Koo, Tae-Hyae 31
16.2 21
Daewoo Shipbuilding & Marine Engineering
Daewoo S & M Eng. Inc. 13
16.0 22
Hynix
Hynix Semiconductor Inc. 9
13.6 23 CJ
Lee, Jae-Hyun 54
13.0 24
Daelim
Lee, Jun-Yong 25
Dongbu
Kim, Jun-Ki
12.5 26
Hyundai
Hyun, Jeoung-Eun 12
 53
Korea Investment Finance
Kim, Nam-Goo
2(2)
5.2 (5.1)
Total
1,264
1,472

22. LEE Kun-Hee and His Family
Ex. Samsung Group
LEE Kun-Hee and His Family
Electronics
SAMSUNG Electronics
SAMSUNG Electro-Mechanics
SAMSUNG SDI
SAMSUNG Corning Precision Glass
SAMSUNG SDS
SAMSUNG Networks
SAMSUNG Techwin
SAMSUNG Mobile Display
SAMSUNG Digital Imaging
Machinary & Heavy Industry
SAMSUNG Heavy Industries
Chemical
SAMSUNG Total Petrochemicals
SAMSUNG Petrochemicals
SAMSUNG Fine Chemicals
SAMSUNG BP Chemicals
Financial
SAMSUNG Life Insurance
SAMSUNG Fire & Marine Insurance
SAMSUNG Card
SAMSUNG Securities
SAMSUNG Investment Trust Management
SAMSUNG Venture Investment
Others
SAMSUNG C&T Corporation
SAMSUNG Engineering
Cheil Industries
SAMSUNG Everland
The Shilla Hotels & Resorts
Cheil Worldwide
Others (cont.)
S1 Corporation
SAMSUNG Medical Center
SAMSUNG Human Resources Development Center
SAMSUNG Economics Research Institute
SAMSUNG Lions
The Ho-Am Foundation
SAMSUNG Foundation of Culture
SAMSUNG Welfare Foundation
SAMSUNG Life Public Welfare Foundation

23. List of Chaebols (2009) (Korea Fair Trade Commission, 2009.4.1) Rank
Business Group
Korean Name
Specially Related Person
Number of Affiliates
Total Asset
(KRW Trillion)
1(1)
Samsung 삼성
이건희(LEE)
63(59)
174.9(144.4)
2(2)
KEPCO (Korea Electric Co.)
한국전력공사
KEPCO
12(12)
117.2(112.6)
3(3)
Hyundai Automotive
현대자동차
정몽구(CHUNG)
41(36)
87.0(74.0)
4(4) SK
에스케이
최태원(CHOI)
77(64)
85.9(72.0)
5(5) LG 엘지
구본무(KOO)
52(36)
68.3(57.1)
6(6)
Korea National Housing Corp.
대한주택공사
KNHC
64.3(51.1)
7(9)
POSCO
포스코
36(31)
49.1(38.5)
8(7)
Lotte 롯데
신격호(SHIN)
54(46)
48.9(43.7)
9(8)
Korea Highway Corp.
한국도로공사
KHC
42.3(38.8)
10(10)
Korea Land Corp.
한국토지공사
KLC
41.4(33.6)

24. List of Chaebols (2009) Rank Business Group Specially Related Person
Number of Affiliates
Total Asset
11(12)
Hyundai Heavy Industry
현대중공업
정몽준(CHUNG)
15(9)
40.9(30.1)
12(11) GS
지에스
허창수(HUH)
64(57)
39.0(31.1)
13(14)
Kumho-Asiana
금호아시아나
박삼구(PARK)
48(52)
37.6(26.7)
14(15)
Hanjin 한진
조양호(CHO)
33(27)
29.1(26.3)
15(13) KT
케이티
KT Corp.
30(29)
28.5(27.1)
16(17)
Doosan 두산
박용곤(PARK)
26(21)
27.3(17.0)
17(16)
Hanhwa 한화
김승연(KIM)
44(40)
24.5(20.6)
18(20)
Korea Gas Corp.
한국가스공사
KGC
3(3)
22.1(12.7)
19(21)
STX
에스티엑스
강덕수(KANG)
17(15)
20.7(10.9)
20(28)
Daewoo Shipbuilding and Construction
대우조선해양
DS&C
10(8)
16.7 (8.7)

25. Differences Between Korean Chaebol and Japanese Zaibatsu/Keiretsu
Ownership and management are not separated; majority of top managers are family members
Zaibatsu/Keiretsu:
Include major commercial banks

26. Characteristics of Chaebols

27. Characteristics of Chaebol
Ownership Structure /
Governance Structure
Abnormal ownership structure:
Founder families as the largest shareholders
Cross-shareholding/Circular equity investments
Control and management by founder families:
No separation of ownership and management
Dual role as controlling shareholder and manager
Inheritance of management

28. Ownership Structure * Direct Ownership * Holding Company
* Mutual Ownership
Owner family
Owner family
Holding Company
Subsidiaries or
Affiliated Companies
Subsidiaries or
Affiliated Companies
Holding Company
Intermediary
Institution
Subsidiaries or
Affiliated Companies

29. Ownership Structure (ex. Samsung: 2009)
(Source: Economist, 2009)

30. Ownership Structure
(ex. Samsung: June 2005)
(as of June 2005)

31. Pyramidal Equity Ownership: Samsung Group (2003)
Electronics
Samsung
Corp
Samsung
Life Ins
Cheil
Comm.
Samsung
Mech. Elec
Samsung
SDI
Samsung
Foundations
S-one
Samsung
Card
Samsung
Heavy Ind.
Samsung
Security
Samsung
Everland
Hotel
Shilla
Samsung
Prec.Chem
Samsung
F&M Ins
Samsung
Techwin
Cheil
Textile
Samsung
Engineering
Samsung
Capital

32. Lee Family’s Shareholding
(Unit : Billion KRW)
Capital
Ratio(%)
Concentration ratio(%)
(A)
C/A
B/C
Lee Family
Top 3 (B)
Total (C)
38,326
3.68
88.25
1,244
1,410
47,115
3.87
91.20
1,664
1,824
54,922
3.98
90.61
1,980
2,185
2000
2001
2002
How can they control this big conglomerate
Surely they do not own the whole business
Look at the table
Total issued shares paid in capital
Intra group share holding
Intro group cross share holding
* Top 3 Affiliates: Samsung Elec., Samsung Life Insurance, Samsung Everland

33. Circular Equity Ownership: Hyundai Group (2001)
Kia Motors
H Securities
H. Precision
Hyundai Co.
H Elevator
H. Motors
H. Heavy Ind
H Shipping
Mipo Shipyard
H Financing
Ulsan Merchant Bank
H Construction
H. Steel Pipe
Inchon Steel
H Electronics

34. Characteristics of Korean Chaebol
2. Management Style:
Paternalistic leadership
Autocratic/dictatorial management
3. Business Practice
Diversification
Resource-sharing among the affiliates (internal labor & capital market)/intra-group trading
Symbiotic relationship with gov’t/politicians
4. Size
Dominant in the national economy
Monopolistic or oligopolistic in individual markets

35. Pros & Cons Pros Cons 1. Family control and management
Rapid consensus/execution
Decision-making on long-term basis and consistent management
Pros
Cons
Serious Principal-Agent problem
Rights and benefits of minority shareholders ignored

36. Pros & Cons Pros Cons 2. Paternalistic leadership,
Autocratic/dictatorial management
Quick decision-making and implementation 
Maximized outcome in case of right decisions
Pros
Hampers innovations, creativity, etc.
Heightened risk of bad judgments:
Negative effects on the whole business group and
on the Korean economy in case of
wrong decisions
(eg. Samsung Motors case)
Cons

37. Pros & Cons Pros Cons 3. Diversification
Reduces risks through diverse industrial portfolio
Provides an opportunity for employees to transfer to other affiliates
Pros
Lack of core competence/Inefficiency due to the dispersion of resources
Discourages small-medium enterprises
Cons

38. Pros & Cons Pros Cons 4. Resource-Sharing/Intra-Group Trading
Efficiency/Reducing production costs
Indirect benefits from advertising/brand recognition
Pros
Illicit subsidization among the affiliates (capital transfer, inter-affiliate transactions)
Involuntary transfer of employees
Hampers economy-wide efficiency
Possible chain-bankruptcies
Obstructs fair competition
Cons

39. Pros & Cons Pros Cons 5. Nexus with Government
Close coordination possible in carrying out strategic policies
Pros
Cons
♦ Corruption, Social injustice
♦ Moral hazard of Chaebols

40. Pros & Cons Pros Cons 6. Size ♦ Economies of scale, economies of scope
♦ Massive investment possible
Market monopoly: Monopoly in an individual market
General monopoly: Monopoly in the whole Korean economy
Can influence economic and political issues or policies
Cons

41. Chaebol Reform (The 5+3 Principle: Under President DJ Kim)
The 5 Principles (Feb. 1998)
Improvement of business transparency
Reduction of debt-to-equity ratios
Eradication of cross debt payment guarantees
Focus on core competencies
Heightening the accountability and responsibility of major shareholders and management
The 3 Supplementary Principles (Aug. 1999)
Improvement of the governance structure of the (non-banking) financial subsidiaries
Restraint from circular equity investments and undue intra-group transactions
Restraint from anomalous inheritance and gifts

42. Chaebol Reform (The 5+3 Principle: Under President DJ Kim)
The 5 Principles (Feb. 1998)
Improvement of business transparency (경영투명성 제고)
Reducing debt-to-equity ratios (재무구조의 획기적 개선)
Eradication of cross debt payment guarantees (상호지급보증 해소)
Focusing on core competencies (핵심역량 집중)
Heightening the accountability of major shareholders and management(지배주주와 경영진의 책임성 강화)
The 3 Supplementary Principles (Aug. 1999)
Improving the governance structure of the non-banking financial sector (제2금융권 경영지배구조 개선)
Restraining circular equity investments and undue intra-group transactions (순환출자와 부당 내부거래 차단)
Preventing anomalous inheritance and gifts (부의
변칙 상속, 증여 금지)

43. Case Study: Samsung

44. Samsung’s Beginning
Founding chairman Byung-Chull Lee started a business in Daegu, Korea in 1938.
Business primarily in trade, selling dried Korean fish, vegetables, and fruit to Manchuria and Beijing.
Through the 1970s, Samsung started heavy, chemical and petrochemical industries.
Now, Samsung is the biggest chaebol in Korea.
When he started business, he was 29 years old.
With 30,000 won his own money and 200,000 won bank loan.

45. Samsung Family First Second Generation Third Generation
Byung-Chull Lee
Meang-Hee (Former Jaeli Fertilizer Chr.)
Wife, Bok Nam Son
Wife’s brother, Kyung Sik Son - CJ Joint Chairman
Meekyung (CJ Ent. Vice Chairman)
Jaehyun (CJ Group Chairman)
JaeHuan (CJ General Manager)
Chang-Hee (Former Seahan Media Chair.)
Young Ja Lee, Wife (Former Saehan Group Chairman)
Jaeguan (Former Saehan media Vice Chairman)
Jaechan (Former Saehan media President)
Jaewon (Former Saehan Inf. Executive director)
Heajin – Life Group
In-Hee (Hansol Group Advisor)
Husband Cho Eun-Hea (Korea Hospital)
Donghyuk (Hansol Group Honorary Pre.)
Dongman (Hansol Group Vice President)
Donggil (Hansol Group Chairman)
Suk-Hee, Koo Cha Hak, Husband (LG)
Myungjin, Cho Junghoo (Meritz Security)
Soon-Hee married to a professor
Myung-Hee (Shinsegae Group Chairman)
Youngjin (Shinsegae Vice President)
Yoogyung (Chosun Hotel executive director)
At first son 맹희 was going to the next chairman but his business ability was not enough so that 이건희 became

46. Gun-Hee Lee Family 이재용,삼성 상무 홍라희 이부진 상무, 호텔신라
이서현 파슨 스쿨 졸업 제일모직(industry) 상무보
이윤형 not married, 이화여대 불문화.
임세령 대상그룹
, 임우재, 김재열
임우재, studied MBA at MIT in the US NOW, 삼성 Elector mechanics assistant executive director
김재열 제일모직 상무
They are all prepare to be a manager for the next generation.

47. Case Study: LG, GS, LS

48. Chairmen of LG,LS,GS LG LS GS
A partnership of half-a-century between the Koo and Hur families, two founding families of the nation’s second-largest family-owned conglomerate LG Group, has finally came to an end.
The partnership of the two families dates back to 1947, when Koo In-hwoi and his business partner Hur Joon-koo founded Lucky Chemical, the former entity of LG Chem and mother firm of the current LG Group.
When 구인회 started the business 허만정, 허준구’s father, supported 구인회 financially and asked him to teach his son to be a good business man. So they started the partnership. However, they always kept in mind one day they would spilt the business so that they maintained the ratio of asset share 65 to 35. The ratio was the standard in separating business process too.
The conglomerate lasted for 57 years under the LG brand until July last year, when LG Group announced a reorganization of the business group into two separate holding companies, a move intended to improve efficiency and transparency by separating unrelated parts of the business.
Now, LG split into LG and LS, Koo family’s business and GS Hur’s business.
Here let’s see two families tree LG LS GS

49. Family Tree of Koo: LG Group
Koo In-Hoi
Ja-Kyung Honorary Chairman of LG Group
Bon-Mu Chairman of LG group
Bon-Neung Chairman of Heesung Group
LG Group
Bon-Joon Vice Chairman of LG Philips LCD
Koo Chul-Hoi
Bon-Sik Vice President of Heesung Precision
Ja-Won Honorary Chairman of LG Insurance
LIG Group
Ja-Hoon Chairman of LG Insurance
Koo Jung-Hoi
Ja-Joon President of LG Insurance
This is a family tree of Koo. 구인회, the founding chairman, has five brothers, 구철희, 구정희, 구태희, 구평회, 구두회 and they also participated into the LG business.
As you can see here, generally there are three groups of LG, LG group, LG Insurance, LS cable which were separated already.
구인회’s first son, 구자경 is now LG honorary chairman, and his first son 구본무 is the current LG chairman. As I told you, 이병철’s second daughter, 이숙희 married to 구본무’ s younger borther, 구자학, the current chairman of Ourhome company he also worked for Samsung once.(아들들 차례로 소개),. Because 구본무 does not have a son, it is expected maybe 구본준’s son will the next generation chairman of LG.
구철회’s sons manage LG insurance
구태희, 구평희, 구두희 families manage LS cable.
In fact, LS cable has been developed by 허준구 almost, so LS cable was a sensitive issue when LG and GS split the business. 허 family considered LS cable as their share naturally and 허준구’s son, 허창수 also had a great attachment to the LG cable (now LS cable) because it was his father’s achievement.
However, Koo family could not gave LS cable to 허 family because of their internal separation problem. They needed LS cable to transfer a part of business to Three younger brothers of 구인회.
So 허준구, gave up LG cable and the decision was quite shocking news.
Ja-Sub President of LG MMA
Koo Tae-Hoi
Ja-Hong Chairman of LG Cable/ Industrial Systems
Ja-Myung Vice Chairman of Kukdong City Gas
Koo Pyung-Hoi
Ja-Yul Vice Chairman of LG Cable
LS Group
Ja-Yong Vice President of E1
Koo Doo-Hoi
Ja-Eun Director of LG Cable

50. Subsidiaries of LG Group
LG Corporation
Chemicals
Electronics
Telecommunications & Services
LG Chem
DACOM
LG Electronics
LG Philips LCD
LG Micron etc.
LG TeleCom
LG Household & Health Care
LG CNS
LG Slitron
LG N-Sys
LG Life Sciences
These are subsidiaries of LG corporation after split. Mainly, chemicals, electronics and telecommunications are transferred to 구 family. These business is export oriented business so little tricky to manage.
When 허만정 was alive, he said ”구 family leads the business, all we, 허 family has to do is helping them.
So the overall business have been managed by 구 family and when they separated the business 구 family have export oriented because to deal with those business, international dimension should be carefully considered so that it is quite difficult to manage.
허 family has industries of domestic demand.
Lusem
LG MRO
LG MMA
Konjiam Leisure
LG Sports
LG Management
Development Institute

51. Family Tree of Huh: GS Group
Huh Man-Jung
Huh Jung-Koo
Dong-Soo
Chairman of GS Caltex
Huh Jun-Koo
Chang-Soo
Chairman of GS Group/GS E&C
Jung-Soo
President of GS Neotek
Jin-Soo
President of GS Energy
Now, let’s see 허만정 family. 허만정 is the man who asked his son, 허준구 to 구인회.
허준구 died in 2002.
now, 허창수 is a representative of 허 family and GS chairman.
When they had to give up LG cable, it is known that 허창수 was discouraged so much, however, 허준구 did not wanted to destroy their 57 year partnership so that he decided to give up.
You may already feel curiosity whether LG families have any daughters because you cannot see any women’s name in the family tree. While samsung women played active roles in business. That is because LG families manage its business based on Confucianism and basically prohibit women from involving business.
LG Main motto is even harmony which is also from Confucianism.
Myung-Soo
Vice President of GS E&C
Huh Shin-Koo
Tae-Soo
Vice President of GS Home shopping
Huh Seung-Jo

52. Subsidiaries of GS Group
GS Holdings Corporation
GS Caltex Oil
GS Mart
GS Power
Seorabul City Gas
Haeyang City Gas
etc.
GS Homeshopping
These are the GS holdings Corporations

53. THANK YOU
감사합니다!!