Sunday, October 4, 2009
Restructuring South Korea's chaebol
The following article discusses the restructuring of the South Korea's indebted family-owned conglomerates or "chaebols." The author states that in the movement towards free market economy the "chaebols" are splitting up into smaller pieces. Overall, they are performing worse than other South Korean firms and carry a huge amount of debt. Their inefficiency is better seen now because of the development of capital markets.
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2 comments:
It is interesting to see the South Korean banks and government so hesitant to let the chaebols fail. I see this paralleling the United States bailouts for American car companies (too big to fail) but on a much bigger scale; the recent crisis in South Korea was much worse than anything the U.S. has experienced in it's recent past.
I see a relation between these break-ups and those of Japan's Zaibatsu's. It is important to keep competition high for the prosperity of consumer's. Therefore, large conglomerate firms often hurt consumers because they don't have to act based on the market. I think it is smart to break up these South Korean powerhouse firms in order to help their economy.
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