When the Asian economic crisis hit South Korea in 1997, many commentators argued that the country's problems were due in part to the power wielded by the chaebol, its big, family-controlled conglomerates. The biggest were Samsung, Hyundai, Lucky Goldstar (LG) and Daewoo. These groups, it was said, were spread over too many industries; they had too cosy a relationship with the government, which gave them privileged access to low-cost capital; and their corporate governance arrangements were opaque.
According to the critics, reforms were urgently needed to bring the management of these companies in line with Anglo-American practice.
The Asian crisis was indeed traumatic for South Korea. Some reforms were made, and some of the chaebol went under, the most spectacular collapse being Daewoo. But the better-managed groups adjusted to the new environment – including the greater presence of foreign investors – and they still play a dominant role in the economy. The ownership of Korean industry today is not very different from in the pre-crisis period. The Samsung Group is still controlled by the Lee family, LG by the Koo family, the Hyundai Group by the Chung family, and the SK group by the Chey family.