tag:theconversation.com,2011:/us/topics/chaebols-8140/articlesChaebols – The Conversation2017-03-13T14:35:31Ztag:theconversation.com,2011:article/743832017-03-13T14:35:31Z2017-03-13T14:35:31ZLessons from Samsung and South Korea in cracking down on corruption<figure><img src="https://images.theconversation.com/files/160496/original/image-20170313-19247-1r0ipby.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Protestors in South Korea calling for punishment.</span> <span class="attribution"><span class="source">Sagase48 / Shutterstock.com</span></span></figcaption></figure><p>South Korea’s scandal-plagued president, Park Geun-hye has been <a href="https://mobile.nytimes.com/2017/03/09/world/asia/park-geun-hye-impeached-south-korea.html">forced from office</a>. Park was impeached by the country’s constitutional court <a href="https://www.engadget.com/2017/03/09/samsung-linked-scandal-takes-down-south-koreas-president/">over accusations</a> that she helped a friend win bribes from Samsung and other South Korean conglomerates. </p>
<p>The impeachment follows swiftly on from the arrest of Lee Jae-yong, the de-facto head of Samsung, the country’s biggest conglomerate. He is <a href="http://www.bbc.co.uk/news/business-39214545">on trial</a> for a string of corruption charges, including bribery and embezzlement, linked to Park’s impeachment. He has denied any wrongdoing.</p>
<p>Prosecutors allege that Lee donated 41 billion won (US$36m) to non-profit organisations linked to Park’s close friend and advisor, Choi Soon-sil, to secure government support for a merger that would help him to the top of the Samsung group. </p>
<p>Choi, meanwhile, is in detention, accused of using her personal ties with the president to <a href="https://www.theguardian.com/world/2016/nov/20/choi-gate-prosecutors-accuse-south-korean-president-of-collusion">meddle in state affairs</a> and encourage local firms to also donate millions of dollars to non-profit foundations under her control. </p>
<p>All parties deny having done anything wrong. But for a country that ranked the 37th least corrupt out of 167 nations in the <a href="https://www.transparency.org/cpi2015/">Corruption Perceptions Index 2015</a>, this is a major blow. And South Koreans are up in arms – <a href="https://theconversation.com/south-korean-protests-the-first-to-bring-down-a-president-in-a-long-history-of-civic-activism-69162">hundreds of thousands</a> have protested over the reports of corruption and called for Park’s impeachment. </p>
<h2>The mechanics of corruption</h2>
<p>Extensive conflicts of interests, intricate webs of connections and widespread clientelism – where goods or services are exchanged for political support – are the distinctive features of corruption. And they are all too common in the <a href="http://harvardlawreview.org/2010/11/on-political-corruption">political world</a> across the globe. </p>
<p>In the absence of proper regulations and <a href="https://www.routledge.com/The-Globalization-of-Corporate-Governance/Dignam-Galanis/p/book/9781138272750">corporate governance measures</a>, intimate relationships between economics and politics can lead to corruption. The mechanics is simple and intuitively understandable: through the exchange of favours between business and government, the former can distort political outcomes as a result of the undue influence of their vast wealth. </p>
<p>Besides the devastating effects that corruption may produce on <a href="http://www.worldbank.org/en/topic/governance/brief/anti-corruption">the poor and the economic growth</a>, the distortion of political outcomes may also exert a series of adverse effects on daily business practice. The advantages that a company may gain from a corrupt political system can harm competition. Not only is it bad for competitors, it tends to harm consumers too, as lack of competition <a href="http://www.imf.org/external/pubs/ft/fandd/basics/suppdem.htm">typically drives up prices</a>.</p>
<h2>Culture change</h2>
<p>To counter a distorted relationship between business and government, it is not enough to wait until criminal prosecutions are possible. Not least because there is a whole grey area in which businesses can legitimately influence politics – through <a href="https://www.theguardian.com/politics/2014/mar/12/lobbying-10-ways-corprations-influence-government">lobbying</a>. </p>
<p>Instead, we need to change the way in which companies operate and enhance a culture of anti-corruption. For instance, it could be possible to impose on corporations a transparency rule where they must publicly declare if they or their lobbyists, directly or indirectly, have on the payroll former politicians or public officials’ close relatives.</p>
<p>The way that corporations are structured is also an important factor in how open they to corruption. Most companies are organised according to a military model, which is incredibly hierarchical. They adopt a <a href="http://www.nuff.ox.ac.uk/users/klemperer/IO_Files/production,%20information%20costs%20Alchian%20and%20Demsetz.pdf">logic of control</a>, which encourages loyalty and obedience to superiors and the company as a whole, but dissuades individualism. These kinds of <a href="https://chomsky.info/20000516/">tyrannical structures</a> foster a culture that passively accepts misconduct. </p>
<p>A recent example of this is Rolls Royce, which recently paid £671m to settle bribery claims that dogged the company for years. An <a href="https://www.judiciary.gov.uk/wp-content/uploads/2017/01/sfo-v-rolls-royce.pdf">investigation by the UK’s Serious Fraud Office</a> into the company revealed that it had an extremely hierarchical and disciplined structure, which ensured high levels of internal confidentiality and facilitated corrupt practices for several years.</p>
<p>If this is true, the particular corporate structure of Samsung could well have played a role in the present scandal. Samsung is a business conglomerate characterised by the <a href="http://openscholarship.wustl.edu/law_globalstudies/vol1/iss1/6/">concentration of economic power</a>. In fact, in South Korean culture it is called a chaebol, <a href="https://www.cnet.com/news/the-chaebols-the-rise-of-south-koreas-mighty-conglomerates/">which means dynasty</a>. </p>
<p>Chaebols have been <a href="https://lens.blogs.nytimes.com/2015/11/13/samsung-and-the-south-korean-success-story/?_r=0">central to the success</a> of South Korea’s development and economy today. Each one is controlled by a founding family that, although typically holds only a small portion of the total equity, exerts an unchallenged power within the group. The chairmen are absolute rulers and key managerial posts are almost always given to their relatives. It is this kind of culture of unswerving loyalty that <a href="https://www8.gsb.columbia.edu/apec/sites/apec/files/files/discussion/PSLee.PDF">research indicates</a> makes it easy for a company’s top management to be enmeshed in corrupt practices.</p>
<p>If we want really to fight corruption in the business world we must also have the courage to transform the internal structure of big companies. Their efficiency must be safeguarded, but the individualism and accountability of employees must be enhanced at the same time.</p><img src="https://counter.theconversation.com/content/74383/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Costantino Grasso does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Fighting corruption in the business world requires transforming the internal structure and culture of big companies.Costantino Grasso, Lecturer in Business Management and Law, University of East LondonLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/687222016-11-18T07:24:10Z2016-11-18T07:24:10ZWhat you should know about South Korea’s political scandal: the same old story – but with a twist?<p>The <a href="http://www.ibtimes.com/south-korean-president-scandal-explained-5-facts-about-controversy-surrounding-park-2441604">allegations involving South Korean President Park Geun-hye</a> and her friend of 40 years, Choi Soon-Sil, has all the hallmarks of an <a href="https://www.theguardian.com/news/2016/nov/02/south-korea-explainer-park-guen-hye-six-key-points-scandal-choi-soon-sil">old-fashioned scandal</a> in the country. But things are nonetheless <a href="http://www.huffingtonpost.com/entry/south-korea-protests-park-geun-hye-exit_us_582b3b57e4b060adb57063e1">not looking good</a> for the president.</p>
<p>The plotline is mundane: <a href="http://www.wsj.com/video/south-korean-presidents-influence-scandal-explained/672143F7-D107-4FCA-9708-3C702BB3C041.html">Choi allegedly extorted US$69 million</a> from South Korean conglomerates (known as <em>chaebol</em>), including Samsung, Hyundai, LG, Lotte, and others, for personal use – in the form of donations to two foundations she controlled.</p>
<p>If this is true, it has certainly happened before. The practice of <a href="http://www.ingentaconnect.com/content/intellect/tmsd/2010/00000009/00000002/art00001">extracting slush funds from <em>chaebol</em></a> is called rent-sharing.</p>
<p>In the past, it has involved companies paying large amounts of money to the president to obtain monopoly rights, gain access to government capital, garner patents, avoid sanctions or punishments, and secure tax reductions. But since thoses bribes were often too big for financially troubled <em>chaebol</em>, they found it necessary to increase their size to multiply their earning capacity. One way to enhance revenue was to invest <a href="https://www.routledge.com/Routledge-Handbook-of-Modern-Korean-History/Seth/p/book/9780415739313">heavily in new technologies while suppressing unions</a> and their demands for higher wages.</p>
<p>Ultimately, both the <em>chaebol</em> and the corrupt past governments were delighted with the result of rent-sharing. Gross domestic product rapidly increased due to massive exports of high-tech goods to foreign countries at cheap prices. And <a href="http://ci.nii.ac.jp/ncid/BB22310104?l=en">rent-sharing became a driver of economic growth</a>. </p>
<h2>A long tradition</h2>
<p>Rent-sharing was <a href="http://ci.nii.ac.jp/ncid/BB22310104?l=en">first devised</a> during the reign of Park Chung-hee (1961-1979), the current president’s late father. During his military dictatorship, no one could openly say anything about his friendship with <a href="http://www.nytimes.com/2016/11/06/world/asia/south-koreans-ashamed-over-les-secretive-adviser.html?rref=collection%2Ftimestopic%2FPark%20Geun-hye&action=click&contentCollection=timestopics&region=stream&module=stream_unit&version=latest&contentPlacement=3&pgtype=collection">Choi Soon-Sil’s father, Choi Tae-Min</a>, the founder of an obscure sect called the Church of Eternal Life, and later, Crusaders to Save the Nation. </p>
<p>Reverend Choi allegedly had <a href="http://www.globalresearch.ca/south-koreas-president-in-crisis-over-corruption-scandals/5554630">undue influence over the dictator</a>. And when <a href="http://www.nytimes.com/2016/10/28/world/asia/south-korea-choi-soon-sil.html">Park Chung-Hee was assassinated</a> by the chief of the Korea Central Intelligence Agency in 1979, <a href="https://aparc.fsi.stanford.edu/sites/default/files/KDP_Report_(final)-1.pdf">pro-democracy movements led by student activists</a> sprouted up all over the country, calling for the imprisonment of all corrupt politicians, bureaucrats, and <em>chaebol</em> owners.</p>
<p>Democratisation finally happened in 1987, after a <a href="http://www.nytimes.com/1995/12/22/world/south-korea-indicts-2-former-presidents-in-staging-of-1979-coup.html">second military coup in 1979</a> and the <a href="http://www.japantimes.co.jp/news/2014/05/17/asia-pacific/politics-diplomacy-asia-pacific/dying-democracy-1980-gwangju-uprising-transformed-south-korea/#.WCwi4qJ94dU">massacre of pro-democracy demonstrators</a> in the southern city of Kwangju in 1980. Despite full democratic reforms that allowed the election of civilian leaders to the presidential palace, the Blue House, civilian presidents continued to imitate the late dictator Park’s rent-sharing practices.</p>
<p>President Roh Tae Woo (1988-1992) was <a href="http://articles.latimes.com/1995-11-17/news/mn-4124_1_roh-tae-woo">indicted and found guilty</a> of raising <a href="http://www.nytimes.com/1995/11/17/world/ex-president-of-south-korea-is-arrested-and-apologizes-in-a-hugebribery-scandal.html">US$650 million from <em>chaebol</em> owners</a>. </p>
<p>Nobel Peace Prize-winning president Kim Dae-Jung (1998-2002) ended up having to <a href="http://news.bbc.co.uk/2/hi/asia-pacific/1970051.stm">leave the party he founded</a> after his <a href="http://news.bbc.co.uk/2/hi/asia-pacific/2590389.stm">three sons and close aides were found guilty of collecting money</a> from <em>chaebol</em>. The case of president Roh Moo-hyun (2003-2008) was the most tragic of all – he <a href="https://www.theguardian.com/world/2009/may/24/south-korea-former-president-suicide">committed suicide while facing allegations</a> of taking US$6 million in bribes.</p>
<h2>Egregious allegations</h2>
<p>Despite its commonplace theme, the Park Geun-hye allegations seem particularly egregious to many South Koreans because it reminds them of her father’s – and Choi’s father’s – alleged misdeeds. <a href="http://www.nytimes.com/2016/11/06/world/asia/south-koreans-ashamed-over-les-secretive-adviser.html">They are embarrassed about this seemingly unending saga</a> consuming the unlikely figure of President Park, whose father is thought to have been assassinated for corruption that involved Choi’s father. </p>
<p><a href="http://www.dailymail.co.uk/news/article-3930384/One-million-protesters-streets-call-South-Korean-president-stand-scandal-involving-shadowy-female-aide-links-shamanistic-cult.html">Park is refusing to step down</a> from the presidency despite <a href="http://www.asahi.com/ajw/articles/AJ201611120038.html">700,000 demonstrators demanding she do so</a> on November 12. <a href="https://www.theguardian.com/world/2016/nov/01/choi-soon-sil-arrested-made-in-south-korean-presidential-cronyism-scandal">Choi Soon-Sil has been arrested</a> as have <a href="http://www.bloomberg.com/news/articles/2016-11-06/park-s-former-aides-arrested-as-protesters-demand-resignation">two of Park’s former aides</a>. And, in <a href="http://www.bbc.com/news/world-asia-37966494">a first for South Korean political history</a>, a sitting president is likely to be interrogated by prosecutors. But Park is <a href="http://www.globaltimes.cn/content/1018254.shtml">doing all she can</a> to avoid this.</p>
<p>Park is accused of <a href="http://www.nytimes.com/2016/11/06/world/asia/south-koreans-ashamed-over-les-secretive-adviser.html">organising the Blue House for Choi’s rent-sharing practices</a>. Choi, who didn’t have any public position in the government, is alleged to have been given presidential power, even as Park <a href="http://www.nytimes.com/2016/11/06/world/asia/south-koreans-ashamed-over-les-secretive-adviser.html?_r=0">severed ties with her own brother and sister</a>. What’s more, the alleged bribes collected would not have directly benefited Park; <a href="https://www.theguardian.com/news/2016/nov/02/south-korea-explainer-park-guen-hye-six-key-points-scandal-choi-soon-sil">but it would have benefited Choi</a> and her allies.</p>
<p>Park has been described as Choi’s “<a href="http://edition.cnn.com/2016/10/31/asia/south-korea-reshuffle/">puppet</a>”, and protesters keep portraying her as such.</p>
<figure>
<iframe width="440" height="260" src="https://www.youtube.com/embed/JmwlA7O96NM?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">South Korean protestors depict President Park Guen-Hye as her friend Choi Soon-Sil’s puppet.</span></figcaption>
</figure>
<h2>Running out of time</h2>
<p>In September, the <a href="http://www.japantimes.co.jp/news/2016/09/28/asia-pacific/crime-legal-asia-pacific/tough-anti-corruption-law-takes-effect-south-korea/#.WCwvc6J94dU">South Korean legislature implemented an anti-graft law</a> (also known as the Kim Young-Ran law after the judge who drafted it) aiming to stop gift-giving in exchange for public or private preferences. It’s now discussing a new law that would <a href="http://www.koreaherald.com/view.php?ud=20161107000862">allow the government to confiscate all illicit wealth</a> accrued by rent-sharing. </p>
<p>It’s unclear whether President Park Geun-hye will step down soon, if at all (her <a href="http://www.nytimes.com/2016/10/25/world/asia/south-korea-constitution-park-geun-hye.html">one five-year term expires in February 2018</a>). Angry voters are promising to hold more rallies. </p>
<p><a href="http://www.ecns.cn/2016/11-16/234144.shtml">Opposition and some former ruling party members are joining together</a> to start an official impeachment process in the National Assembly. And <a href="http://english.yonhapnews.co.kr/news/2016/11/07/64/0200000000AEN20161107002800315F.html">leaders of the ruling Saenuri Party</a>, who refused to resign have now been completely deserted by party members openly siding with the opposition in calling for impeachment. </p>
<p>Meanwhile, the prosecutor’s office has summoned <a href="http://www.koreatimes.co.kr/www/news/nation/2016/11/116_218172.html">key Blue House staff</a>, <em>chaebol</em> <a href="http://koreatimes.co.kr/www/news/biz/2016/11/602_218076.html">owners who are suspected of having giving funds</a> to Choi Soon-Sil and her friends, and <a href="http://koreajoongangdaily.joins.com/news/article/article.aspx?aid=3026151&cloc=joongangdaily%7Chome%7Cnewslist1">the president herself</a>. </p>
<p>Park’s room for manoeuvre is quickly vanishing, although she’s trying hard to find a way to save face by not resigning. But current political leaders are unanimous that the president should be <a href="http://english.hani.co.kr/arti/english_edition/e_national/770227.html">impeached if she doesn’t voluntarily step down</a>. </p>
<p>Park’s time is running out. She might soon have to offer her third apology to the nation, this time with her final decision.</p><img src="https://counter.theconversation.com/content/68722/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Ingyu Oh does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>South Korean President Park Geun-Hye may be about to become the first national leader to be questioned by prosecutors while still in office.Ingyu Oh, Professor of Sociology, Korea UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/201582013-12-06T03:50:29Z2013-12-06T03:50:29ZLessons from South Korea’s Chaebol economy<figure><img src="https://images.theconversation.com/files/35883/original/7bv79kqc-1385094591.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">South Korea is Australia's fourth largest trading partner, with the relationship likely to grow under a new free trade agreement.</span> <span class="attribution"><span class="source">flickr/Emmanuel Dyan</span></span></figcaption></figure><p>The trade deal signed yesterday between Australia and South Korea is <a href="http://dfat.gov.au/fta/akfta/fact-sheet-key-outcomes.html">being promoted as a win</a> by the government for the benefits if will bring to Australian industries including agriculture, automotive, services, resources and energy, and manufactured products.</p>
<p>South Korea is Australia’s third largest export market and fourth largest trading partner with a trade value of A$32 billion in 2012, meaning the ‘KAFTA’ deal may be seen as a significant milestone for the Abbott Government. </p>
<p>But what can Australian businesses learn from South Korea, given some sectors, including car manufacturing, may view it as a competitive threat? </p>
<p>South Korea has long stood out in Asia as a success story of political and economic transformation. The steady growth of the nation’s economy is a remarkable phenomenon of the integration of political and trade policies. </p>
<p>From the early 1960s to the 1990s, South Korea has had one of the world’s fastest growing economies. Though it was badly battered by the Asian economic crisis of the late 1990s, rapid recovery and the subsequent tripling of its GDP tells an unparalleled global success story.</p>
<p>A critical factor contributing to the growth of the modern South Korean economy was the strong leadership from the former President, Lee Myung-Bak (2008 to early 2013). Myung-Bak actively promoted innovation in trade and economy, alongside progressive social welfare and policy. He also pushed South Korea from an export-orientated, albeit heavily-protected economy, to a more open and globally engaged system.</p>
<p>As former CEO of Hyundai, his strategy for the company at that time was to engage with new and emerging markets such as Vietnam, Thailand and most of the Middle East. Not surprisingly, as President, he adopted similar economic policies to encourage Chaebol (the large, conglomerate family-controlled firms of South Korea characterised by strong ties with governmental agencies) to engage in diverse overseas projects including foreign direct investment and portfolio investment.</p>
<h2>Fostering a new model</h2>
<p><a href="http://www.korea.net/NewsFocus/Policies/view?articleId=89843">Lee Myung-Bak</a> fostered the traditional Korean model, a heavy state intervention with a strong entrepreneurial enforcement, and pushed South Korea to be one of the major players in today’s global economy. However, of late we have witnessed a new wave of South Korean small and medium enterprises (SMEs) flowing into the global market. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/35376/original/bkv2f945-1384492795.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/35376/original/bkv2f945-1384492795.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=451&fit=crop&dpr=1 600w, https://images.theconversation.com/files/35376/original/bkv2f945-1384492795.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=451&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/35376/original/bkv2f945-1384492795.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=451&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/35376/original/bkv2f945-1384492795.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=567&fit=crop&dpr=1 754w, https://images.theconversation.com/files/35376/original/bkv2f945-1384492795.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=567&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/35376/original/bkv2f945-1384492795.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=567&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Then Prime Minister Lee Myung-Bak (meeting with Thai Prime Minister Yingluck Shinawatra) has been credited with promoting innovation and leading to unparalleled economic success during his time as President.</span>
<span class="attribution"><span class="source">AAP/YONHAP</span></span>
</figcaption>
</figure>
<p>The focus on economic engagement with other emerging and developing countries can be claimed as another underpinning of steady growth in South Korea. Compared to the trade structure in 1971, in 2011-2012 Korea traded much less with advanced economies and much greater with emerging and developing countries. During the past four decades, South Korea’s trade with emerging and developing economies rose from 17.5% to 67%. This trend, in fact, has been helpful for the Korean economy in the long run. </p>
<p>During the global financial crisis, emerging and developing countries managed to maintain the growth rate and demanded more foreign direct investment from South Korea. It is even argued that investment from Chaebol played a crucial role in <a href="http://www.economist.com/node/15816756">safeguarding</a> some emerging and developing countries from negative spillover of the financial crisis.</p>
<p>With the current global economic situation, South Korea may be seen as a haven, playing a stronger role in the international trade arena. There are, however, a few concerns that may challenge the future growth of South Korea.</p>
<h2>Future challenges</h2>
<p>The first issue relates to international trade and the finance policies of South Korea. In early 2013, South Korea proposed to impose a broad tax on financial transactions and devaluate its currency (the Won). This sign of capital control will prompt more market selling and push the currency down. </p>
<p>The weakening of the Won also creates uncertainty among international investors since this action can lead to competitive currency devaluation or <a href="http://www.bloomberg.com/news/2013-11-12/korea-intervention-bets-prompt-aberdeen-to-dump-won-currencies.html">currency war</a>. The Won can be further devalued the financial policies of the US, Japan, and China. The South Korean Government needs to stabilise its currency, and finance policies, in order to reinforce its competitive advantage over other East Asian countries.</p>
<p>The second issue dovetails with the first. South Korea will continue to innovate. We learn from the Japanese model that innovation can promote a buoyant economy. Devaluation of currency will never promote national long-term trade benefit. South Korea has one of the highest rates of spending on research and development in the world.</p>
<p>However, the Organisation for Economic Co-operation and Development (<a href="http://www.oecd.org/sti/inno/oecdreviewsofinnovationpolicykorea.htm">OECD</a>) suggests the outcomes of R&D investment in South Korea are limited to major business. It should be adopted more frequently and widely among SMEs and those in the service industry.</p>
<h2>Beyond the Chaebol</h2>
<p>Much of South Korea’s miracle has been the success of Chaebol. But it’s worth questioning if a similar approach will work in the future global economy. More importantly, with the closer trade relationship between Australia and South Korea, Chaebol will potentially affect Australian business players.</p>
<p>With the rise of SMEs in cutting-edge technology areas such as computer gaming, design technology, and art technology, the business culture of Yon-go (relation-based informal network), that has promoted Chaebol for the past three decades may impede the growth of venture-capital businesses in these areas. </p>
<p>The Yon-go culture enhances relationships among business organisations. It may be useful in the early and middle stages of South Korean export-led economy. With the new forms of international trade, for which <a href="http://www.businessweek.com/articles/2013-11-04/seoul-s-tech-startups-look-overseas">creativity</a> plays a pivotal role to enhance national competitive advantage, Korean business and political organisations need to consider the new business approaches and policies that promote creativity from various different <a href="http://www.bloomberg.com/news/2012-11-12/s-koreans-fret-world-beating-chaebol-destroys-small-busi.html">protagonists</a> outside the Chaebol system.</p>
<h2>KAFTA and Australia</h2>
<p>KAFTA can be perceived as an international trade challenge to some Australian business sectors. It contains an Investor State Dispute Settlement (ISDS) clause which allows South Korean corporations to take legal action against the Australian government if it infringes on their trade rights. We must think twice about the impacts of some industries such as <a href="http://www.smh.com.au/business/smoke-signals-plans-of-big-tobacco-plain-to-see-20120828-24yqj.html">tobacco</a>, alcohol or pharmaceutical on Australian consumers and Government. </p>
<p>With its strong Chaebol culture, automotive, textile, and high-technology players from South Korea will gain a competitive advantage over Australian companies. The challenge will be for Australian players to stay in the game by learning more from their new free trade partner.</p><img src="https://counter.theconversation.com/content/20158/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Nattavud Pimpa does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The trade deal signed yesterday between Australia and South Korea is being promoted as a win by the government for the benefits if will bring to Australian industries including agriculture, automotive…Nattavud Pimpa, Senior Lecturer in International Business, RMIT UniversityLicensed as Creative Commons – attribution, no derivatives.