Lee Kun-hee Hates the Idea: Of Course He Does

Large Korean Conglomerates Dominate Korea
Samsung Electronics chairmain Lee Kun-hee “shocked” Korea by making statements critical of the the program proposed by President Lee Myung-bak which would effectively subsidize small and medium-sized businesses in Korea. Here is the Wall Street Journal blog which describes the situation.

The Next Zuckerberg Can’t Come From Korea
Recently, the Chosun Ilbo asked whether or not the next Zuckerberg will come from Korea. The article openly questioned this idea, despite President Lee’s declarations of support. The article pointed out red tape and other barriers. While those may be true, there are greater forces at work that prevent a very successful company being established in South Korea. Some of these examples are blatant. Dong-a Ilbo reported this example of a small company that could not obtain access to certain technology, and also reported that large conglomerates often steal technology from small or medium-sized “partners.” The real point is that newly founded companies do not dare compete with Samsung Electronics or LG Electronics. These newly founded companies do not have access to funds as they do in the U.S. The reason for that is that private equity funds invest in a portfolio of different startups, some of which will inevitably fail. In Korea, the best graduates do not dream of becoming the next Mark Zuckerberg or Steve Jobs. They aspire to work at the largest chaebol. That is the way that the largest chaebol wants to keep it. Google, Apple, Facebook, and Twitter have taught once-dominant Microsoft and Yahoo! some very painful lessons. It is logical that Samsung Electronics and the other large chaebol don’t want to learn those same lessons.

The Chosun Ilbo article is correct, but only partially so. The underemployment of college graduates may provide the inspiration to a young person to begin his/her own venture in Korea. However, there is a great deal of bureaucracy which prevents this. Korean students still aspire to become part of the chaebol structure due to its relative stability (often false). Finally, the largest chaebol want to keep the status quo: Lee Kun-hee’s comments made that perfectly clear.