What Is a Chaebol?

Major business conglomerates or chaebol produce most of the goods that flow out of Busan.
The South Korean port of Busan, one of the Pacific Rim's largest export depots. Tom Bonaventure via Getty Images

Definition:

A chaebol is a South Korean business conglomerate that is owned by a single family. Some chaebol consist of a single huge corporation with multiple branches, while others are a series of inter-connected businesses controlled by the family group.

Well-known chaebol include such major names as Hyundai, Samsung, LG, Daewoo, and SK. Although Hyundai, for example, is known mostly for manufacturing cars, it is also involved in steel production, heavy industry, finance, insurance, engineering, construction, aerospace, and defense contracting.

The chaebol of South Korea are similar to Japan's pre-war conglomerates called zaibatsu, or their post-war successors, the keiretsu. Korean president Park Chung Hee sought to industrialize his country rapidly in the 1960s and 1970s, so he followed the model that had worked well for Korea's regional rival, Japan. Park provided government funding to the chaebol to encourage economic growth and production of consumer goods for export. South Korea's economy became one of the "Asian Tigers," growing rapidly from being flat-lined after the Korean War to being ranked number fifteen in the world today, thanks in large part to the chaebol.

However, the chaebol also can cause problems. They wield considerable political power, due to their outsized influence on the economy, and tend to make the country less democratic. During the 1997 Asian financial crisis, eleven of the top thirty conglomerates went bankrupt because they were over-extended.

The South Korean government has since passed laws making it harder for chaebol to hide losses by shuffling them off onto their other holdings.

The word chaebol comes from the Korean chae, meaning wealth, and bol, meaning clan or faction. It's an accurate name - the richest man in South Korea as of 2011 was Lee Kun-Hee of Samsung, with a fortune of $9.3 billion US, while number two was Hyundai's Chung Mong-Koo with a net worth of $7.4 billion.

Also Known As: keiretsu (Japanese), conglomerate (English), zaibatsu (archaic Japanese)

Alternate Spellings: jaebol