(Aug 12): A new elite of uber-rich entrepreneurs is shooting up the wealth rankings in South Korea, overtaking the families behind the country’s decades-old sprawling conglomerates known as “chaebol.”
Brian Kim, the founder of mobile-messaging app Kakao Corp., is the most prominent example with a fortune of US$12.9 billion, who recently replaced Samsung group heir Jay Y. Lee as the nation’s richest person. But other self-made billionaires abound.
There’s Chang Byung-gyu who completed a listing of game developer Krafton Inc. just this week, and Bom Kim, a South Korea-born U.S. national who took e-commerce giant Coupang Inc. public in the U.S. earlier this year. Seo Jung-jin, the founder of biotech firm Celltrion Inc., is worth about US$10 billion.
The changing of the guard is a sign that South Korea’s US$1.6 trillion economy is entering a new era of growth, becoming less reliant on the family-controlled corporations that wield immense power in all aspects of life. Some experts say the new wealthy are more aware of rising inequality and are more willing to give back to society. Others question whether they’ll be any different from those who built their old empires using cozy links to politicians and bureaucrats.
“It’s a positive shift for South Korea,” said Kim Kyonghwan, dean of the graduate school of entrepreneurship at Sungkyunkwan University in Suwon, a city near Seoul. “The new rich offer a silver lining for younger folks by showing how fortunes can be made independently, rather than from inheritance.”
For decades, the chaebol have served as pillars of the Asian “miracle economy” that arose from the ashes of the Korean war. Political leaders have relied on conglomerates including Hyundai, Samsung, LG and Hanjin to rebuild the nation, giving them outsized influence. Over the years, some of them shot into the spotlight for scandals and cases of corruption that made international headlines, sparking backlash from the public. President Moon Jae-in has vowed to overhaul chaebol business practices and his government kicked off reforms last year to improve corporate governance and transparency.
That image of South Korea is slowly giving way to one full of booming startups. With the pandemic spurring demand in sectors such as e-commerce, entertainment and biotechnology, an investor frenzy is fueling billions of dollars in fundraising, initial public offerings and acquisitions. Venture capital investment in the country reached 3.07 trillion won (US$2.7 billion) in the first half of this year, the most on record for the six-month period, government data show.
Some of the newly minted wealthy are getting into philanthropy. Kakao’s Brian Kim and Kim Bong-jin, the founder of food-delivery app Woowa Brothers Corp., have pledged to give away their personal fortunes. That’s in contrast to families behind chaebol, who usually aren’t known to make large personal donations. They’re more likely to give to charity via companies they control.
“A major generational shift is taking place in Korea’s wealthy population,” said Lim Jungwook, managing partner at TBT, a Seoul-based venture capital firm.
Many chaebol have faced criticism for using questionable means to transfer wealth to their scions and retain control, often riding roughshod over minority shareholders, said Park Ju-gun, the head of corporate research firm Leaders Index in Seoul, New-economy businesses that implement such practices need to be scrutinized, Park said.
For now, better capital availability and adoption of digital tools driven by the pandemic are fueling the growth of startups.
“There has never been a better time for startups to grow and raise funds,” said Kim, the professor at Sungkyunkwan University. “We’ll see more cases of these new billionaires overtaking the traditional rich.”