Korea - running on empty?
This reminder of events five years ago is timely because it serves to remind that one of the economies worst hit was that of Korea. It highlighted the fact that the mighty Korean manufacturing machine, based upon a handful of family-controlled conglomerates (chaebol), had been running on empty for some time, the consequence of ‘buying’ market share – the process whereby market share is gained regardless of cost, and invariably at a loss. The chaebol were exposed as financially bankrupt – though not always in a strictly legal sense. Whatever the terminology, these massive conglomerates had no money and little chance of repaying creditors. They did hold one trump card though: they owed the banks, both local and foreign, so much money that the lenders could not afford for them to go bust. Arguably, they owned the
banks.
