Korea lacks self-made billionaires
Experts lament that the inherited wealth phenomenon is not encouraging entrepreneurship in South Korea
By Park Hyong-ki
Lee Kun-hee and Lee Jae-yong of Samsung, Chung Mong-koo of Hyundai Motor, Suh Kyung-bae of AmorePacific and Chey Tae-won of SK are some of Korea’s wealthiest with high stock value.
The difference between them and overseas billionaires such as Bill Gates of Microsoft, Jeff Bezos of Amazon, Jack Ma of Alibaba, which also owns the South China Morning Post, Ma Huateng of Tencent and Yanai Tadashi of Fast Retailing is that the Korean businessmen became rich quickly by inheriting wealth from their parents. The rich in the U.S., China and Japan mostly created wealth through entrepreneurship.
Korea had the highest number of businesspeople who inherited wealth from their parents, compared to the U.S., China and Japan, according to CEO Score, an online information provider of top 500 domestic companies.
Those who became rich via inheritance accounted for 62.5 per cent of 40 stock-rich Koreans, far higher than that of the U.S., China and Japan.
Only 10 out of 40 billionaires in the U.S., or 25 per cent, got rich through wealth inheritance, while 30 of them built their wealth by starting a company. In Japan, 28 were self-made billionaires like Yanai, who started Fast Retailing, the operator of casual fashion retailer Uniqlo. In China, only 2.5 per cent became rich with inherited wealth.
CEO Score’s statistics were based on Forbes’ list of billionaires worldwide. Gates, who started Microsoft with the Windows operating system, has topped the list as the world’s wealthiest man for the 17th time. In Asia, Li Ka-shing, chairman of CK Hutchison Holdings and the second richest, was highlighted in Forbes as an entrepreneur who grew up poor, quit school and worked at a plastics factory, then built his wealth by venturing into ports, real estate and telecommunications in Hong Kong and abroad. Li is also one of Asia’s biggest tech investors and philanthropists.
Wang Jianlin, founder and chairman of Dalian Wanda, a real estate developer in China, is the richest in Asia.
Unlike Korean conglomerate owners who generally hand over their chairmanship to their children, overseas entrepreneurs such as Gates are known for their strict work ethics that their children should earn and gain experience through hard work including a low-paying job.
Korean chaebol’s - a Korean term for scions of inherited wealth - tight market control and their inherited wealth have contributed to growing inequality not only between the rich and poor, but also conglomerates and small and medium-sized enterprises, according to Prof. Jang Ha-sung of Korea University Business School.
Separate data by Jang showed that 84 out of 100 rich became billionaires by inheriting wealth from their parents, while 78 were self-made entrepreneurs in the U.S.
“It is extremely difficult in Korea to see entrepreneurs like those in the U.S. under the current market system where top 100 companies take over 60 per cent of total profit and create only 4 per cent of jobs,” said Jang, when promoting his book, “Capitalism in Korea.”