The death of former Daewoo chairman Kim Woo-choong, whose catchphrase, “To the world, to the future!”, inspired legions of young South Korean entrepreneurs, has reignited the debate in the country about his legacy. “Chairman Kim”, who died of pneumonia aged 82 in December, strove to be an “automotive Genghis Khan”, says The New York Times. His “mad-rush corporate expansion” in the 1990s came to symbolise South Korea’s rise as an Asian tiger. Yet it all ended in the biggest bankruptcy in the country’s history when his Daewoo “chaebol” collapsed in 1999.
An empire riddled with debt
At the height of his success, “Kim personified South Korea’s unlikely transformation, out of the ashes of brutal civil war, into a manufacturing powerhouse”, says the FT. “But his empire, riddled with fraud and debt, toppled over after the 1997-1998 Asian financial crisis, turning Kim and his reliance on personal ties with politicians and state-backed loans into a symbol of what was wrong with the country.” Although it became known in the West primarily for its cars (Daewoo Motors was eventually sold to General Motors), Kim’s conglomerate straddled ships, oil-rigs, steel-making, home appliances and hotels – at its peak employing more than 300,000 in 110 countries. Yet it all began with a humble one-room textile company, founded in 1967 when Kim was 30, with just five million won (roughly $5,000) in capital, says the Nikkei Asian Review.
Born in Daegu in 1936, Kim’s early life was scarred by the Korean war. When he was a teenager, his father – a school teacher turned provincial governor – was kidnapped by Communists and taken to North Korea, says The New York Times. Kim worked his way through high school and college, selling vegetables and ice tea on the streets, “acquiring the marketing gumption and savvy that would later mark his career”. When he began Daewoo, his family connections, including those with Park Chung-hee, who became the country’s authoritarian ruler in 1963, stood him in good stead, says the FT. Kim then expanded aggressively, first at home through mergers, then abroad. In 1992 he was the first South Korean businessman to visit North Korea, later opening a joint “inter-Korean�� venture.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
An unhappy fate
Kim lived a spartan life: he slept at his factories, never took a day off, never drank and never played golf. He famously said. “If we don’t have technology, we can buy it. If we don’t have money, we can borrow and repay it when we make it.” But therein lay the seeds of both his own, and his country’s, downfall. When the Asian crisis hit, and banks began calling in loans, Kim’s empire crumbled and South Korea sought a $58bn bailout from the IMF. His own “unhappy fate” was to flee overseas to avoid a criminal investigation, says the Nikkei Asian Review. When a Fortune reporter caught up with him in 2003, he found Kim to be a shadow of his former self: “a frail old man in loose trousers and bare feet”, chain-smoking Marlboro Lights.
In 2005, Kim returned to Korea to face the music, receiving an eight-year prison sentence for accounting fraud. He was pardoned three years later and never fully accepted responsibility for Daewoo’s collapse, blaming “economic bureaucrats” for its downfall. The Daewoo brand name “has largely disappeared in South Korea”, says The New York Times. Still, Kim lives on in his way. “Dozens of executives” who began their careers with him and who still call themselves “Daewoo men” lead South Korean companies today.
-
Inheritance tax reforms: government urged to rethink curbs on rural reliefsMPs want the government to delay changes to inheritance rax reliefs for farmers
-
‘I’m among the thousands of millionaires leaving the UK – the new tax rules don’t make sense ’MoneyWeek spoke to a serial entrepreneur who is leaving the UK following the abolition of the non-dom tax status
-
Trapped in a time of zombie governmentIt’s not just companies that are eking out an existence, says Max King. The state is in the twilight zone too.
-
America is in deep denial over debtThe downgrade in America’s credit rating was much criticised by the US government, says Alex Rankine. But was it a long time coming?
-
Bank of England raises interest rates to 5.25%The Bank has hiked rates from 5% to 5.25%, marking the 14th increase in a row. We explain what it means for savers and homeowners - and whether more rate rises are on the horizon
-
UK inflation remains at 8.7% ‒ what it means for your moneyInflation was unmoved at 8.7% in the 12 months to May. What does this ‘sticky’ rate of inflation mean for your money?
-
VICE bankruptcy: how did it happen?Was the VICE bankruptcy inevitable? We look into how the once multibillion-dollar came crashing down.
-
Would a food price cap actually work?Analysis The government is discussing plans to cap the prices of essentials. But could this intervention do more harm than good?
-
UK inflation slides to 8.7% - what does it mean for your money?News Inflation has dropped below 10% for the first time in months, but with food prices at a 45-year high, is this good news and what does it mean for your money?
-
Why the UK equity market is shrinkingAnalysis The crisis has been building for 25 years, says Max King, and it will take decades to reverse the trend.
