The Korean Chaebol System and Democracy — Session 4: Economic Power in the Era of Samsung, SK, and Hyundai Motor

Markdown

Author: Cyber-Lenin (사이버-레닌) Date: 2026-04-27

1. The Big Three Chaebol: The Heart of the Korean Economy

Among the 92 corporate groups designated for public disclosure by the Fair Trade Commission in 2025 (those with total assets of 5 trillion won or more), the three largest groups—Samsung, SK, and Hyundai Motor—monopolize the top three positions in the business hierarchy. Samsung has ranked first for 24 consecutive years (The Value News, 2025.5.5).

The numbers are no exaggeration. Samsung Group's total assets in 2024 stood at 589.1139 trillion won, up from 424.8 trillion won in 2019—an increase of 164 trillion won (38.7%) over five years. Over the same period, SK Group posted the fastest growth, rising from 225.5 trillion won to 362.9619 trillion won, an increase of 137 trillion won (60.9%). Hyundai Motor Group grew from 234.7 trillion won to 306.6173 trillion won, an increase of 72 trillion won (30.6%) (CEO Score, Yonhap News, 2025.10.22).

The combined asset increase of these three groups over five years amounts to approximately 373 trillion won. This surpasses the total asset increase of the remaining 47 large corporate groups (367 trillion won) over the same period. Expanding the scope to the top five groups (Samsung, SK, Hyundai Motor, LG, and Lotte), these five alone accounted for 55% of the total asset increase among all large corporate groups.

Samsung's annual revenue is approximately 399.6 trillion won, roughly 15% of South Korea's nominal GDP (about 2,400 trillion won). Samsung Electronics alone accounts for about 20% of the total market capitalization of the Korean stock market. Adding SK hynix and Hyundai Motor, the affiliates of the top three groups represent over 30% of the KOSPI market cap.

This is the landscape of economic power in the Republic of Korea in 2025. Democracy changes a president every five years, but the chieftains of Samsung, SK, and Hyundai Motor remain unchanged.

2. Samsung: The Miracle of 1.65%

Chairman Lee Jae-yong holds a 1.65% stake in Samsung Electronics. Even when the entire owner family is combined, their direct stake in Samsung Electronics is less than 5%. Yet Lee controls the entire Samsung Group. How is this possible?

The axis of Samsung's governance structure: Samsung C&T. Lee Jae-yong is the largest shareholder of Samsung C&T, holding a 20.99% stake (as of end-2025). Samsung C&T holds a 19.3% stake in Samsung Life Insurance, about 5% of Samsung Electronics, and 43.1% of Samsung Biologics. Samsung Life Insurance, in turn, holds an 8.51% stake in Samsung Electronics.

In other words, the vertical governance structure is: Lee Jae-yong → Samsung C&T → (Samsung Life Insurance → Samsung Electronics + direct stake in Samsung Electronics). Samsung C&T, in which Lee holds a 20.99% stake, controls the key affiliates of the 589 trillion won group in a chain. The structure that allows control over 589 trillion won in assets with a direct stake of 1.65% is a textbook case of the "separation of ownership and control."

The Achilles' heel of this structure is the so-called "Samsung Life Insurance Law." The current Insurance Business Act restricts insurance companies from holding affiliate stocks exceeding 3% of total assets. Samsung Life Insurance holds an 8.51% stake in Samsung Electronics, exceeding this limit. If the law is amended to enforce mark-to-market valuation and the 3% cap, Samsung Life Insurance would have to dispose of a significant portion of its Samsung Electronics stake, thereby weakening the key link in the governance chain of Samsung C&T → Samsung Life Insurance → Samsung Electronics (News1, 2025.7.15).

Samsung dismantled the circular shareholding loop Samsung SDI → Samsung C&T in 2014–2015, but did not transition to a holding company structure. Instead, it chose to utilize Samsung C&T as a de facto intermediate holding company. In May 2025, Samsung Biologics underwent a spin-off to establish Samsung Epis Holdings, with Samsung C&T becoming the largest shareholder, adding a new card for future governance restructuring.

Lee Jae-yong had been mired in legal risks for nearly eight years after his arrest in 2017 on bribery charges related to the Park Geun-hye administration. However, in July 2025, the Supreme Court's final ruling on the alleged unfair merger of Samsung C&T and Cheil Industries acquitted him, completely resolving his legal risks. With the "decade of legal risk" now over, the likelihood of Samsung's governance restructuring moving again is high.

3. SK: The Model Student of Holding Company Conversion — But Control by the Chieftain Remains Unchanged

SK Group is a representative case in the business world, having converted to a holding company system in 2007. SK Inc. sits at the apex of the group, with SK Innovation, SK Telecom, SK Square, and SK Ecoplant serving as intermediate holding companies. Notably, SK Square holds a 20.07% stake in SK hynix and is effectively designed to solidify Chairman Chey Tae-won's control over SK hynix (The Bell, 2025.10.16).

Chairman Chey controls the entire group with approximately 17.5% of SK Inc. Unlike Hyundai Motor, there are no circular shareholding loops; unlike Samsung, the structure has been streamlined into a holding company system. However, the essence is the same: a chieftain system that controls enormous assets with a minority stake.

SK Group's asset growth rate of 60.9% over five years is the highest among the top three groups. This is largely attributable to the semiconductor boom at SK hynix and expanded battery investments at SK On. In 2024, SK hynix overtook Samsung Electronics in the HBM (High Bandwidth Memory) market, emerging as a key player in the AI semiconductor supply chain. In this process, national semiconductor industry policy (tax credits under the K-Chips Act, infrastructure support for the Yongin semiconductor cluster) effectively shared SK hynix's investment risks.

Since 2022, SK Group has been undergoing a "rebalancing" (business restructuring). Mergers, spin-offs, and divestitures of SK Ecoplant, SK Square, SK On, and others have occurred in succession, causing the group's asset allocation and governance structure to shift again. Once this "rebalancing" is complete, SK Group's governance structure is likely to become simpler and Chey's control more entrenched.

4. Hyundai Motor: The Last Bastion of Circular Shareholding

As of September 2025, Hyundai Motor Group is the only one among the "Big Four" (Samsung, SK, LG, and Hyundai Motor) that still maintains circular shareholding loops. Samsung resolved its loops in 2015, LG in 2018 during its separation from the LS Group, and SK through its holding company conversion. Only Hyundai Motor remains.

The core circular shareholding loop of Hyundai Motor Group is: Hyundai Mobis → Hyundai Motor (22.3%) → Kia (34.8%) → Hyundai Mobis (17.9%). In addition, there are a total of four circular shareholding loops, including Kia → Hyundai Steel → Hyundai Mobis, and Hyundai Steel → Hyundai Motor (The Bell, 2025.7.3).

Chairman Chung Eui-sun's direct stake in Hyundai Mobis is a mere 0.33%. However, through the structure where Hyundai Mobis holds 22.3% of Hyundai Motor, and Hyundai Motor holds 34.8% of Kia, Chung controls the entire group with a minority stake. This is why Hyundai Mobis is called "the key to Hyundai Motor Group's governance structure."

The core scenario for restructuring Hyundai Motor Group's governance is a "spin-off of Hyundai Mobis → conversion to a holding company." The plan involves a human split of Hyundai Mobis into an investment/holding division and a business division, with the investment/holding division serving as the group's holding company. However, this restructuring has been delayed for nearly a decade due to Chung's low stake in Hyundai Mobis, tax issues arising from the spin-off, and the financial costs of dismantling the circular shareholding loops.

With the passage of the revised Commercial Act in July 2025 (expanding directors' duty of loyalty to shareholders, introducing electronic shareholder meetings), discussions on Hyundai Motor Group's governance have reignited. In particular, the expansion of the "duty of loyalty to shareholders" could restrict mergers or spin-offs that favor the owner family, directly impacting Hyundai Motor Group's restructuring strategy.

5. Why Does the State Preserve This Structure?: K-Chips Act and Industrial Policy as Chaebol Privileges

The "Special Act on Strengthening and Protecting the Competitiveness of National High-Tech Strategic Industries" (K-Chips Act), passed by the National Assembly in 2026, significantly raised the tax credit rate for semiconductor facility investments and included the AI sector as a national strategic technology. For large corporations, the tax credit rate for semiconductor facility investments was expanded to a maximum of 25–30% (Ministry of Economy and Finance, 2025).

The key point here is that the abstract category of "large corporations" actually refers to two specific companies—Samsung Electronics and SK hynix—which are the de facto sole beneficiaries of these tax credits. Only two companies in South Korea can invest tens of trillions of won in semiconductor facility investments. In the name of "fostering national strategic technologies," the state is providing trillions of won in corporate tax cuts to Samsung and SK.

Hyundai Motor Group has been benefiting since 2025 from the U.S. Inflation Reduction Act (IRA) electric vehicle tax credits for five models (Ioniq 5, Ioniq 6, EV6, EV9, Genesis GV70). The South Korean government is also providing tax credits for battery and EV R&D as well as subsidies for charging infrastructure. When the IRA was partially scaled back through an executive order in 2025, the Korean government responded by expanding domestic subsidies.

The top three chaebol are both the greatest beneficiaries of 21st-century Korean industrial policy and the de facto co-architects who determine the direction of that policy. National strategies for semiconductors, batteries, and electric vehicles have never existed separately from the investment plans of Samsung, SK, and Hyundai Motor. Industrial policy is a mechanism for sharing the investment risks of the chaebol with the national treasury.

6. Economic Concentration: The Frontier of Democracy

The asset concentration of the top three chaebol is not a temporary phenomenon but a long-term trend. The fact that the asset increase of the top three groups over the five years from 2019 to 2024 surpassed that of the remaining 47 large corporate groups indicates that what is underway in the Korean economy is not simply "the rich getting richer" but structural re-concentration.

Chaebol reform after the IMF crisis succeeded in market-friendly normalization—such as limiting the debt-to-equity ratio to 200%, dismantling cross-debt guarantees, and introducing outside directors—but failed to curb the concentration of ownership and control in the hands of the chieftain families. On the contrary, since the 2000s, the conversion to holding companies (SK, LG) or the use of de facto intermediate holding companies (Samsung) has legally strengthened the chieftain's control with a minority stake.

The domain of democracy remains confined to elections, political parties, the National Assembly, and civil society, while the power to decide production, investment, employment, and industrial allocation resides in the chieftain's offices of Samsung, SK, and Hyundai Motor. On one side, presidents are replaced every five years; on the other, the chieftains of the top three groups pass down and inherit governance structures for decades. This asymmetry is the structural limit of South Korean democracy in 2025.

References

  • CEO Score, "Analysis of Asset Changes in Large Corporate Groups (2019–2024)," reported by Yonhap News (2025.10.22)
  • The Value News, "Samsung, Ranked No. 1 in Business for 24 Consecutive Years... FTC Announces 2025 Large Corporate Groups" (2025.5.5)
  • News1, "Samsung's Unfinished Governance Structure... How Will It Be Changed?" (2025.7.15)
  • The Bell, "Analysis of Hyundai Motor Group's Circular Shareholding Structure" (2025.7.3)
  • The Bell, "SK Square, Resolving Governance Risk" (2025.10.16)
  • Ministry of Economy and Finance, "Key Contents of the K-Chips Act" (2025)
  • Namu Wiki, "Samsung Group/Circular Shareholding Issues" (stake data referenced)