The South Korean and Taiwanese Business Systems

The region of South Korea has seen immense economic growth after the Second World War ever since the country was freed from the claws of Japanese colonialism in the year 1945. According to Michell (1988), the decade of the 1960s had been very crucial as the early period of boom in the country’s economy, which mostly took place due to advancements in trade and business activities in South Korea.
It was the same period when the South Korean government imposed state to rule over the privately owned businesses in order to manage the increasing developmental reforms in the country. The government took all the banks under its control, nationalized them and played an important part in allocating funds for financial activities that resulted in great economic development in the country. Thereafter the government introduced a system with semi-liberalization of the market by privatizing the country’s major banks in the early 1980s. This action of the government, however, could not be completely implemented and the government instead allowed relaxations to the banking business and facilitated the growth of non-bank financial institutions so as to infuse a market-oriented system in the country.
Jones and SaKong (1980) suggest that the South Korean efforts for the development of economy towards a Liberal Market Economy as that of the United States had been initiated soon after the beginning of the year 1980. However, the government found itself unable to get rid of the chaebol system because of the over-reliance of the country’s financial system on them. Therefore, the government was forced to retain interference and control in the management of the private business system. According to Root (1999), the South Korean economic system still depends upon the government to look over the business affairs in the country. The government controls the corporations’ activities and supports the chaebol companies to stay in the market even after they have become insolvent. This governmental support to the chaebol has led to kind of market in South Korea where the chaebol holds a major share in the ownership of non-bank financial institutions and try to confine the entry of foreign multi-national corporations in the country so as to prevent competition. The government did initially introduce some reforms so as to liberalize the market but still, the South Korean business reflects a predominating governmental influence in private business affairs.
Although the government claims to have taken a lot of steps in order to introduce a market-based economy in the country. But the existing business system indicates as illuminated by Financial Supervisory Commission (1999) that the South Korean government holds the ownership of the shares of financial institutions and also utilizes its influence on the banks to support the remodeling of chaebol corporations.&nbsp.&nbsp.