"Korean Economy Hindered by Big Business Regulations... The More It Grows, the More Shackles It Wears"

Hosted by Korea Industrial Federation Forum
'The 59th Industrial Development Forum'

"The problem is that as companies grow, regulations increase and support decreases, creating a reverse incentive for domestic companies to remain as small and medium-sized enterprises (SMEs)."

Jung Manki, chairman of the Korea Industrial Alliance Forum (KIAF), said on the 24th at the 59th Industrial Development Forum held at the Trade Tower of the Korea International Trade Association in Gangnam-gu, Seoul, "If we do not switch from criminal penalties to administrative fines for violations of working hours like the United States and China, we may lose jobs to China." The forum, hosted by KIAF, was a gathering of industry experts and academics to discuss the current status and future development directions of large corporations under the theme of 'Evaluation and Tasks of Large Corporations.'

In his subsequent remarks, Chairman Jung expressed concern, saying, "Although 70% of large corporations' sales are generated overseas, they are recently facing difficulties even abroad due to challenges from Chinese companies." He pointed out, "The overseas sales of the top 10 major corporations decreased by 3.7% by the third quarter of 2023 compared to 2018, mainly due to a 41.1% sharp decline in sales in China," and added, "The number of Chinese companies among the world's top 500 companies has increased to 135, which is 7.5 times our number."

Jung Manki, Chairman of the Korea Industrial Alliance Forum (KIAF) / Photo by Dongju Yoon doso7@

Experts warned that the contraction of large corporations could lead to a decline in national competitiveness and unanimously called for improving the negative perception of large corporations, abolishing discriminatory regulations, and improving the business environment.

Lee Woongjae, senior researcher at KIAF, said, "The proportion of large corporations in Korea is 0.09% of all companies, ranking 33rd among 34 OECD countries," and added, "The contraction of large corporations is disadvantageous for research and development (R&D) and achieving economies of scale, lowering their contribution to the national economy and causing a decline in birth rates." He explained, "The marriage and birth rates of employees in large corporations are 1.4 times higher than those in SMEs, so an increase in the proportion of large corporations is expected to create jobs and raise birth rates." He also said, "The spread of negative perceptions and discriminatory policies against large corporations is problematic," and noted, "The share of large corporations in government R&D is very low, and progressive corporate tax rates and various regulations are restricting the growth of large corporations."

Professor Ji Inyeop of the Department of Economics at Dongguk University said, "While the global economic growth rate is declining, the sales growth rate and operating profit margin of Korean companies have significantly dropped," adding, "The decline is especially pronounced among large corporations." He argued, "Preemptive regulations on holding companies are only implemented in Korea, limiting management strategies and hindering international competitiveness," and insisted, "Governance regulations should be designed based on economic efficiency."

Choi Junseon, honorary professor at Sungkyunkwan University Law School and participant in the discussion, pointed out, "Excessive regulations and anti-large corporation policies are hampering economic progress," and said, "Reforms should start from government ministries." Kim Yoonkyung, professor at the Department of Northeast Asian International Logistics at Incheon National University, said, "Unreasonable regulations on large corporations need to be improved," and Kwak Eunkyung, secretary-general of Consumer Watch, emphasized, "Regulations on large corporations are the cause of the lack of good jobs and low birth rates," urging, "Regulations should be eased to increase jobs." Yoo Jeongju, team leader of Corporate Systems at the Korea Economic Association, said, "Discriminatory regulations based on company size do not align with global standards," and called for "bold reforms of unreasonable systems."