Farewell, Kim Woo-choongEntrepreneurship refers to taking risks for new challenges and achieving innovation. It can drive business life and lead to significant advancement. The late Kim Woo-choong, founder of Daewoo Group — once the country’s second largest business group after Hyundai, before its epic fall in the wake of the 1997-98 Asian financial crisis — joins the list of Korean entrepreneurial legends.
Although Daewoo has long been defunct, Kim’s legacy in entrepreneurship should guide today’s business community. People grumble about how it is hard to do business. But Kim was up against postwar poverty when he started his business. At the age of 30, he launched business with five staff and starting capital of 5 million won ($4,190) by selling textiles to Southeast Asian countries. Through the money he earned from trade, he expanded to automobiles, steel, construction and electronics. He had his eyes on overseas markets, claiming Korea was too small a market. No other companies in Korea went global as fast as Daewoo did.
When the Cold War ended in the 1990s, free trade picked up and gave more impetus to Daewoo’s expansion. As he wrote in his memoir “The World is Big, and There’s Lots of Work to Do” in 1989, he had spent 280 days a year overseas. He also sought work in Eastern Europe and the former Soviet republics that did not have diplomatic ties with Korea. His reach accelerated Seoul’s diplomatic relationships with the Eastern Bloc. By 1998, Daewoo employees overseas reached 152,000, from 22,000 in 1993.
Such daring entrepreneurship is hard to find among Korean enterprises these days. Growth will likely slow to under 2 percent this year. The regulations on industry these days hamper corporate ventures and innovation. Although commonplace in every part of the world, ride-sharing services are on the brink of being outlawed in Korea. When business is handed down to an heir, the heir must bear the world’s heaviest inheritance tax.
Corporate tax rates have gone up in Korea, whereas they have gone down elsewhere in the world. The income-led growth policy has bred policies that only dampen business and market sentiment.
Kim’s Daewoo crumbled from over-indebtedness and financial crisis. Today’s businesses are at risk because of state intervention.
JoongAng Ilbo, Dec. 11, Page 34