SEOUL -- Avoid Seoul when looking for economic diversity.
South Korea's top four conglomerates generated some 90% of the total net profit earned by the top 30 conglomerates in 2013, according to the Korea Fair Trade Commission.
The fair trade watchdog defines a conglomerate, or chaebol, as a group of at least two companies effectively controlled by the same individual or corporate entity. Conglomerates with total assets of at least 5 trillion won ($4.74 billion) are designated as large corporate groups, which are prohibited from mutual investment and debt guarantee practices within group companies.
These conglomerates are ranked in terms of asset size. The organization releases an annual report on these conglomerates every April. As of April this year, there are 49 such chaebol, excluding public corporations.
The latest report says that Samsung, Hyundai Motor, SK and LG were responsible for 42.842 trillion won out of 47.527 trillion won in net profits earned by the top 30 conglomerates, excluding their financial businesses. Samsung and Hyundai Motor accounted for 76% of all profits made by the top 30 conglomerates.
The share of the four chaebol in the total net profit stood at around 50% to 70% in the four years through 2012. The latest ratio was an increase of 10.3 percentage points compared with 2012 and the highest in the past five years.
The four biggest conglomerates have long played a key role in developing South Korea's core industries, such as semiconductors, smartphones and automobiles. They have become increasingly vital to the country's economic growth. Hit by the strong won, their net profits in 2013 fell 6% compared with the previous year.
Nonetheless they managed to boost their share of total net profit, because lower-ranked conglomerates suffered more. Steelmaker and builder Dongbu, which is ranked 18th, logged a net loss of 589 billion won in 2013. Hyundai Group, which is ranked 21st and undertakes shipping and business connected with North Korea, incurred a debt of 973 billion won. Saddled with a debt-to-equity ratio of 540%, Hyundai Group last year announced plans to sell off its financial units, including Hyundai Securities.
South Korean President Park Geun-hye in February set forth plans to rectify the country's skewed industrial structure in a three-year economic innovation program. She has also pledged to invest a total of 4 trillion won to foster venture companies over the next three years.