The Republic of Korea’s manufacturing giants that have built a global reputation and once dominated markets in shipbuilding, electronics and chemicals are facing intense competition by their Chinese counterparts today. Chinese companies are not only closing the gap but are on track to overtake Korea in ten major export areas by 2030, including in the semiconductors, biohealth, battery, automobile and general machinery industries. This gradual decline in competitiveness, however, is not only the result of market forces – it reflects both structural changes and differences in how individual firms manage corporate governance and capital allocation.
China has completely reconfigured its manufacturing industry, having transitioned from a low-cost and labor-intensive model of production to a system which is driven by innovation, applies high-tech advancements, and is vertically integrated across entire supply chains. State subsidies, far from being a negligible factor, can be three to nine times higher in certain industries in China than in major OECD countries. Price undercutting, market share losses and Chinese control over raw materials are all responsible for Korean companies’ loss of momentum. Some Korean firms have nevertheless witnessed a lag in transitioning from traditional manufacturing to ‘smart’ systems.
The Republic of Korea’s traditional chaebol system has been debated in public discourse for a long time. The family-owned conglomerate structure that served as the source of Korea’s rapid industrialization after the war concentrated ownership and the overwhelming majority of the country’s economic productivity in the hands of a few executives. The top five chaebols account for over half of the Republic of Korea’s total market value. Founding families often retain significant influence compared to shareholders in this management framework, which can, at times, spark debates about the dilution of accountability and the allocation of capital.
Several major chaebols have, nevertheless, managed to adapt their approach to governance, effectively mitigating concerns. For example, Samsung, SK and Hyundai’s share prices have increased and confidence in the firms’ global competitiveness returned. Their performance remains strong, with further gains registered in February, and public debates about their operations receded from the forefront of current affairs.
Other firms across the Republic of Korea’s manufacturing landscape visibly struggle more. For example, the Young Poong Group, one of Korea’s 30 largest chaebols and active in various sub-sectors from the smelting to electronics industries, has experienced setbacks across a number of its subsidiaries. Young Poong Electronics Co.’s Seokpo plant has been at the center of a high-profile environmental scandal, which led to the suspension of its operations by the Supreme Court of Korea in 2024, disrupting the world’s sixth-largest zinc smelter. It has faced significant pressure around industrial safety and environmental compliance concerns. Korea Circuit Co., another Young Poong affiliate, reported significant net losses exceeding 120 billion won in 2025, quadrupling its deficit from the previous year. These reported losses were largely attributed to impairment charges. The share prices of Interflex Co.’s, another affiliate, have experienced great volatility after the ‘frozen iPhone’ scandal that involved the malfunction of touch screen panel modules supplied to Apple by Interflex. The company was even removed from Apple’s primary list of vendors for a period of time, entailing significant reputational and economic damage.
Ownership and effective control within the group remain closely entangled with the Jang family, which raises serious questions about their business capabilities, as well as how oversight and accountability are structured. Although Hyung-jin Jang, the former chairman has stepped down from formal leadership role, he is suspected of maintaining influence over major decisions. This structural separation between day-to-day operations and ownership may limit the family’s legal exposure, as the Seokpo affair demonstrated too.
During periods of regulatory scrutiny or financial troubles, diffused governance structures such as the above may slow remediation efforts. In capital-intensive industries such as smelting and advanced electronics manufacturing, transparent crisis management is just as critical to safeguarding a company’s reputation as its technological capabilities. Young Poong’s efforts in partnership with MBK Partners for increasing their stake in Korea Zinc may prove to be another step in the wrong direction, as the family hopes to expand their revenue from Korea Zinc which seems to be failing. However, in the manufacturing industry, where long-term investments should be combined with operational excellence to retain competitiveness, even tighter family control may lead to further issues in the future.
While several of the largest conglomerates demonstrated resilience and strong market performance, others face increasing pressure to improve their governance structures. As the competition posed by China intensifies, the governance practices and accountability structures of particular chaebols can mean the difference between strong performance and struggles to regain operational stability.
