Daewoo

This article is about the chaebol Daewoo Group. For the Korean auto company Daewoo Motors that is associated with Chevrolet, see GM Daewoo. For Daewoo Automobile Romania see Oltcit, for Daewoo Automobile in Uzbekistan see UzDaewooAvto. more...

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Daewoo (Korean for "Great Universe") was a major South Korean chaebol (conglomerate). It was founded in March 22, 1967 as Daewoo Industrial and was dismantled by the Korean government in 1999. On May 30, 2006 the founder of Daewoo, Kim Woo-jung, was sentenced by a court in Seoul to a fine of approximately 22 billion Won and 8 1/2 years in prison on charges including fraud and embezzlement.

History

Kim Woo-jung was the son of the Provincial Governor of Daegu. He graduated from the prestigious Kyonggi High School, then finished with an Economics Degree in Yonsei University in Seoul. Kim Woo-jung founded the Daewoo Group in March 1967. It became one of the Big Four chaebol in South Korea. An industrial and multi-faceted service conglomerate, Daewoo was prominent in expanding its global market through joint ventures all over the world.

During the 1960s, after the end of the Syngman Rhee government, the new government of Park Chung Hee intervened to promote growth and development in the country. It increased access to resources, promoted exports, financed industrialization, and provided protection from competition to the chaebol in exchange for a company's political support. In the beginning, the Korean government instigated a series of five-year plans under which the chaebol were required to achieve a number of basic objectives.

Daewoo did not become a major player until the second five-year plan. Daewoo benefited from government-sponsored cheap loans based on potential export profits. The company initially concentrated on labor-intensive clothing and textile industries that provided high profit margins. The most significant resource in this plan was South Korea's large workforce.

The third and fourth of the five-year plans occurred from 1973 to 1981. During this period, the country's labor force was in high demand. Competition from other countries began eroding Korea's competitive edge. The government responded to this change by concentrating its effort on mechanical and electrical engineering, shipbuilding, petrochemicals, construction, and military initiatives. At the end of this period, the government forced Daewoo into shipbuildings. Kim was reluctant to enter this industry, but Daewoo soon earned a reputation for producing competitively priced ships and oil rigs.

During the next decade, the Korean government became more liberal in economic policies. Small private companies were encouraged, protectionist import restrictions were loosened, and the government reduced positive discrimination, to encourage free market trade and to force the chaebol to be more aggressive abroad. Daewoo responded by establishing a number of joint ventures with U.S. and European companies. It expanded exports of machine tools, defense products, aerospace interests, and semiconductor design and manufacturing. Eventually, it began to build civilian helicopters and airplanes, priced considerably cheaper than those produced by its U.S. counterparts. It also expanded efforts in the automotive industry and was ranked as the seventh largest car exporter and the sixth largest car manufacturer in the world. Throughout this period, Daewoo experienced great success at turning around faltering companies in Korea.

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