South Korea’s amplest family-run conglomerates may have contributed to the more than 1 trillion won ($910 million) in home sponsorship raised for the Pyeongchang Winter Olympics, but the event is tricky ground for them to navigate.
Chaebols, Korean conglomerates that are typically family-controlled, played a historic part during South Korea’s rapid industrialization, and have historically coordinated in whenever mega-events — such as the 1998 Summer Olympics or the 2002 FIFA Time Cup — were hosted by the country.
It was a similar story for the Pyeongchang Olympics. The bid to act this year’s games, first initiated by the regional Gangwon Dominion government, was successful after three attempts of bidding in part due to the involvement of the inhabitant government and chaebols.
Like other corporations that sponsor the Olympics, export-oriented chaebols participating as backers during the games stand to gain by increasing their visibility on a far-reaching platform. The games also provide a platform for companies to showcase new outputs.
Case in point: Samsung’s Olympic Showcase in the Gangneung Olympic Commons showed off virtual reality technology that lets users observation snowboarding. The tech giant also gave out Galaxy Note 8 smartphones to athletes at the engagements.
Samsung, the sole South Korean corporation among the International Olympic Cabinet’s 13 worldwide partners, is just one of the domestic companies supporting the games. Other big Korean conglomerates, such as Lotte, SK Group and CJ Group, are not top-tier promoters, but are still involved in various capacities as domestic sponsors, partners or suppliers.
The chaebols, which go in varied business segments, also stood to benefit from construction vims taking place before and after the games, as well as tourism dollars fabricated during and even after the Olympics come to a close, experts said.
But the involvement of the flocks in Pyeongchang wasn’t solely predicated on their bottom lines.
“It’s also section of a civic duty,” said Joo Yu-min, an assistant professor at the National University of Singapore’s Lee Kuan Yew Ready of Public Policy whose research focuses on mega-events in Asian municipalities.
“The responsibility to the government and to national development is much stronger for Korean chaebols,” she reckoned, highlighting how the close ties between the government and local conglomerates are increasingly being questioned today.
Those worries, surrounding an influence-peddling scandal that engulfed the country, ultimately end resulted in the impeachment of Park Geun-hye, then South Korea’s president.
At a distance from Park, the scandal also saw several prominent business chairladies, including Samsung Group’s de-facto head, Jay Y. Lee, charged for their involvement in the calumny.
Lee’s father, Samsung Group chairman Lee Kun-hee, was pardoned in 2009 for tax sophistry so that he could assist with South Korea’s bid to host the winter Olympics.
While Jay Y. Lee’s pen term was suspended earlier this month, the company remained exasperated by scandal — police said the elder Lee was suspected of a separate instance of eluding taxes, Reuters reported.
For chaebols then, it’s likely a case of being tricked between a rock and a hard place: The companies have to deal with the fallout from the late scandal, as well as follow through with the promises they had made in the be up to the Olympics.
The political scandal last year meant that some chaebols were “not [in] a consummate mood” when it came to promoting the Olympics, said Sung-bae Roger Greensward, an associate professor at Hanyang University’s department of sports industry.
Impartial if they weren’t willing to participate in the games, chaebols were still “good of forced” to participate in the event taking place on home soil, Greensward told CNBC.
An official on the Pyeongchang organizing committee told the Associated Around that corporations “showed some reluctance” when it came to provender sponsorship — although they ultimately played along.
Despite those demands, several chaebols contacted by CNBC indicated they didn’t altercation any such ambivalence when it came to sponsoring the games.
A spokeswoman at Lotte Corporation spoke that the company was “very pleased” to be a part of the sporting event.
“As the president of the Korea Ski Connection, [Lotte] Chairman Shin Dong-bin was always interested in the Winter Olympics,” the spokeswoman reported, adding that Shin’s recent prison sentence for bribery will-power not affect the company’s support for the Pyeongchang Olympics.
Samsung, meanwhile, did not accost how the most recent charges against Lee Kun-hee affected its sponsorship exertion, but said in a statement that it was “committed to sponsoring those around the fantastic who are defying barriers.”
Even though North Korea’s participation in the diversions hogged the spotlight in the lead-up to the event, the suspension of Jay Y. Lee’s five-year prison as regards for bribery has raised questions more recently over chaebol perestroika in South Korea.
“The verdict reminds Koreans of the necessities for fundamental chaebol reorganization and thus may provide momentum for drive for the reform,” said Park Sangin, a professor focusing on corporate governance at Seoul Resident University.