Dmitry Belousov, head of analysis and forecasting of macroeconomic processes at the Center for Macroeconomic Analysis and Short-Term Forecasting (TsMAKP), announced the “chaebolization” of the Russian economy. According to him, the unification under a single corporate “umbrella” of financial, commercial and industrial assets is “justified” in modern conditions, but this is only a “stage”, a temporary phenomenon.
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The term “chaebolization” comes from the Korean word “chaebol”: this is the name given to a form of diversified commercial and industrial conglomerates in South Korea, RBC notes. In Japan, these associations are called “zaibatsu”.
The most prominent representatives of Korean chaebols include Samsung, LG, Lotte and Hyundai. According to McKinsey, the revenue of the country’s top 10 chaebols in 2017-2021 accounted for 60% of the country’s GDP.
In Russia, the trend began to gain momentum due to the pressure of sanctions and the exit of foreign brands. Domestic chaebols include Sberbank, Gazprombank, Yandex, MTS, etc. (analyst Anna Fedyunina, deputy director of the Center for Structural Policy Research at the National Research University Higher School of Economics).
In Russia, “the synergy of financial, commercial and industrial capital is chaebolization in form, not in genesis,” says Vasily Osmakov, First Deputy Director of the Ministry of Industry and Trade. He is also confident that this trend will continue, since “banks have money and, therefore, the ability to formulate and finance a long-term strategy for their industrial subsidiaries.”
By the early 2000s, Russia was already experiencing a boom in chaebols, which then included Interros, AFK Sistema, LUKOIL, Alfa Group, Russian Aluminium, MENATEP, Surgutneftegaz and AvtoVAZ.
According to Belousov, the new round of chaebols is related to the needs of the economy; it is an “inevitable and correct stage of development”: “Right now we need to create normal industrial capital and the financial component, which is important for this.”
At the same time, the expert stresses that financial institutions need a “network of cooperation” and “sufficient potential” for the real development of industrial assets. And not a repetition of the “crazy nineties”, when banks simply bought companies and did not develop them further, simply not knowing what or how to do it.
“Because chaebols are very large structures, they can make decisions more quickly within the group. In large financial and industrial groups, there is a much higher degree of trust between companies and contracts are concluded more easily and quickly,” Fedyunina adds.
At the same time, Belousov separately says that it is necessary to find a balance for chaebolization, as large conglomerates are rarely able to create innovative know-how: “Small and medium-sized companies that develop dynamically and that can cover risks, that can venture into sectors where we have not yet reached that point, offer new solutions.”
According to Fedyunina, it will be difficult to maintain a balance, as it is almost impossible for SMEs to compete with large corporations, and supporting chaebolization carries serious risks of market monopolization.
Author:
Ekaterina Alipova
Source: RB
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