LG shows the way with chaebol reform model

Family-owned business is never a problem in U.S. or Europe..... Grow up!!!

LG Group provides a classic example of how South Korea's mighty chaebol grew from small family businesses into some of Asia's largest conglomerates.

......LG last month completed its adoption of a holding company structure designed to make the relationship between the group's 34 subsidiaries more simple and transparent.

......"The legacy of Korea's chaebol system, such as subsidising affiliates, cross-shareholdings and cross-guarantees will be prevented by the introduction of the holding company structure,"......

......Moreover, the holding company structure does not loosen the control of family owners. The Koo family remains the most powerful force behind LG, owning 53 per cent of LG Corporation.

Critics of the chaebol question the need for such disparate groups of businesses to be kept under one roof. The best way to increase shareholder value, they say, would be to split the chaebol and free each unit to survive or fail on its own merit.

"The holding company is only a partial solution," says Hank Morris, director of Industrial Research and Consulting, a Seoul-based consultancy. "The question is whether these companies are being managed by professional, competent managers, or whether they are still the play toys of family owners."