Corporate sector has been a main driver to economic growth in both Korea and China. Korean corporations have participated in the global markets from the onset of economic take-off and yielded such gains as outstanding macroeconomic performance at the national level and enormous amounts of wealth to the relevant stakeholders. The Korean growth strategy in which entrepreneurs’ risk-taking activities are fully encouraged and compensated was adopted by the Chinese government authorities in a similar fashion. And, the successful outcomes of both Korea and China also look very much alike.
The major striking contrast between Korea and China lies in the type of ownership of corporations that have led economic growth: state-owned enterprises (SOEs) in China vs. private Chaebols in Korea. Despite this extreme difference in the nature of ownership of leading corporations, however, both countries face the same problem: corporate governance.