In the end, the two agreed in principle to set up a separate company combining the chip-making businesses of both groups. Details would be finalized later. Big Deals are a cornerstone of President Kim Dae Jung's plan to build a more efficient and competitive Korea, and he has been pushing them on the chaebol from even before his February inauguration. But in their single-minded drive to expand, they sank too many fingers in too many pies, leading to overlapping and often unprofitable investments. Of the top five, three have major interests in car manufacturing, three in shipbuilding, four in oil and petrochemicals, four in electronics, and all five in telecommunications equipment.
Many investments seem to be based more on pride than strategy.
In Kim's vision, Big Deals would see chaebol swap businesses among themselves so that just two or three remain in each sector, eliminating redundancies and cut-throat internecine competition while raising efficiency, profitability and global competitiveness. On paper, the chaebol's Big Deal looks like a good start. As balance sheets improve, much needed foreign investment would be attracted. And it is just the start. Sohn says the five chaebol have begun talks on a second phase of restructuring covering the steel, shipbuilding, construction machinery and other sectors, with automobiles and telecommunications equipment down the road.