The economic plight of South Korea has been exacerbated further by the political turmoil that led to the ouster of President Park Geun-hye from power. However, the key culprit that pushed the South Korean industry into hopeless gloom has been the downfall of Samsung Electronics Co. and the arrest and indictment of Lee Jae-yong, vice chairman and de facto chieftain of the Samsung group, in the corruption scandal involving Park and a confidante.
Samsung expanded by imitating and catching up with the management methods and technologies of its rivals in other industrialized economies while its founding family exerted strong leadership and made timely and bold investments. Today, its sources of strength are being emulated by Chinese manufacturers, which are rapidly catching up. The end of the Samsung era may herald the downfall of a wide range of South Korean manufacturing sectors from shipbuilding to steel and automobiles.
Samsung Electronics is said to have played only a minor role in the scandal over the cozy ties between Park and her associate Choi Soon-sil — often referred to as the "Choi-gate." When Cheil Industries, which had managed the Lee family's assets, absorbed Samsung Construction and Trading Corp., a major shareholder of Samsung Electronics, Lee allegedly bribed Choi to help get the National Pension Fund, which in turn held a major stake in Samsung C&T, into supporting the merger. The act in itself appear to be different from the more fundamental part of the scandal, which concerns the leakage of classified state information and private individual's intervention in government policies.