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South Korea to do away with "zombie companies"

Severe economic problems in, not least, South Korea's shipbuilding industry now spur the country's government and banking sector to launch a colossal restructuring process. The aim includes efforts to divest a number of non-performing state-owned companies, so-called "zombie companies."

Photo: Thorbjørn Hansen

A zombie is defined as the living dead, which is why several of the hundreds of state-owned South Korean companies have been dubbed "zombie companies," because under any other circumstances these companies would have succumbed to death - but not in South Korea, where vast amounts of state capital injections are keeping them alive.

However it now looks like the South Korean government and the banking sector have finally come to the conclusion that it is unsustainable to keep these companies alive. The large state subsidies help to keep the wheels and cogs turning at companies which are thus not pushed perform the necessary efficiencies, and which are subsequently delivering continuously poor results and forced to repeatedly ask the government for help in order to survive.

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