Building Ships While Breaking Apart Container Economies and the Limits of Chaebol Capitalism
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Building ships while breaking apart Container economies and the limits of chaebol capitalism Elisabeth Schober Abstract: With the center of gravity of the maritime industry over recent decades progressively moving eastwards, South Korea is today a giant in both shipping and shipbuilding. Its largely family-controlled industrial enterprises are nowadays increasingly engaged in risky business experiments abroad, which on occasion fail in a spectacular manner. By following the story of how one family-run economic actor invested unsuccessfully in the Philippines, I combine an exploration of the political-economic factors involved in this failure with an investigation of how these larger structures are entangled with a complex family story inside a Korean conglomerate. Th e forced separation between family and business that ensued in this case illuminates changing and competing ideals of “waterborne” capitalism in the twenty-fi rst century. Keywords: chaebol, container ships, family business, shipbuilding, South Korea Th e center of gravity of the maritime industry of the Hanjin conglomerate founded by the Cho has progressively moved eastward over recent family, in the 2000s invested in the construction decades. South Korea is today a giant in both of a new shipyard outside of Korea. Pouring shipping and shipbuilding, but due to increased billions of dollars into building a facility in the competition from China, its largely family-con- Philippines, Hanjin aggressively attempted to trolled industrial enterprises are nowadays corner, among other things, the market around increasingly engaged in risky business experi- ultra-large container ships. Once a seemingly ments abroad, which on occasion fail in a spec- banal series of family crises hit the conglom- tacular manner. One such Korean confi guration erate at home, however, its production site in of waterborne capitalism gone wrong, which I Subic Bay saw itself drawn into a tug-of-war have traced since 2013,1 is highly illuminating between a Korean family-led enterprise (or in the way that a corporate dynasty found itself chaebol), its various lenders, shareholders, and at war with a more technocratic, state-driven the Korean state. By exploring how this family- understanding of how their business should be run economic actor that span out of control conducted. Hanjin Heavy Industries, a ship- over succession matters would be singled out by building off shoot that in the late 1980s grew out the Korean state as too big, yet not immune to Focaal—Journal of Global and Historical Anthropology 89 (2021): 12–24 © Th e Authors doi:10.3167/fcl.2021.890102 Building ships while breaking apart | 13 failure,2 I show how the forced separation be- fundamental precarity and instability underly- tween family and business that ensued was also ing contemporary “container economies” (see tied into larger struggles to delineate what con- Leivestad and Markkula, this issue). With con- tainer economies at large should look like. tainerized cargo at sea being part and parcel of Th e sprawling shipping industry, and its an- a kind of “waterborne” capitalism, I also con- cillary sectors like shipbuilding, is a multibillion- tend that we need to study our contemporary dollar sector today that usually involves huge economic system as a structure that depends on fi nancial risks. A remarkable, yet understudied the industrial exploitation of maritime areas, aspect of this industry is that it also features coastal zones, and their hinterland. At these geo- countless cases of family dynasties that have graphic intersections, we can pull the veil back managed to walk the tightrope between messy on an industry that is shaped by a convergence family dynamics and tough business priorities. of corporate and state interests, ample capital What is more, the vast diff usion of these family- (oft en state-provided), and large armies of un- based business entities in the maritime world dervalued workers who construct and maintain may hold some other surprises to observers: the ships that carry the world’s good. To be sure, While the seeming paradox of the high prev- this tight-knit universe is part of what Anna alence of family businesses in shipping in the Tsing has called “supply-chain capitalism” (2009), European context (e.g., in the Nordic countries, which arose in the wake of the “logistics revolu- Greece, and the United Kingdom) has been tion.” “Container economies” à la Hanjin have somewhat explored,3 we are still lacking com- arguably led to a form of “infrastructural vio- parative studies on other parts of the world. My lence” (Rodgers and O’Neill 2012) that has had own research on a Korean conglomerate, how- tremendous impact on workers in Korea and ever, seems to give a fi rst indication that family the Philippines, while also being centrally tied dynasties in the maritime industry are in fact into what Deborah Cowen has called the global globe-spanning phenomena. “deadly life of logistics” (2014). In the existing literature, family-run busi- Additionally, we are faced with a business nesses, until recently, have been considered cu- ownership structure that at times has favored rious outliers and oddly backward phenomena founding families, who oft en engendered entire unworthy of special scrutiny (Hoy 2017: 3). By shipping dynasties that would depend on risky and large, they have a reputation to be small- alliances with state actors for their survival. By scale, conservative, and unwilling to take risks, showing how the economic uncertainties at a which ostensibly leads to their inevitable de- shipyard in Subic Bay were thus intimately tied mise aft er two to three generations or to their in with a crisis within the controlling family of a eventual transformation into a publicly traded conglomerate experienced in Korea, I will com- company under technocratic management (Gul- bine an exploration of the political-economic brandsen and Lange 2009: 175). Th e case of the factors involved in shaping this global picture demise of Hanjin, however, involved a highly with showing how these larger structures en- complex transnational organization and proved gage with a messy family story inside the Korean to be too large-scale and uncontainable in its conglomerate in question. Th is kinship tale, we fallout to neatly fi t into this conventional picture will see, on occasion leaks out, spills over, and as to why family businesses tend to fail. What comes to aff ect the only seemingly contained is more, the multilayered downfall of Hanjin business side of matters. also had signifi cant repercussions in far-fl ung By doing so, I engage here with Sylvia Yan- corners of the world, also bringing turmoil to a agisako’s insistence that kinship and gender are coastal region in the Philippines. essential factors in the production of capital Th e story of Hanjin’s failure, I will argue in (2002) (to be discussed in this article), and with this article, is a case that illuminates well the Ara Wilson’s notion of “intimate economies” 14 | Elisabeth Schober as a vital aspect of the global economy (2004). attracted foreign shipbuilders to the area. Aft er Particularly in my description of the history of Singapore-headquartered Keppel erected a fa- the Cho family that follows, I am inspired by cility at the Freeport in 1993 (Reyes 2013), in the fi rst chapter of Wilson’s Intimate economies 2006, Korean Hanjin Heavy Industries followed of Bangkok, where she uses the portrait of one suit, with shipbuilding for overseas customers entrepreneurial family in Th ailand’s capital to subsequently becoming the key industry in show how capitalist markets, seemingly obscure Subic. Warships thus gave way to commercial and faceless, are oft en aff ected by “intimate vessels, which could be seen leaving the bay at economies”—that is, by “interactions between semi-regular intervals. Of these ships, many of economic systems and social life,” particularly which were container ships, 123 were built be- kinship, gender, sexuality, and ethnicity (2004: tween 2006 and 2019 at the Hanjin-shipyard 11). Th e article will kick off with a description alone—a three hundred-hectare facility that of the death of a large shipyard that took place takes up substantial sections of the coastal land- in 2019 in the Philippines, which I tie together scape, where over the last 11 years ships have with the story of an ultra-large container ship been built practically around the clock. that left the yard just a year before. Th en, I an- Th e biggest feat that was accomplished at the alyze the spectacular failure of this chaebol’s Hanjin-shipyard was certainly the construc- shipbuilding endeavors (whose shipping branch tion of the Saint Exupery—the fi rst of three ul- went bust in 2016—see also Leivestad and Mark- tra-large container ships constructed in Subic kula, this issue) by chronicling the rise and fall for French shipping giant CMA CGM. In Janu- of the conglomerate, and the Cho family behind ary 2018, aft er a one-and-a-half-year construc- it, who came to riches through their involve- tion period, the CMA CGM Antoine de Saint ment in the US military–industrial complex Exupery, then the world’s largest container ship, and during a period of intense state patronage. would be steered out of the bay to begin its jour- Finally, I details the decline of the Hanjin ship- ney to Europe. Th e sending off of the ship was building branch in Korea and how it came to attended by former president Gloria Arroyo, aff ect the Philippines. who had years earlier signed the deal with Han- jin to build its shipyard in Subic. In her speech, she thanked Hanjin for its $2.3-billion invest- Of fl agship spectacles ment and for the training the company had pro- and fi nancial disasters vided to countless Filipino workers.