1997년은 대한민국이 IMF 금융위기를 맞은 해이다.
그 해에 만들어진 기업데이터 자료이다.
물론 기반자료는 좀 더 오래전 것으로 보인다, 쌍용그룹, 삼미 등 요즘세대는 모르는 기업들이 보인다.
Institute of Governmental Affairs
University of California, Davis
Business Groups in South Korea and Taiwan:
A Comparison and Database
Robert C. Feenstra
Revised, October 1997
Program on Pacific Rim Business and Development
Business Groups in South Korea and Taiwan:
A Comparison and Database
Robert C. Feenstra
Dept. of Economics,
University of California, Davis
National Bureau of Economic Research
Revised, October 1997
This paper describes a database of business groups in South Korea and Taiwan. The most
detailed data are available for 1989 in South Korea and 1994 for Taiwan, though additional
information is provided for the groups in both countries in 1983 and 1986. The detailed data
includes a transactions matrix for each major business group, which specifies the sales to other
member firms within the group, as well as total sales and other information for each firm. Thus,
the detailed data can be used to construct measures of the vertical integration for each business
group, and can also be used to analyze their sales across different sectors of the economy. These
results are reported in the paper, along with documentation of the variables included in the
database. The database for each country can be ordered for $50 from: Shelagh Matthews
Mackay, Institute of Governmental Affairs, University of California, Davis, CA 95616, or
downloaded from www.internationaldata.org (choose “Asia”).
Note: This database has been assembled over the past decade at the Pacific Rim Business and
Development Program, Institute of Governmental Affairs, under the direction of Gary Hamilton
and Robert Feenstra. It would not have been possible without the help of the staff there and
many research assistants. In particular, we wish to thank Jean Stratford, Shelagh Matthews
Mackay, Chen Chu-po, Chung Wai-Keung, Cindy Chu, Ho Dwanfan, Kim Wan-Jin, Lim Eun
Mie, Lin Holin, Mariko Suzuki, Dorsati Madani, Josef Merrill, Moon-Jee Yoo, Shunli Yao, Yu
Sheunn-Der, and William Zeile for their dedicated assistance during a long project. Financial
assistance from the Ford Foundation is gratefully acknowledged.
In this paper we describe a database of business groups in South Korea and Taiwan. The
most detailed data are available for 1989 in South Korea and 1994 for Taiwan, though additional
information is provided for the groups in both countries in 1983 and 1986. Using the detailed
data for each country, we are able to construct a transactions matrix for the major business
groups, including 44 groups for Korea and 80 groups for Taiwan. This matrix specifies the sales
to other member firms within the group, as well as total sales and other information for each
firm. Thus, the transactions matrices can be used to construct measures of the verticalintegration for each business group, and can also be used to analyze their sales across different
sectors of the economy.
Summary results from the 1989 Korean data are described in section 2, and from the 1994
Taiwan data in section 3. The structure of the groups in each country is contrasted in section 4.
That analysis is being incorporated into a book under preparation by the author, with Gary
Hamilton and Nicole Woolsey Biggart. Detailed documentation on the databases for South
Korea and for Taiwan are provided in the Appendix. The databases are available on diskette as
Excel spreadsheets, and can be ordered at the price of $250 for each country from: Jean
Stratford, Institute of Governmental Affairs, University of California, Davis, CA 95616.
2. Description of the Korea Business Groups, 1989
The primary source for the 1989 Korean data is the volume 1990 Chaebol Analysis
Report (Chaebol Boon Suk Bo Go Seo in Korean) published by Korea Investors Service, Inc.
This volume provides information on the 50 largest business groups (measured in terms of
assets) in South Korea, but for six of these groups the data on internal transactions within the
groups are missing. Thus, the 1989 database for Korea includes only 44 groups, with 499 firms.
Data on financial and insurance companies belonging to the groups are excluded from the
database, since their sales cannot be accurately measured. In Table 1 we show summary
information for these groups. The first column of Table 1 reports the groups number, as it is
used in the database, followed by the group name and the 1989 sales (in $million), and the
number of firms in each group.
The largest groups have become well known names in the U.S., such as Samsung and
Hyundai. These two groups each had total sales exceeding $25 billion in 1989, while the 44
groups together had sales of $151.4 billion.1
This magnitude is sometimes compared to Korean
GDP ($219.5 billion in 1989) to conclude that the business groups control a very large portion of
the domestic economy. Such a comparison is incorrect, of course, because GDP is a value-added
concept, reflecting the contribution made by each firm over and above its cost of materials. The
1990 Chaebol Analysis Report reported the value-added of each group, which is included in the
database, and this totals $32.2 billion over the 44 groups. Thus, these groups account for about
15% of Korean GDP in 1989.
Of principal interest is the extent to which business groups’ sales go to other firms in the
group, or equivalently, the extent to which the group relies on its own firms for intermediate
inputs. We will refer to this as the “internalization” of a group, and it can be measured by the
ratio of the sales to other firms in each group relative to total group sales.2
The dollar values for Korea have been converted from the Korea won using the exchange rate of 679.6 won per
dollar at the end of 1989.
An alternative measure of “internalization is the ratio of purchases from other firms in the group relative to total
purchases of intermediate inputs by all group firms. The internal sales and purchases are equal, but these two ratios
differ because of their denominators: the internal sales ratio will be lower than the internal purchases ratio, because
the total purchases of intermediate inputs by group firms will be lower than their total sales (the difference between
these is value-added of the group). It is possible to construct the internal purchases ratio from each group from the
database, but it is displays much the same patterns as the internal sales ratio, which we shall focus on.
ratio for each group is shown in the fifth column of Table 1. It is apparent that larger groups
have rather high internalization, exceeding 30% in several cases, and that internalization is
correlated with the size of each group. This can be observed in the simple and weighted averages
reported at the bottom of Table 1: the simple average of the internal sales ratio is 11.3%, but the
sales weighted average is about twice as large, at 22.1%.
There is one feature of the internalization ratio that is somewhat misleading, and that is
the fact that it includes the trading companies within any group. These are companies who act as
intermediaries in transactions between firms in the group, and also sell to and buy from firms
outside the group. Including these firms can artificially increase the internalization ratio when
the trading companies are simply transferring products between firms in the group. Twentyseven out of the 44 groups in Korea – or about 60 percent – have trading companies, and these
are indicated by an asterisk in column four of Table 1.
In order to correct for the presence of the trading companies, two questions need to be
addressed. The first is how to distinguish trading companies. In the Korean database, we relied
on three criterion. First, telephone surveys to the 44 Korean business groups were made to find
out if each group had a trading company. Second, company descriptions in the Yearbook on the
Korean Economy and Business 1991/92 published by Business Korea were used. If a company
was described as a trading arm of their business group, it was included as the trading company.
Third, along with the company description, if a company was largely involved in the group's
internal transactions, it was counted as a trading company. Most of the trading companies are
classified in sector 132 (wholesale and retail trade), though only a subset of firms in that sector
are designated as trading companies.
Table 1: Business Groups in Korea, 1989
Number Group Name
302 Samsung 26,175 32* 31.9 19.0 18.9
301 Hyundai 25,500 30* 33.0 19.9 19.8
303 Lucky-Goldstar 18,807 46* 26.0 16.2 12.6
305 Daewoo 13,835 23* 23.5 9.7 9.7
304 Sunkyong 8,910 16* 20.6 16.7 10.3
306 Ssangyong 5,777 15* 14.8 13.4 11.6
319 Kia 4,602 9* 25.6 16.0 6.6
313 Lotte 3,900 24* 9.2 9.2 7.7
309 Han Jin 3,895 11* 2.7 2.2 2.2
310 Hyosung 3,473 12* 9.7 4.3 4.3
308 Korea Explosives 3,172 19* 7.7 4.7 4.7
312 Doosan 2,576 19* 12.5 11.5 10.8
314 Kolon 2,218 14* 10.6 4.0 4.0
318 Dongbu 1,978 7* 26.1 17.3 17.3
311 Daelim 1,951 12* 4.4 3.5 0.6
324 Dongkuk Steel Mill 1,886 10* 5.4 3.4 3.4
321 Dong Ah Construction 1,866 12* 1.1 0.7 0.7
317 Sammi 1,696 5* 36.7 27.0 27.0
316 Kumho 1,430 8* 3.3 0.4 0.4
327 Hanil 1,296 12* 7.1 7.1 7.1
325 Miwon 1,295 13* 12.5 6.4 6.4
358 Halla 1,262 7 10.2 10.2 10.2
335 Kangwon Industries 1,256 12* 33.5 33.0 11.4
334 Samyang 1,038 5 1.6 1.6 1.6
352 Kohap 1,016 6* 18.2 12.5 12.5
351 Poongsan 941 6 3.3 3.3 3.3
359 Woosung Construction 834 6 2.0 2.0 2.0
357 Kukdong Oil 812 3 19.3 19.3 0.0
333 Dongkuk Corporation 689 7* 11.3 1.1 1.1
348 Tongil 687 11 4.4 4.4 4.4
331 Tong Yang 672 5* 9.3 9.3 9.3
340 Byucksan 672 18 0.6 0.6 0.6
363 Taejon Leather 627 7 1.6 1.6 1.6
344 Daesung Industries 589 8 2.0 2.0 2.0
360 Anam Industrial 537 5 8.7 8.7 8.7
350 Oriental Chemical 528 9 8.9 8.9 8.9
345 Jinro 490 10 2.6 2.6 2.6
332 Taihan Electric Wire 490 3 3.0 3.0 3.0
361 Kyesung Paper 437 5 17.3 17.3 17.3
315 Han Yang 436 4* 6.6 0.7 0.7
343 Hanbo 420 3 2.6 2.6 2.6
362 You One Construction 281 2* 0.3 0.0 0.0
356 Kuk Dong Construction 247 4 0.1 0.1 0.1
355 Life Construction 211 4 3.5 3.5 3.5
Weighted Ave. 23.9 22.1 13.8 12.2
Average 3,441 11.3 11.3 8.2 6.7
The second question is how to correct for the presence of these companies when
measuring the degree of internalization. Consider a trading company that purchases from firm A
and sells that product to firm B, both in the same business group. Since this firm is simply acting
as an intermediary in the transactions, it would be double-counting to include both the purchase
and sale. But since the product was transferred from A to B, it would be incorrect to exclude
both transactions as well. Instead, we should ignore either the purchase or the sale by the trading
company. We decided to ignore the purchases of the trading companies from other firms within
This means that when a trading company buys from an outside firm and sells to
another firm within the group, the sale will be counted as an internal transactions. But when a
group firm sells to a trading company that then sells outside the group, no internal transaction is
counted at all.
We use the phrase “without trading companies” (or, “no TC”) to mean that we are
consistently ignoring the purchases of trading companies from within the group. In the secondlast column of Table 1 we report the internal sales ratio, calculated without the trading
This reduces the internalization of the largest business groups by almost one-half.
Table 2 provides brief descriptions of all groups with internalization ratios greater than 15%, and
part A lists seven groups whose internalization is reduced significantly by the removal of trading
company purchases. These include the four largest groups – Samsung, Hyundai, Lucky-Goldstar,
and Daewoo – as well as several smaller groups. Overall, the weighted average of the internal
sales ratio for all groups is reduced from 22.1% to 13.8%, while the simple average is reduced
from 11.3% to 8.2%.
All of the trading companies made purchases from other firms in their group, and most also made sales.
The purchases of the trading companies are excluded from both the numerator and denominator of the internal
Table 2: Korean Groups with Internalization Above 15%
A. Groups that include trading companies, so that internalization ratio is high when they are
included, but lower when their purchases are excluded:
GROUP 302 - SAMSUNG
Firm 30201 - SAMSUNG CO. acts as the group's trading company. The group includes
producers of industrial machinery, consumer electronics and appliances, in addition to
construction operations and retail sales.
GROUP 301 - HYUNDAI
Firm 30104 - HYUNDAI CO. acts as the group's trading company. The group produces and
repairs ships and other motor vehicles. It also has large construction operations and retail sales.
GROUP 303 - LUCKY-GOLDSTAR
Firm 30310 - LUCKY-GOLDSTAR INTERNATIONAL, oversees the joint operations of the
merged companies 30301 LUCKY, and 30303 GOLDSTAR. They are producers of consumer
electronics and appliances, electrical industrial apparatus, and a variety of chemical products in
addition to their retail sales. Lucky-Goldstar International acts as the group's trading company.
GROUP 305 - DAEWOO
Firm 30501 - DAEWOO CO., heads this diverse group involved in motor vehicles, electronic
products, metal products, as well as shipbuilding and repair. Retail sales are handled by Daewoo
Co., acting as the trading company for the group.
GROUP 319 - KIA (KOREA INTERNATIONAL AUTOMOTIVE)
Firm 31901 - KIA MOTORS, oversees this group and acts as it's trading firm. This group
produces some iron and steel forgings but mainly builds automobiles. Retail sales are not only
made by Kia Motors, but also by firm 31906 - ASIA MOTORS and firm 31911 - KEM CO.
GROUP 318 - DONGBU
Firm 31801 DONGBU INDUSTRIAL, manages this group and acts as the trading firm. Group
products include: cold rolled steel, iron and steel foundry items, and residential construction.
GROUP 352 - KOHAP
Firm 35201 - KOHAP, leads this group. Group products include: chemical fiber fabrics,
chemical fiber yarns, synthetic resin products, as well as wholesale distributing. Firm 35203 -
KOHAP INC., is the trading firm and retailer of the firms products.
Table 2: Korean Groups with Internalization Above 15% (cont’d.)
B. Groups that have a high internalization ratio, but much of it is accounted for by sales to
wholesaler/retailers that are not designated as trading companies:
GROUP 304 - SUNKYONG
Firm 30402 - YUKONG, is the central fuel oil producer of this group, and purchases a large
amount from other firms. Sunkyong also produces petrochemicals. Retail gas and oil sales are
handled by the groups trading company, firm 30412 - SUNKYONG. A substantial amount of
retail sales are also made by firm 30410 - HUNGKUK SANGSA LTD, which is not classified as
a trading company.
GROUP 335 - KANGWON INDUSTRIES
Firm 33501 - KANGWON INDUSTRIAL, directs this group. Group products include: coal
mining, hot rolled steel, cement, and cement products. The group trading company is firm 33502
- SAMPYO INDUSTRIAL. Retail sales are made by firm 33506 - SAMPYO CORPORATION,
with minor sales by firm 33507 - SAMPYO GAS.
GROUP 357 - KUKDONG OIL.
Firm 35701 - KUKDONG OIL, leads this group. They produce fuel oils, retailing these
products through firm 35702 - SEIL PETRO-OIL.
C. Groups that have a high internalization ratio, that is not accounted for by either trading companies
GROUP 306 - SSANGYONG
Firm 30601 - SSANGYONG CO., governs this diverse group. Its primary industries are cement,
fuel oils, construction, and motor vehicles. Ssangyong Co. acts as a retailer and trade company
for the firm, except in automobiles where Firm 30612 SSANGYONG MOTOR is the retailer.
GROUP 317 - SAMMI
Firm 31701 - SAMMI CO., heads this group and acts as the retailer/trading firm. Group products
include: cold rolled steel, iron and steel foundry items, and some metal products.
GROUP 361 KYESUNG PAPER
Firm 36101 - KYESUNG PAPER, heads-up this group, and buys from the other three firms in
the group, especially from Firm 36104 - POONGMAN PAPER. Group products include: paper,
paper products, and road transport.
We have excluded internal purchases of the trading company purchases as a way to avoid
double-counting the transfer of goods between firms within a group. But the trading companies
are also engaged in wholesale and retail trade, so that by excluding their purchases, we are
moving towards a measure of groups’ vertical integration within just manufacturing activities.
To properly measure manufacturing integration, we also need to exclude the purchases of firms
within each group that are classified within wholesale and retailing (sector 132) but are not
designated as trading companies. While most of the trading companies are classified within this
sector, there are some differences between them and other firms that are classified within
wholesale and retailing. Most of the trading companies are actively involved in seeking overseas
customers, and therefore play an informational role within the business group. In contrast, the
other wholesale and retailing firms are engaged in marketing the products domestically, through
establishments owned by the group. This distinction is not hard and fast however, and there is
considerable overlap in their activities. Thus, as a natural extension omitting the purchases of
trading companies, in the last column of Table 1 we report the internal sales ratio while omitting
both the purchases of trading companies and all other firms in the wholesale and retail sector
within each group.
Omitting the wholesale and retailing firms has a rather modest impact on the average
internalization ratios: the weighted average is reduced from 13.8% to 12.2%, while the simple
average is reduced from 8.2% to 6.7%. Still, there are a few groups whose internalization begins
high and is reduced quite substantially by the exclusion of the wholesale and retail firms, and
these are listed in part B of Table 2. Included among these is Sunkyong, which is the fifth largest
group with 1989 sales of $8.9 billion, and produces fuel oils and petrochemicals. Its retail gas
and oil sales are handled by two firms, one of which is classified as a trading company while the
other is not. A second group is also in the petroleum sector, Kukdong Oil, but is considerably
smaller. A third group, Kangwon Industries, is involved in coal mining, steel and cement
products. A common feature of these three groups is that their retail sales are focused on the
domestic market, which explains why their retailers are not classified as trading companies.
In part C of Table 2, we list three additional groups that have high internal sales, where
these are not accounted for by either trading companies nor other retailing activity. The
Ssangyong group is the sixth largest in Korea, with 1989 sales of $5.8 billion, and produces a
diverse range of products including cement, fuel oils, construction, and motor vehicles. Its
internalization ratio of 14.8% is reduced only modestly by excluding either its trading company
or other retailing firms. However, the internalization of this group is no larger than most of the
biggest groups in Korea. The distinctive feature of the Ssangyong group is that its trading
company, Ssangyong Corporation, does not engage in nearly the same extent of the internal
transactions found for the top four groups in Korea. Also included in part C are two smaller
groups, Sammi and Kyesung Paper, which are producers of iron and steel products and paper
products, respectively. The high internalization ratios for these groups, even after the trading
companies and retailers are excluded, simply reflects the vertical integration of their
3. Description of the Taiwan Business Groups, 1994
The primary sources for the 1994 Taiwan data are twofold: Business Groups in Taiwan,
1996/1997, published by the China Credit Information Service (CCIS); and company annual
reports to the Taiwan stock exchange, for 1994, collected by the CCIS, and supplemented by
interviews of selected firms. Business Groups in Taiwan, 1996/1997, provides information on
115 business groups in Taiwan. For the largest 80 of these groups, data on sales to and purchases
from other firms in the groups was collected from their annual reports. Thus, the 1994 database
for Taiwan includes these 80 groups, with 797 firms, as listed in Table 3.
The largest groups in Taiwan are considerably smaller than their counterparts in Korea,
and the total sales of the Taiwan groups is $76.3 billion, or about half as much as the Korean
In order to do a comparison with Taiwanese GDP, which was $241 billion in 1994, we
need to have a value-added figure for the groups. This was not provided in any of the source
materials, but a rough estimate can be obtained by noting that the ratio of value-added to total
sales for all the Korean groups is 21.2%. If we apply this same ratio to the total sales of the
Taiwanese group, we obtain an estimated value-added of $16.2 billion, so that the 80 group
account for 6.7% of Taiwan GDP. The average number of firms in each groups, shown at the
bottom of column four, is also smaller than for Korea.
In the fifth column of Table 3, we report the internal sales ratio for the Taiwanese groups.
In contrast to the Korean groups, it does not appear that the internalization ratios for Taiwan are
significantly correlated with the size of the groups. Thus, the largest group – Formosa Plastics –
has an internalization ratio of 15.8%, no larger than that occuring for a number of other groups of
varying size. This can also be seen from the averages reported at the bottom of Table 3. The
average for the internal sales ratio is 9.5% and 7.0%, computed as a weighted and simple
average, respectively. The difference between these is not nearly as marked as it was for the
Korean groups. These internalization ratios are also smaller than they were for Korea. Thus, the
groups in Taiwan have less vertical integration on average, and this is also true for some of the
The U.S. dollar values for Taiwan have been converted from the New Taiwan dollar using the exchange rate of
26.24 NT$ per US$ at the end of 1994
Table 3: Business Groups in Taiwan, 1994
Number Group Name
1028 Formosa Plastics 6654 16 15.8 15.8 15.8
1063 Shin Kong 5724 25* 0.4 0.4 0.4
1092 Wei Chuan Ho Tai 4889 23* 28.1 28.0 0.4
1026 Far Eastern 4291 26 0.7 0.7 0.5
1095 Yulon 4264 23* 26.6 22.9 5.2
1123 President 3932 31* 6.4 6.1 4.5
1081 Tatung 3634 36 8.3 8.3 6.3
1119 Acer 3243 9* 3.5 2.4 2.4
1062 Chinfon 2986 16* 24.1 24.1 1.1
1141 Hualon 2517 9* 16.4 4.7 4.7
1017 Ho Hsin 2104 15* 0.2 0.2 0.2
1087 Tuntex 1831 16* 8.1 8.1 7.9
1082 Teco Electric & Machinery 1474 17* 2.6 2.6 2.6
1010 Chi Mei 1268 6* 0.3 0.3 0.3
1128 Rebar 1221 9* 1.4 0.9 0.9
1056 Pacific Cable 1214 26 3.2 3.2 3.2
1059 Sampo 1096 11 12.5 12.5 12.5
1077 Tainan Spining 1075 17 2.1 2.1 2.1
1138 Pacific Construction 1032 15 2.8 2.8 2.7
1096 Yuen Foong Yu 1000 8* 18.5 4.5 4.5
1058 Ruentex 997 25* 0.7 0.0 0.0
1078 Taiwan Cement 997 16 3.6 3.6 3.6
1045 Lien Hwa Mitac 900 12* 2.8 2.8 2.7
1115 Walsin Lihwa 881 8 0.1 0.1 0.1
1143 Lite-On 875 10 0.5 0.5 0.5
1125 Kwang Yang 855 7* 6.3 6.3 6.3
1009 Cheng Loong 823 7* 16.3 16.2 16.2
1129 Shih Lin Paper 766 5 0.1 0.1 0.1
1117 United Microelectronics 673 4 8.5 8.5 8.5
1002 Chung Shing Textile 668 5 6.6 6.6 6.1
1131 Yeang Der 618 14 1.0 1.0 0.1
1130 China General Plastics 598 5 12.6 12.6 12.6
1021 Chun Yuan Steel 528 5 4.7 4.7 4.7
1135 Adi 484 9 0.7 0.7 0.3
1139 Shinlee 456 12* 0.4 0.4 0.4
1133 Umax Elitegroup 436 8* 7.2 7.2 7.2
1103 Pou Chen Industrial 434 3 4.5 4.5 4.5
1140 Aurora 406 7* 17.5 8.6 8.6
1124 Ase 404 5* 10.5 1.3 1.3
1097 Great Wall 375 12 21.1 21.1 20.7
1033 Ho Cheng 375 8* 14.5 14.5 14.5
1079 Taiwan Glass 350 9* 2.6 1.3 0.6
1086 Tung Ho Steel 350 4 0.6 0.6 0.6
1118 Lealea 335 7 9.4 9.4 9.4
1090 Vedan 327 8* 8.1 7.5 7.5
1012 Chia Hsin Cement 303 7* 7.0 7.0 7.0
1036 Hwa Eng Cable 303 3 8.9 8.9 8.9
1101 Lily Textile 301 7 0.7 0.7 0.7
1121 Chia Her 293 5 1.6 1.6 1.6
1107 Sun Moon Star 287 5* 7.1 3.8 3.8
1070 Ta Ya Cable 276 6 4.0 4.0 4.0
1065 Shing Nung 256 13* 6.2 5.9 5.9
1025 Tah Tong Textile 235 13* 4.5 3.4 0.7
1137 Dahin 231 5* 12.3 9.9 9.9
1113 Chicony Electronics 217 3 4.3 4.3 4.3
1127 Kenda Industrial 211 8 0.5 0.5 0.5
1075 Lee Tah Farm Industrial 204 5 11.6 11.6 11.6
1011 Fwu Sow Industrial 200 7* 7.1 7.0 7.0
1132 Asia Chemical 180 13* 4.6 2.7 2.7
1050 Men Yi 170 4 1.0 1.0 1.0
1046 China Unique 166 4 2.8 2.8 2.8
1111 Ve Wong 161 3 10.0 10.0 10.0
1122 Hong Ho Precision Textile 159 6* 3.4 3.4 3.4
1020 Chun Yu 158 7* 6.1 5.6 5.3
1114 Ability 157 11 2.2 2.2 2.2
1136 Far Eastern Machinery 156 7 0.3 0.3 0.3
1142 UB 139 8 7.4 7.4 7.4
1013 Chien Shing Stainless Steel 137 6 8.4 8.4 8.4
1068 South East Cement 134 5 8.0 8.0 8.0
1126 Bomy 116 9 29.5 29.5 0.0
1116 Taiwan Everlight Chemical 104 5* 14.2 3.5 3.5
1110 Ching Kuang Chemical 104 3 10.6 10.6 10.6
1134 Nan Pao Resins 104 3 8.4 8.4 8.4
1120 Victor Machinery 101 12* 1.2 1.2 1.2
1014 Ren Hou (Chih Lien) 83 10* 0.0 0.0 0.0
1112 Yung Shin Pharmaceutical 78 8* 2.7 1.8 1.8
1030 Fu I Industrial 77 5* 5.1 5.1 5.1
1061 San Wu Textile 53 3 2.7 2.7 2.7
1207 Fong Kuo 48 4 6.5 6.5 6.5
1084 Tong Hsing 35 4* 2.8 2.0 2.0
Weighted Average 16.9 9.5 8.5 4.5
Average 954 10.0 7.0 6.0 4.7
largest groups. There are still various groups in Taiwan that have rather high internalization
ratios, and these will be examined in greater detail below.
We have corrected for the presence of trading companies in the business groups of
Taiwan. Two criterion were used to select trading companies: if the name of the firm from
Business Groups in Taiwan, 1996/1997 included the words “trading company”; or if the
description of products from that source indicated “buying and selling” as a primary activity.
The trading companies in most cases belong to the input-output sectors 89 (domestic wholesale
trade), 90 (domestic retail trade) and 91 (import and export trade), though only a subset of the
firms with these sector classifications are designated as trading companies. Groups in which
trading companies exist are denoted by an asterisk in column four of table three, along with the
total number of firms in the group.
Of the 80 business groups, 39 or roughly one-half were found to have trading companies,
whereas about 60 percent of the groups had trading companies in Korea. The extent to which the
Taiwan trading companies are involved in the internal transactions of their groups is considerably
less than in Korea. Of the 39 Taiwan groups with trading companies, only 23 of these have any
recorded purchases between that company and other firms in the group.6
The modest degree to
which these companies are integrated with the activities of the business groups can also be seen
from the last two columns of Table 3, where we list the internal sales and purchase ratio without
the trading companies. By excluding the companies the weighted average of the internal sales
ratio declines from 9.5% to 8.5%, and the simple average declines from 7.0% to 6.0%, which is
much smaller than the corresponding decrease for Korea.
There might be some other cases of internal purchases that we are not aware of due to missing data.
To gain a more detailed understanding of the role of trading companies in Taiwanese
groups, descriptions of all groups that have internalization ratios of 15% or higher are provided
in Table 4. These descriptions give information on the major internal transactions, but do not list
the complete set of firms within the group. In part A of Table 4, we first describe four groups
that include trading companies, and whose internalization ratios are considerably reduced by
excluding the purchases of these companies. For example, the internal sales ratio for the group
Hualon, a producer of synthetic fiber and cotton with 1994 sales of $2.5 billion, is reduced from
16.4% to 4.7% when the purchases of its trading company, The E-Hsin International Corp., are
excluded. The same if true for: Yuen Foong Yu, a manufacturer of paper products with sales of
$1 billion; Aurora, a manufacturer of electronic equipment with sales of $404 million; and
Taiwan Everlight Chemical, a smaller manufacturer of dying and bleaching materials. In the
latter two cases, the trading companies are active in overseas markets.
In part B of Table 4 we list three other groups that have high internalization ratios, but the
firms involved in these transactions are retailers that do not fit our criterion for trading
companies (i.e. these words do not appear in their name, and their primary activity is not “buying
and selling”). Three of these groups are very large producers of motor vehicles: Wei Chuan Ho
Tai, with sales of $4.9 billion, Yulon with sales of $4.3 billion, and Chinfon, with sales of $3.0
billion. Both of these sell to a domestic market that is protected by tariffs and domestic content
requirements, and where export sales are practically nonexistent .7
The fourth group, Bomy, is a
smaller producer of fruit and vegetable juices, which also sells domestically.
Taiwan maintains has a 30% tariff on imported autos, and also a domestic content requirement that 50%of parts
and components for sedans be made in Taiwan. Up until 1994 it also banned imports from Japan. Despite these
restrictions, imports accounted for one-third of total sales in 1994, with the largest sales coming from Japanese
automobiles produced in the U.S.
Table 4: Taiwanese Groups with Internalization Above 15%
A. Groups that include trading companies, so that internalization ratio is high when they are
included, but lower when their purchases are excluded:
Group 1141 - HUALON
Firm 176 - HUALON CORP., is a producer of synthetic fiber and cotton. It sell a large amount to the
following group firm, which is designated as a trading company:
Firm 178 - THE E-HSIN INTERNATIONAL CORP.
Group 1096 - YUEN FOONG YU
Firm 724 - YUEN FOONG YU PAPER MFG. CO. LTD., is a manufacturer of paper products. It sells a
large amount to the following group firm, which is designated as a trading company:
Firm 875 - RAY FOONG ENTERPRISE CO. LTD.
Group 1140 - AURORA
Firm 1281 - AURORA CORPORATION LTD., Firm1282 - SANTA SYSTEMS CORP., and Firm 1284 -
AURORA MECHATRONICS CORP., are all producers of electronic equipment. They have transactions
between themselves, and also with the following firm which is a trading company:
Firm 1283 - EOS SYSTEMS CORP.
Group 1116 - TAIWAN EVERLIGHT CHEMICAL
Firm 1067 - EVERLIGHT CHEMICAL INDUSTRIAL CORP., is a manufacturer of dying and bleaching
materials. It sells a large amount to the following group companies, all of which are designated as
Firm 1068 - EVERLIGHT (HONG KONG) LTD.; Firm 1069 - EVERLIGHT USA LTD.;
Firm 1070 - ELITE DYESTUFFS & CHEMICALS FOREIGN TRADING CO.
B. Groups that have a high internalization ratio, but most of it is accounted for by sales to
wholesaler/retailers that are not designated as trading companies:
Group 1092 - WEI CHUAN HO TAI
Firm 1257 - KUOZUI MOTORS LTD., is a producer of motor vehicles. It sell a large amount to the
following group firm, which is an automobile dealer and service center:
Firm 684 - HO-TAI MOTOR CO. LTD.
Group 1095 - YULON
Firm 711 - YULON MOTOR CO. LTD., is a manufacturer, buyer and seller of automobiles and auto
parts. Firm 716 - CHINA MOTOR CO. LTD. produces finished vehicles and auto parts. Both these
companies buy from a number of other firms in the same group that are also classified in the motor
vehicle sector. Retail sales are handled by firm 1217 - NISSAN TAIWAN LTD. and firm 1218 -
TAIWAN ACCEPTANCE CORP.
Group 1062 - CHINFON
Firm 444 - SAN YANG INDUSTRY CO. LTD., is producer of motor vehicles. It sells a large amount to
the following group firm, which is an automobile dealer:
Firm 445 - NANYANG INDUSTRIES CO., LTD.
Table 4: Taiwanese Groups with Internalization Above 15% (cont’d.)
Group 1126 - BOMY
Firm 1153 - CHOU CHIN INDUSTRIAL CO. LTD., is a producer of fruit and vegetable juices, sells and
rents vendor machines, and manages supermarkets. It sells a large amount to the following group firms,
all of which are engaged in selling beverages:
Firm 1154 - CHOU SHANG INDUSTRIAL CO. LTD.; Firm 1155 - SHIOH HORNG CO. LTD.;
Firm 1156 - CHOU HIS CO. LTD.; Firm 1157 - CHIA PIN INDUSTRIAL CO. LTD.;
Firm 1158 - CHOU HUEI CO. LTD.
C. Groups that have a high internalization ratio, that is not accounted for by either trading companies
Group 1028 - FORMOSA PLASTICS
This group is a leading producers of chemicals, plastics, textiles and garments. It includes the following
four firms, which have a large amount of transactions with each other: Firm 218 - FORMOSA
PLASTICS CORP.; Firm 219 - NAN YA PLASTICS CORP.; Firm 221 - FORMOSA CHEMICAL &
FIBER CORP.; Firm 1308 - FORMOSA HEAVY INDUSTRIAL CORP.
Group 1009 - CHENG LOONG
Firm 1181 - TIEN LONG PAPER MFG. CO. LTD., is a manufacturer of paper products. It sells a large
amount to the following group firm, which a producer of paper products, such as boxes:
Firm 87 - CHENG LOONG CO., LTD.
Group 1130 - CHINA GENERAL PLASTICS
Firm 1179 - TAIWAN POLYVINYL CHLORIDE, is a refiner of petrochemicals. It sells a large amount
to the group firm: Firm 64 - CHINA GENERAL PLASTICS CORP.
Group 1097 - GREAT WALL
Firm 746 - GREAT WALL ENTERPRISES CO. LTD., is a producer of bean oil and animal fodder. It
both buys and sell a large amount to the following group companies, the last of which does not have a
sector classification, but might be a trading company:
Firm 747 - PAO FU LIVESTOCK ENTERPRISE CO.; Firm 749 - TOTAL NUTRITION
TECHNOLOGIES CO. LTD.; Firm 1266 - COUNTRY FLAVOR FOODS CO. LTD.;
Firm 1270 - CHANNELS POWER CO. LTD.
Group 1033 - HO CHENG
Firm 254 - HOCHENG POTTERY MFG. CO., LTD., is a manufacturer of porcelain items. It purchases
a large amount from (and sells a smaller amount to) the following producers of plumbing fixtures:
Firm 1064 - HCG-MOEN CORP.; Firm 1065 - YUHONG CO. LTD.
Group 1137 - DAHIN
Firm 1253 - DAHIN CO. LTD., is in chemicals and plastics engineering. It both purchases and sells a
large amount with the following firms, the second of which is a trading company:
Firm 1254 - YANIN LEATHER CO. LTD.; Firm 1256 - ATMOSA INTERNATIONAL CO. LTD.; Firm
1256 - YISHIN ENGINEERING CO LTD.
To determine the impact of excluding these wholesale and retail sales from groups’
internalization, in the last column of Table 4 we re-compute the internal sales ratio while
omitting the purchases of trading companies and all other firms classified in sectors 89 (domestic
wholesale trade), 90 (domestic retail trade) and 91 (import and export trade). The internalization
of the three large groups in autos, and the Bomy group in beverages, falls dramatically. The
weighted average internal sales ratio now becomes 4.5%, while the simple average is 4.7%.
There is evidently no relation at all between sales and internalization once the retail sales of the
three large, automotive groups are excluded. The corresponding internalization rates computed
without retail sales for Korea are 11.8% (computed as a weighted average) and 6.8% (computed
as a simple average). The weighted average in particular is considerably higher than that for
Taiwan, indicating the tendency of the largest groups in Korea to have substantial vertical
integration even after the sales of trading companies and other retail firms are excluded.
In part C of Table 4, we describe the six remaining groups with internalization ratios of
15% or higher, that cannot be explained by either sales to trading companies or sales to
wholesale or retail firms. At the top of this list of groups is Formosa Plastics, with 1994 sales of
$6.6 billion and an internal sales ratio of 15.8%. This is the only group listed in part C that has
sales exceeding $1 billion, and is therefore the only example in Taiwan of a large group with
high internalization, not explained by either trading companies or retail sales. Its internal sales
ratio is similar to that of some large groups for Korea (once the trading and retail sales are
excluded). In contrast to the large Korean groups, however, Formosa Plastics is not verticallyintegrated forward into the retail and export sectors, but maintains its presence primarily in
chemicals and plastics, while also diversifying into textiles. This tendency to locate primary in
the upstream sectors is shared by all six groups listed in part C, three of which are in chemicals,
and one each are in food products (for animals), paper products, and plumbing supplies. These
groups are supplying intermediate inputs to other firms, rather than selling directly to consumers
or to overseas markets.
4. Cross-County Comparison
An initial comparison of the groups in South Korea and Taiwan can be obtained by
looking at the sector sales of the firms involved. For each country, the sales of business group
firms are classified according to the input-output sector of their primary product. These sales are
then aggregated to twenty-one manufacturing sectors, and several non-manufacturing sectors, as
shown in Table 5. The group sales are expressed as a percentage of total sales of all firms in
these sectors. For Korea we show values constructed from the 1983 and 1989 databases, while
for Taiwan we shows values from the 1983 and 1994 databases. Overall, there is a substantial
degree of conformity in the sales of the groups between the earlier and later years. The principal
change is that groups in both countries have been moving out of several sectors, including
garments and apparel, rubber and non-metallic mineral products (i.e. stone, clay and glass items).
For Korea, about one-half of the sectors have business group sales that account for more
than 25% of total sales, and in several cases the business group sales account for more than 50%
of total sales, including petroleum and coal, electronic products, motor vehicles and shipbuilding.
The groups have a strong presence in both upstream and downstream sectors. In Taiwan, by
contrast, the business groups dominate in only a selected number of upstream sectors. Thus, in
textiles the business groups account for nearly one-half of total manufacturing sales. These
groups are selling downstream to the garment and apparel sector, where business groups are
almost nonexistent. This pattern can also be seen from the strong group presence in pulp and
Table 5: Group Sales in South Korea and Taiwan
Agriculture, Forestry, Fisheries na 0.3 na 2.9
Mining 10.6 12.8 0.0 0.0
Food Products 33.7 23.8 26.3 13.9
Beverages and Tobacco 27.6 47.2 3.8 1.4
Textiles 38.4 32.5 50.7 45.3
Garments and Apparel 12.6 0.9 12.0 0.4
Leather Products 15.2 7.6 9.1 \1
Lumber and Wood Products 31.5 13.4 4.0 1.1
Pulp and Paper Products 6.7 15.4 20.1 20.8
Printing and Publishing \2 9.2 \2 0.0
Chemical Materials 54.3 37.5 42.4 35.3
Chemical Products 24.0 26.9 8.4 2.2
Petroleum and Coal Products 91.9 100 0.0 4.25
Rubber Products 76.8 12.1 13.0 1.2
Plastic Products \3 38.7 5.4 5.0
Non-Metallic Mineral Products 44.6 28.0 47.6 37.6
Primary Metals 28.0 34.3 7.8 2.8
Metal Products 26.7 20.6 6.0 22.5
Machinery 34.9 35.1 3.6 12.3
Electronic Products 50.9 64.3 22.7 24.4
Motor Vehicles and Shipbuilding 79.0 80.4 23.6 34.9
Precision Instruments 14.0 11.1 0.0 0.0
Misc. Industrial Products 5.2 2.9 10.7 0.12
Total Manufacturing 45.4 40.4 19.0 16.4
Utilities na 3.6 na 1.2
Construction 66.0 31.7 5.6 8.4
Transportation, Comm. & Storage 23.1 23.6 1.8 3.0
1. Leather products for Taiwan are included with garments and apparel.
2. Printing and publishing is included with pulp and paper products.
3. Plastic products for Korea in 1983 are included with chemical materials.
paper products, chemical materials, non-metallic minerals, and metal products. In contrast,
business groups have a weak presence in downstream sectors such as wood products, chemical
products, rubber and plastic products, as well as beverages and tobacco.
In nearly every sector where Taiwanese groups have an significant share of sectoral sales,
the Korean groups account for even more. In addition, Korean groups are dominant in heavy
industries such as petroleum and coal, basic and non-ferrous metals, and shipbuilding. With the
exception of only a small number of sectors (notably, garments and apparel), business groups in
Korea spread across nearly the entire manufacturing sector, but this is not true in Taiwan, where
groups are principally found in upstream sectors. This difference in the sectoral allocation is
consistent with the higher degree of internalization found in Korean business groups, as these
groups integrate forward and backwards to span the production process.
Further evidence on the vertical integration of the groups can be taken from the
internalization ratios, reported in Tables 2 and 3. In Table 6, we show the summary information
on the internalization ratios for all business groups in each country, the largest five groups, and
the remaining groups. We report both the averages, and the standard deviations of the averages.8
The largest groups for Korea – Samsung, Hyundai, Lucky-Goldstar, Daewoo, and Sunkyong –
have 1989 sales ranging from $8.9 to $26 billion. These gigantic groups are all larger than the
top five for Taiwan – Formosa Plastics, Shin Kong, Wei Chuan Ho Tai, Far Eastern, and Yulon –
with average 1994 sales of $5.2 billion. The average internal sales ratio for the top five in Korea
is twice as much as that for Taiwan, and three times as much when purchases of the trading
companies and other retail firms are excluded (these differences are statistically significant).
The standard deviation of the averages are constructed as the standard deviation of the sample, dividing by the
square-root of the sample size. Roughly speaking, if two averages differ by more than the sum of their standard
deviations, then the averages are significantly different.
Table 6: Group Internal Sales Ratios, Summary
Group Name Sales
(a) South Korea, 1989
All 44 Weighted Average 23.9 22.1 13.8 12.2
Average 3,441 11.3 11.3 8.2 6.7
Stan. Deviation / N 917 1.3 1.6 1.3 1.0
Top 5 Weighted Average 31.4 28.7 17.1 15.7
Average 18,645 29.4 27.0 16.3 14.3
Stan. Deviation / N 3,329 5.0 2.4 1.8 2.1
Other 39 Weighted Average 11.8 11.5 8.6 6.7
Average 1,492 9.0 9.2 7.2 5.7
Stan. Deviation / N 212 0.8 1.4 1.2 0.9
(b) Taiwan, 1994
All 80 Weighted Average 16.9 9.5 8.5 4.5
Average 954 10.0 7.0 6.0 4.7
Stan. Deviation / N 154 0.8 0.8 0.7 0.5
Top 5 Weighted Average 22.1 14.0 13.4 5.2
Average 5,164 22.6 14.3 13.6 4.5
Stan. Deviation / N 457 1.7 6.0 5.7 3.0
Other 75 Weighted Average 14.3 7.2 6.0 4.2
Average 673 9.1 6.5 5.5 4.7
Stan. Deviation / N 96 0.7 0.7 0.6 0.5
1. Computed as the ratio of sales between firms in each group to total sales of the group.
2. “No TC” means that the internal sales ratio is calculated without including the purchases of
any trading companies from within the group.
3. “No retail” means that the internal sales ratio is calculated without including the purchases of
any trading companies or other wholesale or retail firms from within the group.
Outside of the top five, Korea has an average internalization ratio of 9.2% for the remaining
groups (or 5.7% without retail firms), which compares with the average internalization for all
groups in Taiwan of 7.0% (or 4.7% without the retail firms). These differences are quite small,
and not statistically significant. While the top five groups for Taiwan have an average internal
sales ratio that is twice as large as the remaining Taiwanese groups, that difference is eliminated
when sales to the trading companies and other retail firms are excluded. Thus, it is indeed the
top five groups for Korea that are the outliers in these comparisons.
Since the largest groups in Korea are not only enormous in terms of their sales, but are
also substantially more vertically-integrated than is typical for other groups in Korea or Taiwan,
this raises the question: is the vertical-integration of these groups commensurate with their size?
Given that these groups are so large, it may be that the extent to which they buy from each other
is a natural reflection of the breadth of firms in each group. To examine this, we use the sales of
the groups as an overall measure of their size, and regress this variable on the internal sales
ratios. These regressions are run separately for Korea and Taiwan, and also for the two samples
pooled together, with results shown in Table 7.
In the first regression for each country, labeled (1), we include the following dependent
variables: a constant and the sales of each groups; a variable called “top 5” which takes the value
of unity for the largest five groups, and zero otherwise; and the “top 5” variable multiplied by
sales. The coefficients on the “top 5” and “top 5*sales” variables show how the impact of these
groups differs from the rest of the sample. For example, the positive coefficient on “top 5” for
Korea shows that the largest five groups tend to have higher internalization, but the negative
coefficient on “top 5*sales” shows that as their sales expand, the internalization of the largest
Table 7: Linear Regressions -
Dependent Variable: Internal Sales Ratio
(a) Korea (N=44)
(1) coefficient 6.33 7.41 1.95 -1.24 0.384 2826.3
stan. error (2.04) (11.36) (1.03) (1.17)
(2) coefficient 7.72 1.03 0.367 2905.1
stan. error (1.44) (0.21)
(b) Taiwan (N=80)
(1) coefficient 6.00 18.83 0.70 -2.73 0.089 3377.3
stan. error (0.99) (17.13) (0.94) (3.39)
(2) coefficient 5.73 1.28 0.066 3461.1
stan. error (0.91) (0.55)
(c) Pooled (N=124)
(1) coefficient 5.83 4.72 1.67 -0.81 0.28 6350.6
stan. error (0.91) (4.14) (0.63) (0.69)
(2) coefficient 6.44 1.11 0.269 6448.5
stan. error (0.72) (0.17)
This table reports results from a linear regression, where the dependent variable is the Internal
Sales Ratio of the business groups. For each of Korea(44 groups), Taiwan (80 groups) and the
Pooled sample (124 groups), there are two regressions reported. In the first regression, labeled
(1), Top 5 refers to an indicator variables that equals unity for the largest five groups, and zero
otherwise. This variable is entered on its own, and also multiplied by Sales, so as to show how
the regression coefficients are affected by the top 5 groups. In the second regression, labeled (2),
the Top 5 variable is excluded.
groups grows more slowly than the rest of the sample. Note that both these coefficients have
rather large standard errors (shown in parentheses). This means that forcing the coefficients to
equal zero, so that the largest five groups fit the same regression as the rest, is unlikely to be
rejected. The second regression, labeled (2), uses the same coefficients for the largest five
groups and rest of the sample. For Korea, the coefficient of 1.03 on sales shows that increasing
the sales by $1 billion increases the internal sales ratio by one percent, and the standard error on
this coefficient is quite small.
The remainder of Table 7 shows the same two regressions for Taiwan, and then for the
pooled sample. In Table 8, we formally test the hypotheses that the largest five groups in each
country fit the rest of the sample for that country, and that the two countries fit the same sample.
These hypotheses are tested using the sum of squared residuals from the regressions in Table 7
(see the notes to Table 8 for a formal explanation of the hypotheses tests). The results show that
we cannot reject the hypotheses that the largest five groups in either country fit the rest of the
sample, and we cannot reject the hypotheses that the two countries (and their largest groups) fit
the same sample. These results are obtained whether we used the internal sales ratio as the
dependent variable in the regression in Table 7 (as shown), or alternatively, if we use the internal
sales ratio adjusted to exclude the sales to trading companies, or other retail firms in the group.
In either case, we find the high internalization of the largest groups in Korea is commensurate
with their enormous size.
Summing up, Table 6 showed that both the sales and internalization of the five largest
chaebol are significantly above the averages of these variables for the other groups in Korea, or
for the groups in Taiwan. This conclusion is still consistent with the evidence in Table 7 and 8,
which show that overall size of a group and its degree of vertical-integration move in tandem.
Table 8: Hypotheses Tests for Equality of Sample
Top 5 belong to rest of sample 0.56 0.40 0.17 (2,40) 3.23
Top 5 belong to rest of sample 0.94 1.15 2.42 (2,76) 3.12
Korea & Taiwan have same sample 0.69 0.28 1.36 (4,116) 2.69
Korea and Taiwan have same sample
and Top 5 belong to this sample
0.76 0.81 1.21 (6,116) 2.30
For Korea and Taiwan, we test the hypothesis that the top 5 groups belong to the rest of the
sample, by comparing the sum of squared residuals (SSR) from regressions (1) and (2) in Table
7. Regression (1) is “unrestricted” (SSRu) , since it allows different coefficients for the top 5
groups, while regression (2) is “restricted” (SSRr) since the top 5 have the same estimated
coefficients as for the other groups. The null hypothesis that the restrictions are true is tested by
[(SSRr-SSRu)/R]/[SSRu/(N-K)], as reported in the table, where: R is the number of restrictions;
N is the number of observations; K is the number of estimated coefficients in the unrestricted
regression; and (R,N-K) is shown in the second-last column. Under the null hypothesis, this
statistic is distributed as F(R,N-K), whose 95% critical value is shown in the last column. If the
test statistic is less than the critical value, then the null hypothesis is accepted, as occurs for all
cases shown in the table. For the pooled sample, we first test whether Korea and Taiwan belong
to the same sample, by comparing the SSR in regressions (a1)+(b1) of Table 7 to that in (c1), and
then test whether the top 5 groups also belong to this sample, by comparing the SSR in
regressions (a1)+(b1) to that in (c2).
The largest five groups for Korea are statistically out of the ordinary in terms of both their large
size and their correspondingly high internalization. This is dramatically illustrated by a scatter
plot of the internalization ratios against the sales of each group, in Figures 1 and 2. In each
figure, the black points are the internal sales ratios, while the gray points are the internal sales
ratios calculated without the purchases of trading companies or other retail firms from within the
groups (the ratios calculated with just excluding the trading companies would lie between these
two points). We have quite intentionally kept the scales identical on the plots for each country,
so that the relative sizes of the groups can be compared.
The top five groups for Korea stand out on the right-side of the plot, being dramatically
larger than the other groups, and also have higher internalization as compared to many (though
not all) of the others. The remaining groups are fairly tightly clustered with sales of less than
about $5 billion, and internalization ratios mostly less than 20% (computed without the retail
firms). Remarkably, the groups for Taiwan display much the same pattern. The largest group
for Taiwan – Formosa Plastics – stands out somewhat with sales exceeding $5 billion and an
internalization of 15.8% whether trading companies and other retail firms are excluded are not.
But for nearly all other groups that have high internalization ratios (above 20%), they are reduced
substantially when the purchases of retail firms are excluded. There are also more very small
groups for Taiwan than Korea. But notwithstanding these differences, the striking difference
between the two scatter plots are the presence of the very large and highly vertically-integrated
groups for Korea. While small in number, these top five or six groups account for nearly twothirds of the sales of all forty-three groups, and are a dominant presence of the Korean economy.
The complete absence of similarly large groups in Taiwan attests to the difference in the
industrial structure of these two countries.
Figure 1: Korean Business Groups, 1989
0 5 10 15 20 25 30
Sales ($ billion)
Internal Sales (percent)
Figure 2: Taiwan Business Groups, 1994
0 5 10 15 20 25 30
Sales ($ billion)
Internal Sales (percent)
Cross-Classification of Input-Output Tables for South Korea and Taiwan:
Sector Classification South Korea
161 sector IO Table
123 Sector IO Table
Agriculture, Forestry & Fisheries 1~13 1~10
Mining and Quarrying 14~20 11~15
Food Production 21~33 16~25
Beverages and Tobacco 34~36 26~28
Textiles 37~53 29~34
Garment and Apparel 54 35~36
Leather Products 55~56 37
Lumber and Wood Products 57~60 38~41
Pulp and Paper Products 61~63 42~43
Printing and Publishing 64 44
Chemical Materials 65~72 45~49
Chemical Products 73~77 51~53
Plastics 78 50, 57
Petroleum and Coal Products 79~82 54~55
Rubber Products 83 56
Non-Metallic Minerals 84~89 58~62
Primary Metals 90~97 63~66, 68
Metal Products 98~100 67, 69
Machinery 101~106 70~73
Electronic Equipment 107~113 74~76
Shipbuilding and Repair 114 77
Motor Vehicles and other Trans. Equipment 115~118 78~79
Precision Instruments 119~121 80
Misc. Manufacturing 122 81
Utilities 123~126 82~84
Construction 127~131 85~88
Wholesale and Retail, Hotel and Restaurant 132~134 89~93
Trans. and Communication 135~142 94~100
Finance and Insurance 143~144 101~102
Real Estate and other Business Services 145~146 103~109
Other Services* 147~161 110~123
Note: Includes social and individual services, government and unclassified services.
A. Business Groups in Korea, 1983 & 1986 (KFIRM83/86.XLS, KGROUP83/86.XLS)
The source of data is Analysis of Financial Statements - Fifty Major Business Groups in
Korea published by Management Efficiency Research Institute in 1987. The database was put
together by Wan-jin Kim in 1987-1988.
The database has 4 files in this dataset. They are: KGROUP83.XLS and KFIRM83.XLS,
which contain data on the business groups and the individual group firms, respectively, for 1983,
and KGROUP86.XLS and KFIRM86.XLS, which contain the same information for 1986.
KFIRM83.XLS has information for 537 business group member firms, while KFIRM86.XLS
contains information for 533 firms. KGROUP83 and KGROUP86 represent 50 groups, and the
data in these files are aggregated from KFIRM83.XLS and KFIRM86.XLS.
Note: In a few cases, the values in the GROUP files do not exactly equal the summation of
values from the FIRM files, and the reason for this is unknown.
The following is the list of variables as they appear in the datafiles and their respective
explanations. The unit of the figure is million Korean won.
Number assigned to each group and firm. First 3 digit numbers represent business group
and last 2 digit numbers represent member firms of the group.
Indication of whether firm is listed on the public stock exchange market. T means yes
and F means No.
Group name as it is pronounced in Korean and English name
Sales of the firm or group
Assets of the firm or group
Debts of the firm or group
Owner’s equity for the firm or group, which is the same as net worth, and is computed as
the difference between assets and debts
Initial value of capital for the firm or group
Profit of the firm or group
Year of establishment of the firm. In this data, year does not necessarily indicate the year
when the firm was merged into the group.
Number of workers of the firm or group
Value added of the firm or group
Four digit standard industrial classification
Five digit standard industrial classification. Source of sec and sec5 is Report on Mining
and Manufacturing Survey published by the Bank of Korea, 1987.
Contained in the GROUP files, this indicates the number of firms in each group.
Contained in the GROUP files, this indicates the number of sectors in each group.
B. Business Groups in Korea, 1989 (KGROUP89.XLS, KNAME89.DOC, KMISS89.DOC)
The primary source for this database was the volume 1990 Chaebol Analysis Report
(Chaebol Boon Suk Bo Go Seo in Korean) published by Korea Investors Service, Inc. This
volume was based on a survey of the 50 largest Korean business groups (measured by assets),
and contains data for 1989. The original data were published in Korean, and translation was
made during the construction of the database by Eun Mie Lim, from December 1992 through
July 1993. In particular, the “Internal transactions figures, total sales figures, assets, and value
added figures” all come from that volume. The database was originally constructed in SPSS, but
transferred to Excel during September 1995 to December 1996 by Dorsati Madani. The member
firms and data for each group was extensively checked by Josef Merrill during summer 1997.
The sector classification was based upon 1988 Input-Output Tables published by the
Bank of Korea in 1991. The input-output number was first introduced by using the 5 digit-SIC
number that was already in KFIRM86.XLS. Input-output classification number for the new firms
and business groups for 1989 were added. The 1988 Input-Output Tables uses a 161 sector
classification. The IO sector “107: household electrical appliances” was combined to sector
“110: household electronic appliances.” The numbers and names of the IO sectors are included
in the file K_IO161.XLS.
The IO numbers were assigned by the company's main product. The source of company
products was Hankuk Kiup Chong Ram (Korea Business Firms) 1990 & 1991 published by
Korea Chamber of Commerce and Industry, and Yearbook on the Korean Economy and Business
1991/1992 published by Business Korea.
(b) Trading companies
Trading company are indicated in the database. The trading company(s) of a business
group was designated based upon three factors. First, telephone surveys to the 44 Korean
business groups were made to find out if each group had a trading company. Second, company
descriptions in Yearbook on the Korean Economy and Business 1991/92 published by Business
Korea were used. If a company was described as a trading arm of their business group, it was
included in the trading company files. Third, along with the company description, if a company
was largely involved in the group's internal transactions, it was counted as a trading company.
Most trading companies are in the sector 132 (wholesale and retail trade), though only a subset of
the firms in that sector are designated as trading companies.
(c) Companies excluded from database
The database contains information for 44 Korean business groups and 499 member firms,
with all values in million Korean won. The 1990 Chaebol Analysis Report contains data for 50
chaebol, but did not provide internal transactions data for six groups which were therefore
excluded from KGROUP89.XLS. The names of the six missing groups are reported in
KMISS.DOC, as well as the names of firms excluded due to missing data.
The total sales figures of finance and insurance companies were often misleading due to
the nature of the business. Thus, those companies were excluded from the database. If a
company did not have internal transactions, and was missing its total sales figure and was
considered insignificant in terms of size and contribution to its group, then it was excluded from
the database. Thus, the number of firms in the database does not indicate the total number of
member firms in the group. The names of excluded firms are reported in KMISS.DOC.
(d) Company codes and names
Five-digit company codes (3 digits for group and 2 digits for company, i.e., 301: group
and 10: company) were introduced based upon the files KFIRM83.XLS and KFIRM86.XLS.
Companies and groups not included in those 44 business groups of the database were deleted.
Codes for new companies and groups which were not included in the 1983 and 1986 data files
were created. Thus, group code, i.e., 301, 302,...310, does not indicate the rank of the groups in
any sense. The list of group and company codes and names is in the file KNAME89.DOC. The
primary references for English names of Korean business groups were the Yearbook on the
Korean Economy and Business 1991/92 and Hankuk Kiup Chong Ram 1991.
B.2 Layout of the Spreadsheets in KGROUP89.XLS
Sheet 1 - With Trading Companies
This is the basic information collected from 1990 Chaebol Analysis Report. At the left
side of the sheet, a matrix for each group appears. Each matrix shows the value of sales from
each row firm to each column firm. A blank entry in each matrix can be interpreted as zero
transactions between that row and column firm within the same group. The matrices for each
group are stacked on top of each other. All data in this sheet (and the following sheets) is in
million of Korean won, for the year 1989.
The first column lists the group and firm number, preceded by S: the first three digits
after S is the group number, and the next two digits after S is the firm number. The next column
lists a “column” for the firm. This means that the same firm on that row will appear on the
column indicated. Sometimes these columns are consecutive, but in other cases they skip values.
The top row of the matrix repeats the column numbers. For example, a column number of 4
indicates that the same firm appearing on that row appears in column 4 of the transactions
matrix, labeled as k4 on row 14 of the spreadsheet.
On the right of the worksheet are the following columns:
BJ - the group number
BK - the group and firm number (preceded by S)
BL - the Korean SIC number
BM - the corresponding sector number taken from the 1988 Korean IO Table
BN - the total sales of each row firm
BP - whether the firm is a trading company or not.
BQ - a count of the number of groups with trading companies
BR - Total internal sales = sum of internal sales from that firm's row
BT - total internal buys = sum of internal purchases from that firm's column
Sheet 2: Without Trading Companies
This is identical to sheet 1, With Trading Companies, except that the values in the
column of the transaction matrix are set equal to zero for the trading companies. Thus, these
values are not included in the internal sales recorded in column BR, or the internal buys in
column BT. Furthermore, the internal buys in column BT also exclude the purchases of all other
wholesale or retail firms, in sector 132. The non-trading company total sales recorded in column
BN is equal to that in column BN of sheet 1 minus the sale to trading companies listed in that
same row of the transaction matrix. The rows and columns for trading companies are in bold.
Sheet 3: By firm
This provides summary information on the internal sales and internal buys, sorted by
group firm numbers.
Sheet 4: By IO category
This provides summary information on the internal sales and internal buys, sorted by
sectors of the 1988 Korean Input-Output table.
Sheet 5: By Group Sales
This provides summary information on the internal sales, sorted by business groups,
computed with trading companies, without trading companies and then without the purchases of
all other wholesale/retail firms in sector 132.
Sheet 6: By Group Summary
This provides summary information on the total and internal sales of the business groups,
taken from sheet 5 and sorted by the sales of the business groups.
Sheet 7: By Manufacturing
This provides summary information on business group total sales and internal sales, sorted by
major manufacturing sectors. These figures are then compared to the total sales of all
manufacturing firms for the same product sectors, taken from the Mining and Manufacturing
Survey, 1989, Bank of Korea.
5.3 Errors and Corrections
Some errors and discrepancies were discovered in the course of using the data 1990
Chaebol Analysis Report. The book was missing total sales figures of several companies while
those companies were involved in internal transactions within the group. The data also indicated
that some companies had bigger internal transactions figures than total sales figures.
Corrections were made in two steps: First, missing total firm sales figures were collected,
if available, from the book, Hankuk Kiup Chongram (Korea business firms). Because the
missing data were mostly of small and new firms in chaebol, they were not found in the printed
publication. In that case, personal contact was made with the publisher of 1990 Chaebol
Analysis Report, and correct data and explanations for discrepancies were provided by the
publisher. If total sales data for 1989 were still not available, then data from other years were
(a) Corrections on internal transactions figures
i. Correction was made based upon additional data that the publisher of 1990 Chaebol
Analysis Report provided.
ii. In the book, 1990 Chaebol Analysis Report, company 30222 sells 7282 hundred million
won to company 30205. The figure 7282 is corrected to 3452.
iii. Company 30533 sells 354 hundred million won to company 30501. Correct selling figure
iv. The book mistakenly indicates that company 33501 sells 1279 million won to itself. The
figure must be moved to next column, company 33504.
v. According to the book, 1990 Chaebol Analysis Report, internal transaction figures of
Hyundai Electronics (company code: 30107) is bigger than total sales figure. The
publisher responded to this error as follows: “According to our data sources, Hyundai
Corporation(30104) reported that the company purchased 696100 million won from
Hyundai Electronics (30107). But Hyundai electronics reported that they did not sell to
Hyundai Corporation. It would be OK to consider total sales of 30107 as amounts of the
company's internal sales.”
(b) Corrections to the total sales figure
i. Total sales figure for company 30317 is 3397 hundred million won,
ii. Company 30107, 30404, 32109, 34810 have bigger internal transaction figures than total
sales figures. According to the 1990 Chaebol Analysis Report, total sales for 30107,
30404, 32109, and 34810 are 538,345 million won, 5,499 million won, 1,167 million
won, and 4,242 million won respectively, and internal sales are 700,132 million won,
8,993 million won, 4,789 million won, and 10,206 million won respectively. Since it is
impossible to have larger internal sales than total sales, the total sales figures of those
four companies were changed to the internal sales figures.
(c) Addition of total sales figures
i. Data collected from the publisher:
30243, 30317, 30535, 30808, 31027, 31907, 35205(1991 data), 35805(1991 data)
ii. Data collected from Korea Business Firms (1990 data)
30109, 30154, 30240, 30241, 30348, 30355, 31331, 33405, 35206.
iii. Data collected from Yearbook on the Korean Economy and Business 1991/92
31008 (1989 data)
C. Business Groups in Taiwan, 1983 & 1986 (TFNAME86.XLS, TGNAME86.XLS,
TFIRM83/86.XLS, TGROUP83/86.XLS, TOWNER83.XLS)
Business Groups in Taiwan, 1985/1986 and Business Groups in Taiwan, 1988/1989.
Published by China Credit Information Service, Ltd., Taipei. 1985 and 1987. The original data
was published in Chinese, translation and data entry was done during 1989-91.
The database has seven files:
TFNAME86.XLS Firms' basic data (1983 & 1986). This file includes all basic data for a
firm that is not likely to change for different years (such as firm ID, the year established, initial
capital, industrial sector code, etc.)
TGNAME86.XLS Groups' basic data (1983 & 1986). This file contains group ID and name.
TFIRM83.XLS Firm level 1983 data.
TFIRM86.XLS Firm level 1986 data.
TGROUP83.XLS Group level 1983 data. The data in this file is aggregated from TFIRM83.
Some of the data are not equal to, and we believe more accurate than, what is listed in the source
book table in pp. 62-69.
TGROUP86.XLS Group level 1986 data. The data in this file is aggregated from TFIRM86.
Some of the data are not equal to, and we believe more accurate than, what is listed in the source
book table in pp. 2-6.
TOWNER83.XLS This provides information on the owners of the firms for 1983.
The year designations (83 or 86) correspond to the actual year of the data, not the dates in the
title of the source books (which Rae year of publication).
The following variable names are consistently throughout the database.
FIRMID ID code assigned to each firm (including both local and foreign firms).
GROUPID ID code assigned to each group.
COREFIRM(83/86) Designating whether a firm is the core firm of the group. There are two
possible values: Yes (=1) and No (=2).
GRUPNAME(83/86) The name of the group. Because group formation may change and the
group name also may change, names for both years are listed.
FIRMNAME(83/86) Same as above.
ESTABLISH The year the firm was established.
INITIALCAP The start-up capital of the firm.
SECTOR Industrial sector designation according to the United Nations' system (see Indexes to
the international standard industrial classification of all economic activities, New York: United
MERGERYEAR The year the firm merged into the group.
GFIRMS(83/86) How many firms in a group.
Variables with self-explanatory variable names:
FCAPITAL(83/86), FWORKER(83/86), FASSETS(83/86), FSALES(83/86) are for firm level
data. (The first letter "F" means firm. All currency in NT$ 1 thousand.)
GASSETS(83/86), GSALES(83/86), GNETWRTH(83/86), GPROFITS(83/86),
GWORKER(83/86) are for group level data. (The first letter "G" means group. All currency in
NT$ 1 million.)
Some variables are not reliable and incomplete. They are in the file for future reference, but we
do not recommend that they be used. They are: PUBSTOCK(83/86), FORGNCAP(83/86),
Additional variables that are used within the file TOWNER83.XLS:
CORE_FM_PL Designating whether this is a core firm in the group or a core person in the
group. (Yes =1, No =2).
OWNERNAME The name of the owner of a firm. "Owner" means major shareholder of a
firm. It can be a person or a firm. All names in Chinese (including Japanese and English names
which were translated into Chinese in the source book) were translated using PinYin system
published by the Chinese government.
OWNERID The ID code of owner. The following ID naming rules were used:
• For Taiwanese names, there are seven alphabets or 0: First 3 of the family name +
first 2 of the first character of the given name + the first and the third alphabets of the
second character of the given name. Example: DONG JIAN HUA = DONJIHA
• If there are missing characters (e.g., single character given name), then the last two
digits are 0. Example: SHANG WU = SHAWU00
• If a married woman's name has four characters, discard the last character. Example:
PENG DONG XIAO PING = PENDOXA
• If the owner is a Japanese, use the first alphabet of the fourth character. Example:
QIAN YE GENG ZAO = QIAYEGNZ
• If the owner is a firm, for those firms listed as a member firm of a group, its FIRMID
is the OWNERID. Example: T0003, T0823.
• If a firm is not a member firm of any group (both Taiwanese and foreign firms), begin
the ID with a "#", then follow the same rule as with people's name. Examples: WAN
BAO DEVELOPMENT = #WANBADV, ASSOCIATE INTERNATIONAL
(LIBERIA) = #ASSIN00
• For the purpose of easy identification, some foreign firms' OWNERID are not
assigned according to the above mentioned rules. Examples: SUMIMOTO
CHEMICALS = #SUMICHE, SUMIMOTO TRADING = #SUMITRA
TITLE Designates a person's position(s) title. Firms can only be a major shareholder (=3).
1 = Chair person of the board of directors.
2 = General manager.
3 = Major shareholder.
4 = Vice-chair.
5 = Vice-general manager.
PAGE Page number where the group or the main firm is listed in the source book.
D. Business Groups in Taiwan, 1994 (TORIG94.XLS, TGROUP94.XLS, TFNAME94.XLS)
This database was constructed from two sources, both of which relied on the China Credit
Information Service (CCIS), located in Taipei, Taiwan:
(1). Business Groups in Taiwan, 1996/1997, published by CCIS (contains data for 1994)
(2). Company annual reports to the Taiwan stock exchange, for 1994. This data was collected
by the CCIS, and supplemented by interviews of firms conducted by CCIS.
Source (1) lists membership, sales and other financial information for the firms within
115 business groups in Taiwan, but provides only qualitative information on whether a firm
transacts with another firm in that group or not. The quantitative information on the value of
internal transactions was obtained from source (2).
A principal limitation of the data collected in (2) is that it did not cover exactly the same
set of firms as indicated by group membership in source (1). For example, if a firm belonged to a
business group, but the qualitative data in (1) indicated that it had little or no transactions with
the other firm in that group, then no information for that firm was collected from source (2).
This means that the set of firms for which information was collected in source (2) are only a
subset of the firms in each group (namely, those which engage in transactions with other firms in
the group). The information from source (2) was received in Chinese, and translated by Shunli
Yao during 1996; this data appears in TORIG94.XLS.
This information from source (2) therefore had to be extensively supplemented with the
data from source (1) in order to obtain a complete set of the firms in each group and their internal
transactions and sales data. This additional data was added by Shunli Yao during 1996 and 1997,
and the resulting dataset is in TGROUP94.XLS. The database includes the 80 largest business
groups from the 115 groups identified in source 1, and there are 796 firms belonging to these
groups in total. All data is for 1994, and measured in thousand of New Taiwan dollars.
The sector classification was based on the 1989 Input-Output Tables: Taiwan Area, the
Republic of China, published by the Directorate-General of Budget, Accounting and Statistics,
Executive Yuan, Republic of China. The 123 sector classification was used (the same
classification is also used the 1984 IO Table). The IO numbers were assigned based on the
companies made products as identified in source 1. In most cases a firm produces several
products, so the first product listed in source (1) was used. The list of IO numbers and names
appears in T_IO123.XLS.
(b) Trading Companies
Trading companies are identified in the dataset. This designation was based upon two
factors: if the name of the company from source (1) included the words “trading company”; or if
the description of products from source (1) indicated “buying and selling” as a primary activity.
The trading companies in most cases belong to the IO sectors 89 (domestic wholesale trade), 90
(domestic retail trade) and 91 (import and export trade). Note that only a subset of the firms with
these sector classifications are designated as trading companies.
(c) Company codes and names
The groups and firms are identified by code numbers, which are the same as the codes
used in the 1983 and 1986 Taiwan data. The English names for the groups in 1994 are contained
in TGNAME94.XLS, while the English or Chinese names for the individual firms for 1994 or
earlier years appears in the file TFNAME94.XLS.
D.2 Layout of TORIG94.XLS
This was the information received from the China Credit Information Service (source 2), which
was translated into English. On the left of the sheet is a matrix for each group. This matrix gives
internal sales from the firms listed in each row, to the firms listed in each column. Groups are
stacked on top of each other in this matrix. All data are in NT$1,000, expect for a small number
of firm sales that are in the foreign currencies, such as US$ or HK$. The last rows of the matrix
list (i) purchases of that column firm from outside firms; (ii) total purchases of inputs by each
column firm; and (iii) total group sales. It should be stressed that the information in (i) and (ii) is
incomplete: the data provided on total input purchases may not equal the sum of purchases from
within and outside the group; and firms are likely to be purchasing additional products from other
firms that are not included in the data. These cases are indicated with a * on the spreadsheet, and
will be corrected in TGROUP94.XLS. Missing data may appear as either a "na" (not available),
or as the number zero, or as a blank field.
On the right side of the sheet are listed additional data for each row firm. Thus, column
AH lists sales outside the group, and column AI then sums each row to list total sales. Note that
the data on total group sales in (iii) does not necessarily equal the sum of individual firm sales (as
listed in column AI). This is because the value for total group sales in (iii) was not taken from
the survey, but instead, was obtained from the published volume of CCIS. It may be inconsistent
with the survey data of individual firms. This inconsistency is corrected in TGROUP94.XLS.
Additional columns provide information on the firm's: export sales (AJ); capital value (AL) at
historical cost; and the number of employees (AM). In a few cases, a currency other than
NT$1,000 is used for the capital value, such as US$ or HK$.
At the far-right of the sheet is a correspondence between each group number, the location
of this group in the CCIS book, and the file number of the original data from CCIS (these were
computer spreadsheets in Chinese).
D.3 Layout of TGROUP94.XLS
Sheet 1 - With Trading Companies
This revises the data from TORIG94.XLS. Added to the information was:
• the sector number of each firm, taken from the 123 sector 1989 Taiwan IO Table.
• additional firms listed in the CCIS book, source (1), but not included in source (2). These
firms have no internal transactions, but are included in terms of their total sales. The data in
each group transactions matrix are not included for these added firms, but it can be generally
assumed that there are zero transactions between these added firms and other firms in the
Other changes to TORIG.XLS are described in “Errors and Corrections,” below.
On the left of the sheet is a matrix for each group. This matrix for each group gives sales
from the firms listed in each row, to the firms listed in each column. Groups are stacked on top
of each other in this matrix. All data in this sheet (and the following sheets) is in NT$1,000, for
1994. Missing data may appear as either a "na" (not available), or as the number zero, or as a
blank field. The first two columns list the group number and firm number, and the third lists the
sector. The firms numbers also appear within the first row for each group matrix. Generally, the
ordering of firms in the rows and columns are the same, except that the firms that have been
added to the rows from source (1) often do not appear in the columns (since these firms do not
buy anything from other firms in the group). On the right of the worksheet are the following
AG - Internal sales, obtained from summing values on each row
AH - External sales outside the group, revised from TORIG94.XLS
AI - Total sales of each firm, obtained by summing AG+AH
AJ - Group internal sales, obtained by summing down column AG for each group
AK - Group total sales provided in TORIG94.XLS, or revised using source (1)
AL - Group total sales (with trading co.), obtained by summing down AI
AM - The maximum of AK and AL. These rows can differ due to missing observations on
firm sales. In most case the difference between AK and AL is small.
AO - Capital value, at historical cost
AP - Number of employees
AQ - Whether the firm is designated as a trading company, indicated by the value 1.
AR - A count of the number of groups with trading companies
AV - An estimate of the value-added for each firm, equal to AP4*31.833*12+AO4*0.35,
where 31.833 is the annual wage for each employee (in NT$1,000), and 0.45 is the return
to capital. See the notes on this formula below.
AW - Total purchases of all inputs (from within or outside the group) by each member firm.
This is taken from TORIG94.XLS.
AX - Internal purchases of the group, equal to column AJ.
It should be noted that the total purchases of all inputs in column AW, taken from
TORIG94.XLS, is missing for quite a number of firms, and may be an underestimate even for the
firms for which it is included. Thus, when the total purchases of inputs are summed across firms
in each group, as in column AZ, the resulting “total input purchases of the group” is very likely
to be an underestimate. According, a second estimate of this variable was constructed in column
BA by taking the difference between estimated value added for the group (column AZ) and total
sales of the group (column AM). The maximum of these two estimate for “total input purchases
of the group” is contained in column BB.
The group value-added figure used in this calculation (column AY) is summed from the
firm-level value added estimate (column AV), which uses the formula indicated above. The
wages used in this formula are the average monthly earnings of employees for total industry in
Taiwan, 1994. The return to capital used – 0.35 or 35% – is an estimate that is constructed to
that the ratio of value-added to sales over all the Taiwan firms is the same as that for all Korean
firms, or 21%. This return to capital is rather high because the capital values represent the
historical cost of capital rather than the current cost.
Sheet 2: Sales by Group
This sheet provides summary information on the internal sales by business group. This is
compared to the two estimates of the total group sales (taken from either the total group sales
figure provided in column AK of sheet 1, or alternatively from summing the sales of the
individual firms for each group, in column AL of sheet 1). The internal sales ratio listed in
column AH of sheet 2 is computed using the maximum of these two estimates.
Sheet 3: Without Trading Companies
This is the same to sheet 1, With Trading Companies, except that the values in each
column are set equal to zero for the trading companies. Thus, these values are not included in the
internal purchases or in total group sales, recorded in columns AG, AI, AJ, AK or AL, which are
constructed using the transactions matrix for each group. As in sheet 1, column AM gives the
maximum of the constructed and provided groups sales, which are usually quite close.
Column AN in sheet 3 in another calculation of the internal sales of the groups, which not
only sets the internal purchases of the trading companies at zero, but also sets the purchases of all
other wholesale/retail firms in sectors 89, 90 or 91 at zero. This is constructed using the
information in columns AO, which gives the sales of each non-trading company in sectors 89, 90
or 91, and column AP which sums these sales over each group.
Sheet 4: No Trading Companies, Sale by Group
This is computed in the same manner as sheet 2, Sales by Group, except that the
purchases of the trading companies are excluded.
Sheet 5: Group Summary
This summarizes information from sheets 2 and 4.
Sheet 6: Sector Subtotals, and Sheet 7, Sector Totals
These sheets total up the sales of the business groups, by IO sector.
Sheet 8: Manufacturing
This sheet takes the total sales of the business groups by broad manufacturing sector, and
compares it to the total sales from all manufacturing firms in each sector. The total sales figures
are taken from the 1995 Statistical Yearbook of the Republic of China, Executive Yuan,
Republic of China, p. 191, which lists 1994 data.
6.4 Errors and Corrections
i. The following groups had the values for total sales in TORIG94.XLS replaced with those
from source (1), in order to obtain the values in TGROUP94.XLS: 1026, 1063, 1087, 1142,
1062, 1082, 1115, 1120.
ii. Group 1119, firm 1394, has a sales figure of -149,985 listed in source (1). This was revised
to 149,985, but appears to be too low since the calculated value of sales for the group,
obtained by summing the individual sales of the firms, is substantially lower that the provided
total sales of the group from source (1).
iii. Group 1123, firm 1425, has a sales figure of US$10.4 billion listed in source (1). This
appears to be incorrect (far too high), so NA was entered instead in TGROUP94.XLS.
iv. The following groups had missing or incorrect value for firm sales in TORIG94.XLS, which
were filled in or corrected using the data from source (1): 1056, 1092, 1142, 1025, 1028,
1030, 1058, 1081, 1115, 1127, 1128, 1131.
v. Group 1062, firm 445 had NT$ 198.6 billion listed in “other purchases” in TORIG94.XLS.
This appears to be incorrect (far too large), so NA was entered instead in TGROUP94.XLS.
vi. Group 1140, firm 1284, is the Aurora Mechatronics Corp. It was missing a total sales value
from source (1). CCIS provided its 1991 sales as NT$ 1.6 billion, which is used in
TGROUP94.XLS. CCIS also informed us that firm 1283 is a trading company.
vii. Group 1190, firms 1607 and 1608, are Shanghai Vedan and Vedan Vietnam, respectively.
They have internal purchases listed in TORIG94.XLS, but were missing total sales values.
Since these could not be obtained from sources (1) or elsewhere, the internal sales and
purchases for these two firms were changed to NA in TGROUP94.XLS.