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He built an $8.9bn fortune …


Bom Kim amassed a fortune at Coupang, the Amazon of South Korea, that reached as a lot as $8.9 billion, and have become the poster baby of a brand new form of wealth technology within the nation: self-made riches from the expertise world as a substitute of the dynastic hoards of decades-old conglomerates.

A lot was made about how the brand new breed of titans was completely different, extra prepared to present again to society and extra thoughtful of staff. Coupang, for instance, promised employees and frontline employees about $90 million in inventory awards when it listed in New York in March.

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However simply months after its blockbuster preliminary public providing, the e-commerce large is beneath strain for a sequence of controversies, and a few South Koreans are reconsidering their angle to the billionaire and his firm.

Coupang is going through renewed criticism from labour unions and prospects about working circumstances, with the set off being a lethal fireplace at a success heart in June. Each day customers of Coupang’s app dropped by greater than 700 000 at one level amid a boycott of the corporate following the blaze. An ill-timed public assertion — the identical day because the accident — on Kim’s transfer to step down as chief of the Korea enterprise was extensively seen as an try and shirk duty, including to the outrage.

“Self-made entrepreneurs have gotten a part of the privileged class,” mentioned Park Sangin, a professor at Seoul Nationwide College’s Graduate College of Public Administration. “They’re turning into a brand new kind of chaebol,” he mentioned, referring to the nation’s family-controlled conglomerates.

In an emailed response to queries from Bloomberg Information, Coupang mentioned it cares “deeply concerning the welfare of all staff” and takes its “duty to guard their well being and security severely.” It additionally strives to realize extra equality on the office by granting “an infinite quantity of fairness to employees, creating wealth for all” its staff and in addition within the broader society by offering assist for small- and medium-sized enterprises, it mentioned. On Kim’s resignation from the Korean enterprise, it mentioned the change turned public via a authorities web site earlier than the fireplace, and the timing of the announcement was only a coincidence.

Billionaires all over the world aren’t any strangers to criticism focused at their huge wealth. Jeff Bezos has confronted a backlash towards what critics name poor working circumstances at Amazon.com Inc. and for firing staff who protested. Fb’s Mark Zuckerburg has come beneath fireplace for the social media large’s affect on politics and society.

However the scenario is extra nuanced in South Korea. Whereas the nation’s family-controlled chaebol stay unpopular, having been embroiled in scandals and corruption instances, there’s hope that the brand new breed of entrepreneur will develop into completely different — and extra prepared to present again to society. Brian Kim, as an example, the founding father of mobile-messaging large Kakao Corp and now the nation’s richest particular person, pledged to present away most of his fortune.

The query for Coupang is whether or not the fireplace and altering attitudes will harm its enterprise. The corporate’s web loss widened within the second quarter after it spent closely on enlargement and the blaze broken one in all its primary success facilities. Its shares are down 7.5% from going public via Wednesday’s shut. The S&P 500 Index gained 13% within the interval. Until the corporate fixes its inner tradition, it might face one other disaster that might hit its inventory and backside line, mentioned Suh Yonggu, a professor of selling at Sookmyung Ladies’s College.

Kim, 42, was born in Seoul and moved to America as a baby, later acquiring U.S. nationality. He returned to South Korea and began Coupang in 2010 after dropping out of Harvard Enterprise College.

Right now, Coupang is the most-used purchasing app in South Korea, and one of many nation’s largest employers. Income virtually doubled final yr to $12 billion as demand for on-line purchasing surged in the course of the pandemic.

Backed by Masayoshi Son’s SoftBank Group Corp., Coupang raised $4.6 billion in its IPO, regardless of posting losses for years. It surged on its first day of buying and selling. Whereas Kim’s wealth has fallen from its peak, he’s nonetheless value $5.7 billion, in keeping with the Bloomberg Billionaires Index.

On June 17, a hearth broke out at a success heart in Icheon, outdoors Seoul, killing one firefighter. Native media stories, which linked to CCTV footage, mentioned the blaze appeared to have been sparked by {an electrical} fault. The footage additionally seems to point out that sprinklers didn’t instantly activate.

Police arrested staff of an organization that managed electrical and fireplace security on the warehouse for allegedly turning off fireplace alarms and delaying the activation of sprinklers. The case was despatched to prosecutors after the investigation led to late July, in keeping with a police officer at Gyeonggi Nambu Police Company who requested to not be recognized, citing company coverage.

Coupang apologised to these impacted by the fireplace and promised to offer lifetime assist to the household of the firefighter who died. The corporate did a radical investigation and denies allegations that the safety guards dismissed any fireplace warnings, it mentioned in its emailed response to Bloomberg Information.

The incident prompted a boycott of Coupang’s providers, with each day customers of the corporate’s cell app falling to about 7.9 million on June 26, down from about 8.6 million on the day of the fireplace, in keeping with knowledge from South Korean market analysis agency Cellular Index. The quantity has since recovered. Coupang mentioned on its earnings name final week that prospects who made purchases within the second quarter elevated 26% from the earlier yr to 17 million.

Hyeon-woo Lee, 34, stopped utilizing Coupang after the fireplace. He had initially been a fan as a result of he thought the corporate handled employees extra pretty, he mentioned. However now Lee questions whether or not that’s true.

“I used to be pleased with Coupang’s providers,” he mentioned. “But when they’re thoughtless of their employees when offering such providers, I doubt whether or not it’s useful to make use of them.”

The hearth compounded criticism that the comfort Coupang presents, reminiscent of assured next-day supply, is coming on the expense of employees.

The corporate has saved workloads down for frontline staff although employee hours within the logistics business have ballooned, it mentioned in its response. Its frontline workforce work “effectively beneath 50 hours per week on common in an business the place 72 hours per week is the norm,” it mentioned. It achieved this through the use of expertise and its nationwide community of greater than 100 logistics facilities, and by considerably increasing the workforce, it mentioned.

Nonetheless, most warehouses don’t have air-conditioning or heating, so staff making ready items for cargo must depend on a number of followers and air circulators, mentioned Min Byeong-jo, who works at a Coupang success heart outdoors Seoul and heads a labor union for the corporate’s warehouse employees. Staff aren’t allowed to convey telephones onto the office flooring, he mentioned.

“We really feel like we’re being handled like machines,” Min, 55, mentioned. For Coupang, “merchandise are an important issues,” he mentioned.

Coupang mentioned in response that air conditioners and enormous followers have been put in in keeping with the scenario of every area in its distribution facilities. Success facilities the world over, as a typical coverage, don’t enable using private cell telephones on the ground to forestall accidents, it mentioned. Many different companies, particularly manufacturing vegetation, have some stage of restrictions on telephone utilization within the office.

Coupang mentioned it has been on the forefront of making “a brand new working surroundings for the logistics business.” It mentioned it ensures shorter working hours, hires frontline employees immediately, and presents paid holidays and breaks, in addition to advantages.

Coupang’s labor union says 9 employees, together with two subcontractors, have died as a result of working on the firm for the reason that starting of final yr. Coupang mentioned whereas the logistics business in South Korea has had greater than 1 300 work-related deaths within the final 10 years, it solely had one. It added it has spent $200 million and employed 600 security professionals to enhance the well being and security surroundings for its employees.

The one loss of life that has been formally acknowledged as such was that of Jang deuk-jun, 27. He died of a coronary heart assault final October after coming back from work at a Coupang success heart in Daegu, a metropolis south of Seoul. An investigation by the Korea Employees’ Compensation & Welfare Service mentioned he died from overwork after clocking greater than 62 hours within the week of his loss of life.

A Coupang spokeswoman mentioned that the precise variety of hours labored was 48.5, however the authorities counts nighttime work at a a number of of 1.3 for every hour labored.

The corporate apologized and provided condolences in a press assertion after the federal government probe. It additionally promised to offer assist for Jang’s household.

However Park Mi-sook, Jang’s mom, mentioned that months after the investigation ended, Coupang hasn’t supplied any compensation. In its response to Bloomberg Information, Coupang mentioned it has tried a number of occasions to speak immediately with Jang’s household to supply condolences and assist, with out mentioning the household’s response. Park mentioned she feels nothing has modified.

“We thought issues can be completely different as soon as we proved our son died due to work,” she mentioned. “We wished to show it in any respect prices. However even now, Coupang hasn’t modified.”

In Might, Coupang launched Coupang Care, which it calls the business’s first paid well being promotion program in South Korea that enables staff with comparatively excessive well being indicators reminiscent of blood strain and blood sugar to get as many as 4 weeks paid day without work to give attention to their well being.

Additionally beneath the highlight was Kim’s resignation as chairman of the board and as a director of Coupang Corp., the South Korean enterprise operation, efficient Might 31. He stays chairman and chief government officer of Coupang Inc., the Delaware-incorporated and US-listed guardian firm.

The transfer might assist Kim keep away from accountability beneath South Korean legal guidelines and laws, in keeping with Seoul Nationwide College’s Park.

“Bom Kim in impact controls the corporate,” he mentioned. “Eradicating his titles looks like a transfer to keep away from the chance of any punishment.”

Kim’s resignation from the board had been deliberate for months, the corporate mentioned. It was a pure step to take as he focuses on Coupang’s world operations, it mentioned.

South Korea’s Truthful Commerce Fee has additionally focused Coupang for unfair commerce practices, slapping a positive of three.3 billion received ($2.8 million) on the corporate this week. Coupang mentioned it will file a swimsuit towards the choice.

To make sure, Coupang isn’t the one quickly rising e-commerce firm going through criticism about employee remedy. Moreover complaints by Amazon staff about grueling circumstances, food-delivery platform Ele.me, owned by Chinese language e-commerce large Alibaba Group Holding Ltd., additionally confronted a public backlash earlier this yr after the loss of life of a supply driver. And Chinese language food-delivery firm Meituan got here beneath fireplace on-line after a number of supply riders have been killed or injured whereas making an attempt to fulfill strict deadlines.

However that doesn’t absolve Coupang of duty to handle its points, in keeping with one South Korean ruling social gathering lawmaker.

“The ‘Coupang disaster’ ought to finish right here,” Woo Gained-shik mentioned in a press release final month. “It ought to rethink its general company tradition.”

© 2021 Bloomberg



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