3. Under what exchange rate scenario is the “option-loan” interest-free? What is Daewoo’s cost of financing? Daewoo Corporation, headquartered in Seoul, South Korea, was established in 1967 by an entrepreneur named Woo Choog Kim and soon became one of the largest corporations in all of Korea. Its 1987 unconsolidated annual sales amounted to some US$5.6 billion, which made Daewoo the number four “chaebol” in Korea. Daewoo was mainly involved in three lines of activities: international trading, domestic and overseas construction, and textile goods manufacturing with 31 domestic and 16 foreign subsidiaries. It was the third largest exporter in terms of volume among South Korea’s seven General Trading Companies, was the number-two “general contractor,” and was rapidly diversifying into industrial and consumer durables.

As for its major rivals, the only check on Daewoo’s explosive growth was its access to capital.