Hyundai Motor cuts new path in chaebol system

Hyundai Motor's vehicles are assembled at the firm's plant in Saint Petersburg, Russia. / Korea Times file

By Vince Courtenay

The 1997 financial crisis weaned chaebol from its dependency on the government that enabled them to make their incredible growth.

Chung Mong-koo had taken the reins of Hyundai Motors in 1999.

His feats of global business development, the enormous positive impact on Korea and the benefits for its people are astounding.

Ironically, many of them could not have succeeded, were the Hyundai Motor Group not a conglomerate of interlocked companies.

Both Hyundai and Kia owe their existence and good fortune to others in the group, such as its parts, systems and modules developer and supplier, Hyundai Mobis.

The two car companies assemble the parts and the systems but it is Mobis and 10 other major parts producing companies within the group that develop and deliver the parts, parts systems, modules or subassemblies.

Everywhere in the world where there is a Hyundai or Kia plant, there is a Hyundai Mobis plant, and feeder plants of many of their other Korean-based affiliated suppliers.

While Chung was reaching out and putting new plants into the United States, China, Brazil and Russia in the early years of the new millennium, and significantly upgrading and expanding operations of two existing overseas plants in India and Turkey, he was also working tirelessly on giving the group and Korea its own sheet steel supply.

The Hyundai Motor Group commands and controls three major steel companies: Hyundai Hysco and Hyundai BNG, and the relatively new from the ground up Hyundai Steel.

In 2004 Hyundai Steel acquired the old properties of defunct Hanbo Steel in Dangjin and over the next eight years constructed three colossal blast furnace operations.

The Dangjin investment, including construction of the blast furnaces, totaled roughly $10 billion (the same amount Chung's Hyundai/Kia/Mobis consortium just used in the cash purchase of a choice parcel of land in Gangnam, Seoul, for its iconic new global headquarters).

From the plants of Hysco, BNG and Hyundai Steel, Hyundai Group's steel operations turn out 24 million tons of steel product annually. They significantly reduce South Korea's need for imported steel.

Like his Hyundai-Kia automotive enterprise, Chung's steel entities are the fifth largest, and in some steel categories the second largest in the world. Chung also procured a small transportation and logistics company which was renamed Hyundai Glovis.

He developed it rapidly and with a reach throughout the world. It provides not only ocean transportation, but warehousing and logistics services in every major market where the Group does business.

Today, within a decade of its founding, Glovis has a fleet of 30 huge ocean going ships designed to carry primarily cars and trucks. Chung successfully acquired Hyundai Engineering and Construction in 2011, one of the world's largest construction companies.

Together with other construction arms, it not only provides employment for Koreans within Korea, but for tens of thousands of Koreans who work on their overseas projects as well.

Together they develop advanced construction and ecological methods and are masters of their industry.

Today the Hyundai Motor Group operates 14 overseas vehicle assembly plants for Kia and Hyundai located in eight nations ― with more to come very soon.

Hyundai and Kia export vehicles to well over 150 countries from its Korean plants in Ulsan, Asan, Jeonju, Sohari, Hwasung, Gwangju and Seosan.

With new vehicles and propulsion systems being developed ― always at the cutting edge ― the Hyundai Group stays far out in front of the global technology curve. Indeed, the Group powers that curve.

It has advanced engineering centers in Korea, Japan, China, India, the United States, Germany and virtually wherever Hyundai and Kia produce vehicles.

Hyundai engineers and scientists collaborate with major universities and research institutions all over the world, and contribute in the development of a wide range of breakthrough technologies.

By developing and growing this impressively efficient chaebol, Chung has brought employment to hundreds of thousands in Korea and around the world directly through the member companies of the Hyundai Motor Group.

The huge number of direct employees is significantly multiplied if one counts in those who are employed by the non-Group companies that do business with them.

The wages of many of his most automotive workers have roughly doubled since he began putting the chaebol together in 2000.

He has brought enormous riches to South Korea and he has done the same for other countries where his plants operate.

He has brought great prestige to his nation, helped make it a world leader in technology, a leading global exporter, and one of the richest countries in the world.

Vince Courtenay has been the Korea correspondent for WardsAuto.com and Wards AutoWorld for many years. He is a Canadian Korean-War veteran and a nonpaid consultant to Korea's Ministry of Patriots and Veterans Affairs. He was awarded Korea's Order of Civic Merit earlier this year by President Park Geun-hye.