Group founder sowed seed of Hyundai today
By Kim Tae-gyu
Under the leadership of late founder Chung Ju-yung, Hyundai Group climbed to become Korea’s No. 1 conglomerate but the empire showed signs of slowly crumbling after his death at 85 on March 21, 2001.
A long and tumultuous life was marked with both success and tragedy and he lost two sons before his passing. The six sons and one daughter remaining went on to divide the company.
In early 2000, Chung chose his fifth son Mong-hun as his successor to head the Hyundai Group while entrusting only the automotive sector to second son Mong-koo. The eldest son died in a car accident in 1982.
Strife amongst the siblings, considered “princes,” splintered the group into three separate parts.
Mong-koo took charge of Hyundai Motor while Mong-hun became the sole chairman of Hyundai Group as the official successor of Hyundai Group, which controlled Hyundai Engineering & Construction (E&C) and its North Korean businesses.
Chung’s sixth son Mong-joon took over Hyundai Heavy Industries.
The division prompted the conglomerate to forfeit the economy of scale as well as its pole position to Samsung Group even to this day.
The misfortunes of Hyundai Group culminated in 2001 — just before the death of founder Chung, the group lost its managerial right on debt-stricken Hyundai E&C to creditors through a debt-equity swap.
Worse, the group lost its leader later the same year as Mong-hun jumped to his death from his office in Seoul in the midst of a police investigation on slush funds involving North Korean businesses.
A family of champions, it wasn’t long before the siblings of the tycoon soon got back on track.
Together with Kia Motors, which Hyundai acquired in 1998 in the aftermath of the Asian currency crisis, Mong-koo catapulted Hyundai Motor to become a leading global automaker.
In 2001, the two outfits combined to churn out 2.46 million cars for a turnover of 34.8 trillion won. During the past decade, their sales have more than doubled to 5.74 million last year for 60 trillion won in 2010.
Hyundai-Kia Automotive Group is now the world’s fifth-largest carmaker and aims to crank out 6.33 million vehicles this year to break through the significant 6 million mark.
The Seoul-based outfit also successfully signed an agreement with creditors to take over Hyundai E&C in a fierce competition against Hyundai Group, currently headed by his sister-in-law Hyun Jung-eun, the widow of the late Mong-hun.
It appears Hyundai Automotive will emerge as the ultimate successor of founder Chung as far as the conglomerate is concerned — automobile and construction were the two start-up industries.
With 40-plus subsidiaries and more than 100 trillion won annually, Hyundai-Kia Automotive Group now ranks the nation’s second-largest chaebol, closely trailing Samsung Group.
Hyundai Heavy Industries (HHI) has also grown into the world’s primary shipbuilder with sales reaching 22.4 trillion won last year for an operating profit of 3.4 trillion won.
With 28.9 trillion won in total assets HHI aims to jack up sales by 20 percent this year to 26.9 trillion won.
In comparison, Hyundai Group has struggled greatly since 2001. The termination or contraction of many North Korean businesses further weighed down on the group in recent years.
Led by widow Hyun, however, Hyundai Group maintains solid performances thanks to flagship affiliates as Hyundai Merchant Marine, Hyundai Elevator and Hyundai Asan.