Lee Min-hyung joined The Korea Times in 2014 and has worked as a journalist mainly in Korea’s finance, tech and automotive industry. He specializes in content creation, breaking news and in-depth analysis currently on transportation and mobility. You can reach him via mhlee@koreatimes.co.kr.
HS Hyosung seeks new growth engine in materials
HS Hyosung Vice Chairman Cho Hyun-sang speaks during a Korea-Vietnam business forum in Seoul, July 1. Yonhap
By Lee Min-hyung
Hyosung reduces risk in governance structure
Hyosung Group Chairman Cho Hyun-joon, left, and HS Hyosung Vice Chairman Cho Hyun-sang / Courtesy of Hyosung Group
Following a governance reform for independent management under the third-generation heir of the newly established holding company of the Hyosung Group, HS Hyosung is tasked with expanding its global presence in the next-generation materials business.
In February, the group unveiled a plan to split the holding firm by launching HS Hyosung, aiming to grant separate authority to the two heirs of the group, Hyosung Group Chairman Cho Hyun-joon and HS Hyosung Vice Chairman Cho Hyun-sang.
Under the drive, both leaders recently exchanged part of their shares in each firm through a block deal, allowing the vice chairman to become the largest shareholder of HS Hyosung. This move will help him exert tighter control over the new holding firm.
The leader of HS Hyosung is widely expected to concentrate on identifying new revenue streams for Hyosung Advanced Materials, the firm's key cash-cow affiliate. This company is a global leader in the tire cord industry, with its products primarily used in passenger cars and holding a 45 percent share of the global market, according to the company.
The affiliate generated an operating profit of 65.8 billion won ($50 million) in the second quarter of this year, up 35.4 percent from a year earlier, despite a slowdown in the global petrochemical industry. Sales also reached 840.5 billion won during the same period.
However, the company also needs to secure more stable revenue sources in other materials businesses. Therefore, the new head of HS Hyosung is expected to focus on diversifying its materials business into promising areas such as future mobility, aerospace, and eco-friendly materials.
“Under the leadership of the vice chairman, we plan to continue investments in research and development for the future materials businesses with huge growth potential,” an official at HS Hyosung said.
However, HS Hyosung faces potential risks due to its heavy reliance on the materials affiliate. If the business experiences any unexpected external shocks, there is a significant risk that the holding firm could be adversely affected, potentially impacting all the businesses under its umbrella.
HS Hyosung manages six affiliates, including the materials arm. Hyosung Information System, the company's IT infrastructure arm, is also aiming to undergo a major transformation to align with the ongoing technological shift driven by big data and artificial intelligence (AI).
The new holding firm will also collaborate with global companies in the supply chain management (SCM) solutions business both domestically and internationally. Hyosung leverages its expertise in global SCM, assisting clients in managing their supply chains in major and emerging markets, including Vietnam.
HS Hyosung has also expressed ambitions to aggressively pursue mergers and acquisitions to scale up its overall business volume and expand its presence in the global market.
“We will also respond promptly to any demands from global clients and the market, and generate more synergies with our affiliated companies,” the official at the company said.
Hyosung Group headquarters in Seoul / Yonhap
Sibling feud nearing end
Hyosung Group has long been entangled in a sibling feud among the three sons of the late former Honorary Chairman Cho Suck-rai.
However, the recent stock block deal between the heads of the two Hyosung holding firms has paved the way for the conglomerate to realign its governance structure, potentially eliminating risks associated with the heirs.
Earlier, Cho Hyun-joon, the eldest brother with the most influence within Hyosung Group, was the controlling shareholder of HS Hyosung with a 33.03 percent stake. However, the recent deal reduced his stake to 23.12 percent.
But Cho Hyun-sang, the youngest heir of the group, increased his stake in HS Hyosung to 31.96 percent.
Former Hyosung Vice President Cho Hyun-moon, the second-oldest brother, recently reached an agreement with the Hyosung Group chairman to establish a public welfare foundation with his share of the family inheritance. Currently, he is not involved in any management activities within the group.