Hyundai Car Recall

What Matters Is Corporate Responsibility to Consumers, Society

Hyundai Motor has decided, rightly, to recall up to 50,000 new Sonata sedans with relatively minor glitches in the door locks.

Even at a glance, Hyundai's recall is hardly comparable with Toyota's in both the number of affected vehicles and the seriousness of the problems underlying them. A Hyundai spokesman said the preemptive move was necessary to prevent the sparks of consumer ire with Toyota from spreading to the Korean company.

But there is an uncomfortable semblance in the two automakers' abilities ― or lack thereof ― to properly manage the safety issue and keep it from growing into a crisis.

The door lock problem, industry watchers say, also cropped up as early as September, triggering consumer demands for a recall. Yet, Hyundai simply turned a deaf ear until U.S. media outlets raised the issue. Even the ``preemptive" action took nearly a half year to materialize.

We have stressed the need for Korean companies to learn lessons from the Toyota crisis, which can be summed up by putting consumer welfare, not to speak of safety, ahead of corporate bottom lines. As Akio Toyoda, CEO of the troubled Japanese automaker, acknowledged, however, even the one-time global icon for manufacturing has forgotten its own corporate axiom in a blind rush to be the world's No. 1.

At a time when the world still largely regards Korea as a ``second Japan" ― copying Japanese management style and technology ― Toyota's problems can be found in many Korean businesses. So the Japanese industry's own analysis of Toyota's crisis might as well evoke sympathy in Korean corporate minds, too. The world's largest carmaker has yielded to its own arrogance amid no checking mechanism in and outside of the company, as neither the advertisement-hungry media nor growth-thirsty government pointed out its problems. Few of Korea's largest conglomerates could say this is completely another company's affair. The problem may be worse here, as Korea still maintains family-controlled corporate governance of a chaebol system while Japan has long broken away from its zaibatsu era.

If the Enron scandal and financial crisis in the United States left lessons about unbridled greed and irresponsible risk-taking within shareholder capitalism, the Toyota case reveals the ills of stakeholder capitalism, which puts the interests of ``corporate family members" ― management and labor ― ahead of all others, including subcontractors and even consumers.

The problem is that individual governments have little means of putting these giant businesses under effective control. This is not to emphasize renewed business regulations but instead to say that there need to be efforts to enhance a corporate sense of responsibility.

It is all the more significant in this regard that the International Standard Organization has recently come up with final drafts on provisions stipulating social responsibilities that should be taken by government, non-governmental organizations and business enterprises. By far the most important role among these should be played by businesses, especially giant corporations.

The time has long passed for Korean businesses to realize corporate prosperity comes only when they try to coexist with not just shareholders but employees, subcontractors, consumers and local communities.