By Kim Tae-gyu
The Hyundai-Kia Automotive Group was supposed to hold a mega event Wednesday wherein the nation’s runner-up conglomerate was expected to announce a long-term development plan together with a new corporate identity (CI) and an official company song.
The event was to have marked the 10th anniversary of the company after it was spun off from the Hyundai Group, founded by the late Chung Ju-yong and the father of Hyundai-Kia Group Chairman Chung Mong-koo.
The group planned to celebrate a successful 10 years during which it more than tripled sales, and disclose its target of becoming one of the world’s top three auto manufacturers over the next decade under its Vision 2020 plan.
However, Hyundai suddenly delayed the ceremony, explaining that it didn’t want to attract too much attention at a time when worries linger on the monopolistic status of large firms.
The move, to the contrary, drew more attention to the world’s fifth-largest automaker than if it had gone ahead with the event, because speculation on the reason behind it has become rampant.
Even company insiders did not know of the decision, which was believed to have come from Chairman Chung himself, until Wednesday morning as they were busy organizing details for the occasion.
“We had prepared for the event for the past few months so nobody projected that it would be postponed. We are also wondering what is going on at the moment,” said a Hyundai insider.
“We usually do not call off any event participated in by our Chairman on the morning of the slated date. Many are confused and so am I.” Market observers point out that Hyundai made the surprise decision because of two vulnerabilities — a possible backlash from the government and its militant trade union.
“As you know, the government has pushed for the balanced growth of conglomerates and their suppliers due to growing concerns on the hardships suffered by subcontractors compared to large corporations that are flourishing,” a Seoul analyst said.
“Hyundai-Kia Automotive may have worried that it would be under the spotlight if it revealed its Vision 2020 and bold goals for the next decade. Some could say that Hyundai is looking to chalk up fast growth at the expenses of its subcontractors.” The country’s chaebol have been under fire of late for fattening their purses through squeezing small-sized suppliers. This has prodded them to set up plans to share profits with subcontractors.
Making the analysis plausible, the Hyundai-Kia Automotive Group offered a lengthy press release after the unexpected cancellation detailing measures that will help its suppliers.
“The Hyundai-Kia Automotive Group reportedly wanted to take Kia out of its name. But this would have led to complaints from employees of Kia Motors,” the analyst said.
“What if disgruntled Kia Motors unionists vote down an agreement not to stage walkouts for the first time in decades? In my view, Hyundai’s traditional vulnerabilities of its government relationship and labor union prevented the group from revealing the all-important Vision 2020.”
Hyundai officials, however, said that the celebrations were being put on the ice, not canceled. “Even though Kia achieved peaceful settlement of wage negotiations, there are other subsidiaries in which talks are still under way,” a senior Hyundai representative said.
“When everything is settled, we will likely host an event that properly marks our 10th year.” However, this alone seems to fall short of explaining the last-minute decision not to hold the scheduled event.
This leads to speculation that Hyundai officials are keeping a low profile in order to maintain its status as the government’s favorite conglomerate.
President Lee Myung-bak, a former CEO of a Hyundai subsidiary, only mentioned Samsung and LG in his remarks calling for chaebol’s social responsibility that was the starting point of what is widely believed to be the government’s “big business-taming” endeavor.