Chung Ju-Yung - Legacy Surpasses Dreams

It has been nine years since the death of Chung Ju-yung, the founder and honorary chairman of the Hyundai Group, but his legacy lives on. Chung passed away in May of 2001, leaving behind one of the largest multinational conglomerates in South Korea, which continues to succeed after his passing, even after being split into many satellite companies in the 1980s. He made his name attempting to reconcile the two Koreas, developing the first Korean car, and being instrumental in developing a nondock ship making method with Hyundai Heavy Steel Company and many other greats which Korea boasts as its own today.

The story of Chung Ju-yung’s rise to prominence is remarkable, and very much related to the continued success of his company and his country at large. Chung Ju-yung was born the oldest child of six in 1915, in Tongchon, Gangwondo, during the Japanese occupation of Korea. His burning desire to do something better than what he was saw him become a successful businessman, despite a foreign occupation and a civil war during his lifetime.

Chung ran away from home to work in the big city when he was young, and had a succession of jobs as a dockworker, a deliveryman, an accountant and a mechanic, all at the objections of his farmer father. He saw several rises to success, and several falls from grace, due to occupation and war. But the man didn’t give up, and managed to turn his businesses into some of the most successful in the world.

When people refer to Hyundai as a conglomerate they are not exaggerating. The company has expanded into a dizzying array of enterprises. What started out in 1946 as Hyundai Togun, or Hyundai Engineering and Construction, has today become an eight-company conglomerate consisting of Hyundai U&I, Hyundai Research Institute, Hyundai Securities, Hyundai Merchant Marine, Hyundai Logistics, Hyundai Elevator, Hyundai Asan and Hyundai Construction Equipment India Pvt. Ltd. Also mixed up in a rather complex set of shareholding arrangements are Hyundai Kia Automotive group and Hyundai Motor Company. Hyundai Motor Company is the most visible of these many companies and is the de facto representative of the group itself. This huge tangle of similarly-named companies is the third largest such group in Korea.

Hyundai Motor Company made headlines in 2008 as the only automotive company that made a profit during the global financial crisis. This was mostly attributed to the excellent marketing strategy of offering to take back any car from a new owner who lost their job. With an assurance like this, consumer confidence in the company was higher than any other car company. Also, the company’s steadily-rising quality reputation didn’t hurt either. In a recent study in Britain, for instance, the Hyundai i30 was voted to be the most satisfying car to own. More than 23,000 buyers participated in the survey, in which the car beat out the Jaguar XF and the Skoda Octavia. Hyundai was the first Korean automaker to win the annual survey. Another study by Kelley Blue Book says that Hyundai is first place in brand loyalty, with 56.3 percent of its current customers saying they will buy again.

As if all that good news were not enough, Hyundai Motor has also experienced record sales in the United States and China in the first quarter of 2010. Sales in China were a full 47 percent higher than they were in the same quarter in 2009, while in the United States, sales were up 15 percent. “Given the tough incentive and promotion competition by stronger rivals in the U.S., I think Hyundai’s U.S. March sales were superb,” said Kang Sang Min, an analyst at Hanwha Securities in Seoul. This is a good step in the direction of meeting the current Hyundai Motors chairman’s goal of raising global sales by 17 percent.

Hyundai Steel Company has also made headlines recently by starting its first-ever integrated blast furnace in the city of Dangjin. The furnace was in construction for three years. This increases the capacity of the company to deliver steel products at the perfect time – when demand is rising. “The furnace is built with environmentally- friendly technology and facilities,” said Hyundai Motor Group chairman Chung Mong-koo. The steelmaker is also constructing a second blast furnace. The completed mill can now create 4 million tons of steel products per year. When the second mill is finished, together they will be able to pump out 8 million tons of steel. A third furnace is planned to be finished by 2015. This means that POSCO is no longer the only South Korean mill to make steel from blast furnaces. It also means that Chinese steel manufacturers will receive less business from Hyundai Heavy Industry in the coming years, as they can simply get the steel that they need from their sister company. Finally, this has more than doubled Hyundai Steel’s shares, since the two furnaces will be replacing about US$8 billion worth of imports per year.

In the United Arab Emirates, Hyundai Engineering and Construction just recently won a joint contract with Samsung C&T to build a nuclear power plant. Hyundai Engineering will receive approximately $3 billion from the contract. The construction is said to have already started and will continue until May 2020. This is the result of a deal between UAE officials and KE PCO for a $20.4 billion deal to design, build and help run four nuclear power plants from 2017 to 2020. Hyundai Engineering and Construction has also won other projects overseas recently. In 2009 it was awarded a $594 million design-and-build contract for a series of underground oil storage rock caverns in Singapore. The first of the caverns are expected to be ready in the first half of 2013, and be completed in 2014.

Work with India has also stepped up for Hyundai Group since the Great Eastern Shipping Company, one of India’s biggest private ocean carriers, has ordered three new supertankers from Hyundai Heavy Industries. While the price of the tankers wasn’t specified, one can easily speculate. Currently it costs approximately $90 million to construct a tanker, and while prices crashed during the global recession, they used to be $160 million per supertanker. These three ships are said to be the key to Great Eastern re-entering the oil supertanker market. It had sold one of its existing ships two years ago in an exit from the market, but seems to be making a resurgence. Both India and China have been utilizing this Suezmax class of super tanker, so named because it can cross the Suez canal with a full load. Oil refineries have been favoring this type of tanker, because they can ship larger quantities of oil at one time. Since India imports approximately 75 percent of its crude oil, the purchases make sense. And its good news for Hyundai’s new steel mill as well.

Did Chung Ju-yung ever imagine that his humble beginnings would spawn such a world-spanning enterprise? Now it is too late to ask. But his 20th century rags-to-riches tale and the company that it created are larger than anything anyone expected. Hyundai is just doing things right and great, and shows no signs of slowing down.