Seoul Man: A Memoir of Cars, Culture, Crisis, and Unexpected Hilarity Inside a Korean Corporate Titan (12 page)

Even though they were split, the major
chaebol
came roaring back in their new forms. The impact of the
chaebol
on Korean life and the Korean economy is almost impossible to comprehend for anyone in the West. Korea is a physically small country, with about 50 million people, so the
chaebol
have outsized impact. In 2012, Samsung and Hyundai—Korea’s two largest
chaebol
—accounted for 50 percent of all the profits of companies listed on the Korean stock exchange. That was nearly double from only three years earlier. But these companies weren’t just big in Korea.
By the turn of the millennium, Samsung’s annual profits had topped those of any of the giant Japanese companies, a fact that shocked and galled Japan.

Even though the
chaebol
family owners individually hold comparatively small amounts of stock in their businesses, they are able to retain control of their empires thanks to complex cross-shareholding arrangements linking one company to the others. This structure is unfamiliar and murky to Westerners and is the cause of what is known as the “Korean discount,” meaning that the stock of big Korean companies such as Samsung and Hyundai trades for less than its real value because of the opacity. Then there is the Korean side to the story. In the wake of the 1997 IMF crisis, the formerly big conglomerates found their individual companies weak and vulnerable to being picked off, one by one, by foreign takeover firms. Interlocking the
chaebol
created an entity too big and seemingly too complex to be swallowed at once. Think of dozens of small fish swimming closely together to create the impression of a much bigger fish to potential predators.

The
chaebol
have also drawn criticism for a business practice called “tunneling,” meaning the awarding of contracts to related conglomerate businesses without a public tender. But many of the
chaebol
, like Hyundai, are vertically integrated enterprises. In a corporate ecosystem like that, tunneling is efficient. And, in fact, in response to public criticism and new laws, tunneling is less prevalent than it used to be.

Hyundai’s business will become more and more global in the years to come. When I was still at Hyundai, the company switched to international accounting standards. Much more globalism is anticipated when the third generation takes over the company. And, for the first time, large shareholder groups are no longer marching in lockstep to what the conglomerate chairmen decree. But don’t expect the great Asian conglomerates to
completely mimic their Western counterparts in terms of corporate governance anytime soon, if ever. The Eastern conglomerates have prospered by following Asian corporate values, adjusting to their historical mean after being force-fed Western business practice after the IMF crisis. Traditionally, Asian corporate giants have not had access to capital markets or been subject to Western-style market regulation, so they have relied on political and family networks in authoritarian political systems—the personal relationship that is at the heart of every Asian business deal. On the one hand, the
Economist
wrote in 2015, this leads to cronyism. On the other, the
Economist
allowed, it enables long-term decision making. Companies are not forced to scramble for quarter-on-quarter earnings as Western public firms must. Regardless of which system is better, East and West have very different concepts of how corporations should be structured. There is more ill will to be gained and less progress to be made when condescendingly trying to force Western values upon Asia, either at the corporate or individual level.

Hyundai founder Chung Ju-yung’s plan to pass on his empire to his sons was perfect, except for one problem: Hyundai Motor. It was being run by one of Chung’s brothers, and the great man wanted his brother out. At the urging of his father, Chung Mong-koo—the oldest living son, who was heading the car company’s main parts supplier—forced his uncle out of a job and took over Hyundai Motor.

Chung Ju-yung died in 2001 after a colorful life that saw an unsuccessful presidential bid, the creation of a joint economic zone just across the border in North Korea, company picnics where he wrestled his employees, and a lasting legacy as one of the men who literally built modern Korea in concrete and steel.

Now, Chung Mong-koo was in charge of the biggest of his father’s companies. It was his turn.

Let us return to the corporate metaphor of the twin Hyundai headquarters towers. If you were to complete the metaphor accurately, you would build a bridge at the top, linking the Hyundai and Kia towers, and put a seat at the apex. On that seat would sit one man and one man only: the chairman.

Hyundai Motor Group chairman Chung Mong-koo was born in 1938. He speaks very little English. In the entire time I worked at Hyundai, I spoke to him only once. It took place when a number of executives were lined up in the lobby of Hyundai headquarters waiting to meet some arriving VIP journalists. The chairman, deciding to greet them as well, emerged from an elevator I didn’t even know existed, spotted me, walked straight toward me with his hand out, smiled, and said, “Staff!” Yes, sir, Mr. Chairman. That’s right. I’m on your staff. I should have said, “
Annyeong hashimnikka,
” the formal greeting, but I choked and blew it.

Short and stocky, the chairman is old-school Korea, direct and authoritarian but with a ready smile that conveys charisma. Chung Mong-koo was not the most polished of Chung Ju-yung’s boys—indeed, in younger days he was known as “the farmer” for his rough mannerisms. Like many Korean business leaders, he’s been called a “bulldozer” and a “tank.”

But Chung Mong-koo was smart enough to realize Hyundai’s desire for international growth was being doomed by its poor quality. He is the man who is responsible for Hyundai’s high-quality reputation today. Chung is responsible for building most of Hyundai’s factories outside of Korea so the company would not be brought to its knees each year by the country’s annually striking militant labor unions. Chung is responsible for investing in new product development during the 2008 global financial crisis, giving Hyundai a jump-start on its competitors when the crisis began to lift. In short, Chung Mong-koo is responsible for
taking the car company that his father established as just one more company in the family conglomerate and turning it into a world-class automaker.

Chairman Chung commands authority. He once visited a motor show I was working, sending everyone into high-panic preparations. After his inspection of our booth, the chairman decided to stroll the convention center floor to check out the competition. Unlike other car company CEOs who do this and take a couple top aides with them, our chairman was followed by his top executives, which meant—per Confucian custom—that they had to be accompanied by
their
top executives, and so on and so on, down the hierarchy. I climbed to the second floor of our booth to watch this play out: there was the chairman making his way through a parting motor show crowd, at least twenty dark-suited men following, some taking notes. The effect was that of a long, black eel snaking its way through a crowd of startled media and competitors. PR-wise this was bad optics: it looked imperious. But there was nothing I could do about it.

One day—no one but the Chung family knows, and they aren’t telling—Chung Mong-koo will pass down Hyundai Motor Group to his only son, Vice Chairman Chung Eui-sun, who will become head of the world’s fifth-largest automaker and an $85 billion company. Chung Eui-sun already is a billionaire, as is his father. But that’s where most of the obvious similarities between the two ends.

Chung Eui-sun, born in 1970, has the task of taking Hyundai to a higher goal, something even harder than improving its vehicle quality: improving its brand to an extent that consumers will start to think of Hyundai like Audi. Chung did his undergraduate work at the prestigious Korea University in Seoul but then got his master’s in business management administration at the University of San Francisco. He then worked for five years in New
York and San Francisco before returning home. I’m sure there was never any question that he would take up the family business. As the only male heir to the Hyundai automotive empire, Chung Eui-sun had no choice, from the time he was a boy, to be chairman. He has two daughters and, luckily, like his father, only one son, so there will be no question who continues the Hyundai Motor Group dynasty.

Unlike his father, Chung Eui-sun speaks nearly fluent English with a light Korean accent. He has an easygoing, ingenuous manner, not at all imperious in the fashion of other Korean corporate heads. He is confident and comfortable enough in his own skin that, when asked a question he doesn’t know, will turn to a nearby colleague for help. In addition to social gatherings with his top executives, he puts on good-natured nights out for the rank-and-file Hyundai employees, renting a theater for a movie showing, dinner, and
noraebang
, inviting not only his top executives in a particular division but also representative employees who are only in their early years at the company. He is more physically fit than his father, has a good sense of humor, enjoys watching Britain’s
Top Gear
motoring show, and has a much more restrained style at the Korean drinking dinner. He has, naturally, his own go-to
noraebang
songs. There was one detail about the vice chairman I found especially telling and promising. Like most other high-level Hyundai executives, he rode in a top-of-the-line Hyundai Equus luxury sedan. But unlike the others, which are black, the vice chairman’s was dark blue. In a society such as Korea’s, this is a radical, even revolutionary color choice. It suggests to me that Chung Eui-sun, even within a highly ordered culture and corporate structure, is and will be his own man. And may even have a little streak of rebelliousness in him.

As a businessman, Chung Eui-sun rose through the company
ranks working in several jobs at Kia as well as Hyundai, learning the business from the ground up. So far his signature on the two marques has been in their design and branding. Understanding that the great auto brands also are among the most beautiful and distinctively designed, with a family look—think BMW, Audi, Porsche—it was Chung Eui-sun who lured Audi’s Peter Schreyer to Kia. Schreyer redesigned the Kia line, giving it a distinctive grille, known as the “tiger nose.” Chung took the extraordinary step of promoting the non-Korean Schreyer to a president’s position in 2013, overseeing both Kia and Hyundai design. Now vice chairman of Hyundai Motor, Chung Eui-sun is in charge of the automaker’s daily operations.

When he interviewed me for the job in July 2010 in his office in Seoul, Vice Chairman Chung referenced the Twitter feed for financial news I ran at the
Washington Post
and asked me how I’d built my audience. He then went on to note other major corporations that had not handled their digital communications optimally during various crises and asked my opinion about that. It was clear to me from the interview that the vice chairman was aware of which way the media was heading and the need for Hyundai’s global PR team to digitally engage with journalists.

At this point you have just read a longer profile of Chung Eui-sun than has appeared anywhere, at any time ever, in English, at least on my watch. As a Hyundai PR man, this was one of my greatest frustrations. Here I had a perfectly mediagenic top executive, the heir to the company, who would be approachable and engaging with the world motoring and business press—and I could not use him. In Korean corporate culture, the spotlight should fall on the product principally, and if it falls on any one person, it should be the chairman. It’s okay for lower-ranking executives to give media interviews about their business operations—say, the head of international sales or a power-train
engineer. But only one person speaks for the company, and that’s the chairman. And my chairman did not speak English. And, per custom and culture, his son, who did speak English, could not do interviews. There is a famous (in Korea) photo of Hyundai founder Chung Ju-yung walking to work one morning in the 1970s trailed by all of his sons. In a Confucian culture, children, juniors, and lessers literally walk in the footsteps of their parents, seniors, and superiors.

My inability to market my vice chairman to the media was correctly diagnosed by an auto reporter at a global business paper, who told me: “Every other automaker has one top guy who can tell the brand’s story—Alan Mulally at Ford, Carlos Ghosn at Nissan, Sergio Marchionne at Fiat. Hyundai is the only one that doesn’t.” When I conveyed this observation to a colleague, he was dismissive. “They are salaryman CEOs,” he said. “Chairman is owner.” And that was that.

I liked Vice Chairman Chung and his inquisitive, unassuming manner. Unlike every Korean who worked for him, I was at ease around the vice chairman—probably because I didn’t have the cultural burden of being deferential. I was looking forward to working closely with him and found that opportunity when it was decided by top management that Vice Chairman Chung would step briefly into the spotlight and deliver the corporate speech to the 2011 Detroit Auto Show, announcing Hyundai’s bold plan to elevate its brand to stand alongside the world’s greatest cars.

It was a heavily symbolic moment utterly lost on all the Americans in the audience but freighted with meaning for the Koreans. Here was the Hyundai heir who would one day lead the company. At the Detroit Auto Show, he was going to take that first step by announcing the company’s new brand direction.

I got a rough draft of the vice chairman’s speech about a week before the show, written by the marketing division, whose job it
was to launch the new branding campaign. It was my job to hone its message and craft it into clear English that would be easily understandable to native speakers and at the same time be easily pronounceable by a nonnative speaker working off a TelePrompTer. In addition, it should be interesting, compelling and, hopefully, quote-worthy to the media members in attendance.

Most speeches given by executives at motor shows tend to focus on whatever new car is being introduced. Sometimes sales figures or company performance will be mentioned: solid facts and figures, along with some superlatives thrown in. With this speech we had to do something much harder: we had to roll out an idea. We had to debut a new slogan and the “brand concept” behind it.