Is Hyundai Motor transferring leadership to heir?
[THE INVESTOR] On June 4, Chung Eui-sun, the only son of Hyundai Motor Chairman Chung Mong-koo, brought himself into the public eye.
Wearing jeans and a plain white T-shirt, the 47-year-old chaebol scion stood in front of an audience to introduce Hyundai’s first compact sports utility vehicle Kona.
In an apparent highly-engineered marketing strategy targeting young customers in their 20s and 30s, the scene made an impression on the Korean public more used to middle-aged chaebol members, stoic in tailored suits and refraining from making public speeches.
Since then, Chung began to make more frequent public appearances as a representative of Hyundai Motor, in place of his 79-year-old father.
He was with President Moon Jae-in on his first official trip to the US, became the patron of a number of sports organizations and tournaments which have been led by his father for many years, and began to replace his father’s place in the biannual meetings of Hyundai’s overseas operation heads since July.
From Silicon Valley to Israel, the third-generation heir also travelled twice a month overseas this year, according to the company, to check on Hyundai’s operations around the world and to seek partnership for the carmaker’s future growth.
The image of a hard-working successor has also raised a common question among watchers. Is he readying to replace his father?
Rumors have been circulating that the chairman is in ill health and is not able to carry out daily works. A company official denied it, saying that the chairman is now painting “a big picture” for Hyundai and still comes to the office at “6:30 a.m., sharp.” And the vice chairman who increased external activities are being frequently seen in contrast, the official added.
Despite his reputation as a prepared heir and his success in boosting the design strength of Kia, a sister company of Hyundai, Chung’s recent moves mean “practically nothing,” says Park Ju-geun, chief of Seoul-based corporate tracker CEOScore.
The junior Chung has made little progress in increasing his stake in the group’s key units. He holds 2.3 percent in Hyundai Motor and none in Hyundai Mobis, de facto holding company for Hyundai Motor Group. His father Chung controls the group with his 7 percent stake in Hyundai Mobis.
There has been literally no change in the group’s governance, except for its purchase of a 10.5 trillion land in Samseong-dong, southern Seoul, three years ago.
“It means that nothing has been decided yet. Hyundai suffering from sluggish sales also poses risks for the owner family,“ said Park.
The biggest problem for Hyundai is that it faces pressure from the government to cut the group’s cyclical cross-holding structure and also to seek ways to complete the power transfer from the chairman to his son at the same time, he noted.
Kim Sang-jo, head of the nation’s fair trade agency, has given Hyundai a deadline to come with governance change plan by the end of this year. He pointed out that Hyundai is the only top chaebol group keeping the owner family’s control over the conglomerate through the cross-holding structure, a method criticized for keeping them in power even with a small amount of shares.
Meanwhile, other industry watchers and former Hyundai officials say that the junior Chung is a man capable of turning the carmaker‘s deeply-rooted hierarchy and put creative vision forward.
”He is a listener,“ a former Hyundai official said, adding that he is a believer in great design.
But will he be able to put the entire organization under his feet?
Park says, “not any time soon.”
“Hyundai is late in generational reshuffle in its management. While Samsung is replacing its CEOs with younger ones, Hyundai is still managed by vice chairmen who are in their 60s, who have long worked for Chairman Chung, not his son.”
By Cho Chung-un/The Korea Herald (firstname.lastname@example.org)