[Dynasty Korea’s corporate roots] For Hyundai founder, no challenge was too big

How Chung Ju-yung built an empire from a small car repair shop

Nov 07,2016
Hyundai Group Chairman Chung Ju-yung inspects the construction of a ship propeller at Hyundai Heavy Industries’ construction site in Ulsan in 1983. [Hyundai Group]
“Asan” Chung Ju-yung was named the most important businessman in Korean history in a survey conducted by the Federation of Korean Industries.

The Hyundai Group founder was also ranked the No. 1 businessman in a Gallup Korea survey, while he came in fourth on the list of most important Koreans since the country was founded.

Born the son of a poor farmer, Chung worked his way up from laborer and rice deliveryman to chairman of Korea’s No. 1 conglomerate. He called himself a “rich laborer.”

Chung singlehandedly created one of Korea’s largest business group, and raised the nation’s prestige by expanding Korean industry overseas, particularly to the Middle East, Thailand and Vietnam. He played a significant role in the development of key Korean industries including shipbuilding and automobiles.

“Asan” Chung Ju-yung was born Nov. 25, 1915, in Asan, Tongchon County, in Kangwon, now part of North Korea. He was the eldest of eight siblings including two sisters. His pseudonym “Asan” comes from his hometown.

His grandfather was a teacher in a neighborhood of around 50 homes. He made no contribution to the household’s budget because the only skill he had was reading and teaching. That responsibility fell on Asan’s father, who cultivated land and built a reservoir for a paddy field. His father was known for his relentless work, and Asan’s mother was known to be fiercely competitive, traits they passed on to their son.

Asan started learning from his grandfather at the age of five. He studied traditional Asian teachings including Mencius. He attended Songjeon Elementary School and graduated in 1930.

While working on the family’s farm, Asan was determined to leave his hometown and find work elsewhere. But every time he left home, his father would bring him back.

In 1934, when Asan was 19, he left home for good. He worked at construction sites in various areas including Incheon’s port and was later hired at a confectionery factory.

Not long after, he was hired by a rice store to deliver rice. He worked hard. Asan was the first to arrive at work and started the day by cleaning up the store. The store’s owner was so impressed by the hard work that he placed Asan in charge of the store’s books instead of his own lazy son.

After three years at the store, Asan, who had earned the trust of the owner, bought the store and inherited its regular customers. He also rented a store in Sindang-dong, central Seoul, and opened a rice store under the name Kyungil Rice Store in January 1935 with the ambition of becoming the No. 1 store in Seoul.

However, his ambition came to a close in December 1939, two years after the Sino-Japanese War broke out in 1937. As a rice rationing system was adopted, all rice stores across the country had to close business. Asan then returned home, purchased a large plot of land as a gift to his father and married Byun Joong-seok, who was six years younger than him. She was the eldest of nine siblings.

The following year, Asan returned to Seoul, where he opened up an automobile maintenance shop called Adonis in the western hills of Ahyeon-dong with the little money he had and an unsecured loan on the credit he had built up while managing the rice store.

Business was doing great until one early morning, due to his own fault, the car repair shop was burnt to the ground. Asan, however, did not give up, went to a financier and received a small loan where he opened up an unlicensed car repair shop in Sinseol-dong, northeastern Seoul.

Although the police in the neighborhood kept cracking down on his business, Asan went to the head of the neighborhood police station, who was Japanese, pleaded his situation and asked him to stop the crackdown.

Asan built his reputation by cutting down on the time it would take to repair cars. While other shops took roughly 10 days, he would complete repairs in four. But the charges he asked for the service was higher than his competitors. It was a marketing strategy that was based on the understanding that car users were more excited that their cars could be fixed as quickly as possible rather than worry about costs. Despite being an illegal operation, car owners were bringing in their broken cars to Asan.

After Korea gained independence, Asan opened up Hyundai Motor in Jung District, central Seoul. In the first year, the work was limited to changing U.S. military vehicle engines. A year later, his business expanded to remodeling outdated Japanese vehicles. One day, while he was visiting the American military bases and local government offices, he saw construction workers getting paid for their work. He realized that while he made 300,000 to 400,000 won remodeling vehicles, the construction workers were collecting 10 million won on each project.

To him, the work looked very similar to what he was already doing. Come up with an estimate, work and then get paid - it was that simple. In his autobiography, Asan said he had 100 percent confidence in his business proposition, while his brother-in-law and friend were not too sure.

Still, he hung up a banner for Hyundai Civil Works next to the banner for his existing Hyundai Motor business, and that’s how Hyundai E&C got its start on May 25, 1947. In 1950, he merged Hyundai Civil Works and Hyundai Motor into a new company in Pil-dong, central Seoul, which is now home to today’s Hyundai Group headquarters. Six months later, the Korean War broke out.

The war, though, didn’t stop Asan from growing his business. With his motto “there’s nothing that can’t be done,” he asked his younger brother In-yung, who at the time was a reporter for the Dong-A Ilbo and fluent in English, to help him win several contracts from the U.S. military stationed in Busan, including turning a shuttered school into a barrack for the U.S. military.

Asan didn’t limit his business partnership to the U.S. forces. He also aggressively participated in construction projects commissioned by the South Korean government in hopes of winning more contracts after the war.

The worst contract that Asan got was rebuilding the Goryeong Bridge in Daegu in 1954. Exceptional inflation at the time resulted in an astronomical rise in material prices and labor costs. This led Asan to take on a deficit that was four times the size of the contract.

Although he was on the verge of bankruptcy, Asan did not yield and took it as an opportunity to turn things around. As he continued finishing projects on time, the government’s faith in him strengthened and led to more construction commissions. With such feats like completing the Indogyo Bridge on the Han River in just eight months, Hyundai E&C was able to become one of the top six construction companies in the country.

In 1962, Asan worked on the construction of a cement plant that later became Hyundai Cement. It was considered a milestone in his legacy. Over the 24-month construction period, Asan visited the site every weekend and led the project. He earned the nickname “Tiger” from his employees, and to this day, one can find the word “Tiger” branded in the cement at the factory.

Another milestone came when his company won the project to construct the Soyang River Dam. Asan developed a revolutionary construction system that used the river’s sand and pebbles as the main materials for construction. This helped reduce overall cost by more than 20 percent.

In 1965, Hyundai E&C became the first Korean company to win an overseas construction project: building the Pattani-Narathiwat highway in Thailand. The contract’s value was much larger than that of Hyundai E&C’s annual construction projects combined.

In February 1968, under a commission by the Park Chung Hee government, Asan also began construction on the Gyeongbu Expressway. At the time, it was considered the largest infrastructure construction project since the country’s founding. Over 40 billion won was required to build the 428-kilometer (266-mile) expressway, a feat many at the time thought was near impossible.

Asan believed that in order for Hyundai E&C to successfully complete the massive project, it needed to reduce the amount of time it took to build it. Every day, he would ride his jeep and visit the construction site to encourage his workers and instill in them a sense of nationalistic pride for their contribution to a monumental project.

The expressway was completed in just over two years and celebrated its opening on July 7, 1970.

While building his business in construction, Asan also worked on developing his automobile business. He realized early on that a country’s industrial technology level is measured by the country’s automotive industry development and that this industry also played a significant role in raising the nation’s global recognition.

In 1966, he told his younger brother In-yung, who was on a business trip to the United States, to help secure an exclusive contract with Ford that would allow the American carmaker to assemble vehicles in Korea. It was an unexpected order, and when his brother hesitated, Asan replied, “Have you even tried?”

At the end of 1966, Hyundai Motor won a contract with Ford.

But that relationship didn’t last long. Asan’s real goal was to build a 100 percent Korean-made car. In 1976, he introduced the country’s first Korean-brand automobile, the Pony, and 10 years later exported it to the U.S. market.

Thanks to Asan’s strategy, Korea became the second country in Asia to export cars and the world’s 16th country to produce its own brand of vehicles. His ambition grew, and this helped Hyundai Motor export cars not only to the United States but also Canada and Europe.

The man did not stop with construction and automobiles. In March 1970, Asan pursued the idea of opening up a shipbuilding company. Because Korea was short on foreign currency at the time, he traveled overseas to secure finances.

In the United Kingdom, a banker asked Asan to show his past orders. In Greece, he won an order to build two 2.6 million-ton vessels from Sun Enterprise. During a meeting with the company’s chairman, George S. Livanos, all he had to show him was a piece of Korean currency with a picture of Geobukseon, a turtle-shaped warship used by Adm. Lee Sun-shin to fight the Japanese Navy in 1593, and a picture of Mipo Port in Ulsan. It has been referred to as a miracle.

The shipbuilding company, Hyundai Heavy Industries, was founded in March 1972, and the Ulsan plant was built in June 1974. Although it started off small, Hyundai Heavy Industries soon became the world’s No. 1 shipbuilder.

Asan’s strong determination and can-do spirit is reflected in the $944.6 million construction project he won in 1978 to build the Jubail Commercial Port in Saudi Arabia. This project has been dubbed the biggest construction project of the 20th century and was worth half of Korea’s budget size.

Because the company could only make profit by cutting back on the time it took to build the port, Asan ordered all of the equipment needed for construction be made at the Ulsan plant and then shipped them to Saudi Arabia on a barge. A single trip took 35 days, and 19 trips were made.

In 1981, Asan became the first businessman in Korea to head the Olympic committee that would eventually win the bid to host the 1988 Summer Games in Seoul. While Japanese rivals sent high-end watches to the International Olympic Committee ahead of the vote, Chung took a more sentimental approach and sent a basket filled with flowers.

Even after Seoul won the rights to host the Olympics, Asan continued to give his full support to successfully host the Games.

Asan also displayed leadership at the Federation of Korean Industries, the lobbying group of the country’s largest conglomerates, leading the organization for 10 years from 1977 to 1988. He served five terms in a row.

He also worked on social welfare projects and funded scholarships, research and hospitals.

In 1992, Asan ran for president. He eventually came in third place after Kim Young-sam and Kim Dae-jung, but that didn’t discourage him from continuing in public service. Asan surprised the world on June 16, 1998, when he sent 500 cows he was raising at his farm in Seosan, South Chungcheong, to North Korea.

Asan strongly believed that helping North Korea develop was the way to speed up unification, and he sent another 501 cows four months later. He met with North Korean leader Kim Jong-il and won exclusive rights to operate a tourism business in Mount Kumgang.

The business titan passed away on March 21, 2001, and was buried in Hanam, Gyeonggi. He has been praised as one of the key players in helping realize Korea’s industrial modernization.

Asan had eight sons and a daughter. The eldest, Chung Mong-pil, who was born in 1936 and died in 1982, bought the state-owned company Incheon Steel and turned its deficits around. He tragically died in a car crash.

Mong-pil, who was married to Lee Yang-ja, had two daughters. The eldest Eun-hee, is married to Chu-hyun, the CEO of Hyundai IHL. The youngest daughter Yoo-hee is married to Kim Ji-yong, currently the vice president of Tae-A Industrial. Ji-yong is the eldest son of Kim Suk-won, the honorary chairman of Ssangyong Cement Industrial.

Mong-koo is the second-oldest son of Asan and is currently chairman of Hyundai Motor Group. Before, he served as president of Hyundai Precision Industry, which became today’s Hyundai Mobis, and then became chairman of Hyundai Group.

However, after a feud with his younger brother Mong-hun over succession of the conglomerate in 2000, Mong-koo took over the automotive affiliate Hyundai Motor and spun it off into Hyundai Motor Group.

After his older brother Mong-pil passed away, Mong-koo acted as the family’s eldest. His wife Lee Jeong-hwa has prepared the family’s breakfast at 3 a.m. in the morning while attending to Mong-koo’s mother for the past 19 years.

Mong-koo has four children: a son and three daughters. His eldest, Sung-yi, is an adviser at the ad agency Innocean and is married to Sun Doo-hoon, president of Sun Medical Center in Daejeon. He is the son of Sun Ho-young, the founder of Young Hoon Medical Group, of which Sun Medical Center is a part.

Mong-koo’s second-eldest daughter Myeong-yi is an adviser at Hyundai Commercial and married to Chung Tae-young. He is the son of Jongro Hagwon founder Chung Kyung-jin.

The youngest daughter Yoon-yi is managing director of Haevichi Hotel & Resort and is married to Shin Sung-jae, a former Hyundai Hysco CEO.

Mong-koo’s only son Eui-sun is vice chairman of Hyundai Motor Group. He is married to Chung Ji-sun, the daughter of Sampyo Group Chairman Chung Do-won. Both his father Mong-koo and father-in-law Do-won graduated from the same high school and were known to have had long relationship.

Eui-sun, the heir to Hyundai Motor Group, is known to be rational and well mannered. The father-son duo’s support of the nation’s archery team was considered a strong contributing factor to the Korea’s gold medals during the 2016 Summer Olympics held in Rio de Janeiro.

Asan’s third-oldest son Mong-keun is honorary chairman of Hyundai Department Store and has two sons, Ji-sun and Kyo-sun, from his marriage to Woo Kyung-sook.

The older Ji-sun is married to Hwan Seo-lim, the granddaughter of former Justice Minister Hwang San-duck, while the younger son Kyo-sun, who is vice chairman of Hyundai Department Store and also CEO of Hyundai Home Shopping, is married to Hur Seung-won, the granddaughter of Hur Jai-chul, chairman of Daewon Kang Up.

BY KIM DUCK-HYUNG [lee.hojeong@joongang.co.kr]

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