[EDITORIALS]Arresting a business model

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[EDITORIALS]Arresting a business model

Chung Mong-koo, chairman of Hyundai Motor Group, has been arrested. Given the position he has in Hyundai Motor, his absence will have a significantly bad impact on the company. For that reason, we always believed it would be better not to arrest him, but prosecutors and the court put legal principles over economic interest.
What is worrisome right now is the big absence in Hyundai Motor’s management. Based on his strong leadership and drive, Mr. Chung turned the company into the second-largest business in the nation. The company’s auto guarantee, which provides a warranty for up to 10 years or 100,000 miles and which fueled the firm’s rapid growth in the United States, would have been impossible if it were not for him.
Now, with such a charismatic captain gone, Hyundai Motor is bound to be rattled. Not surprisingly, uncertainties and concern about the future are ubiquitous in the company, but it must hold on strong. Hyundai Motor does not belong to just one person ― it belongs to its tens of thousands of investors, employees and suppliers. It is time for them to unite and overcome the crisis.
But the story does not end at Hyundai Motors. Now, all companies in the nation will be forced to establish a more transparent corporate governance system. Slush funds and the illegal inheritance of management rights will have no place in Korea. We have seen a company relying on one-man leadership pushed to the brink of collapse when its head faced a critical situation. Such charismatic one-man leadership, to some degree, is vital for a company to make quick decisions and survive amid increasingly fierce global competition. But gone are the days when big companies such as Hyundai or Kia were based on a single owner. These days, a company cannot survive unless it is armed with a transparent and effective management system.
The business environment here and abroad is unpredictable and inpenetrable. Yet Korean companies face a double crisis, in which they have to renounce the conventional Korean way of business and discover a brand new management model. It is a stage we must go through in order to create a more mature society. But growing pains can seem unbearable. A social climate in which the public looks at local companies’ efforts to reinvent themselves with more generosity and patience may be necessary. If it is not us, who else is going to protect local companies exposed to global competition?
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