It's promotion season in Korea — and nepo babies are taking charge

Home > Business > Industry

It's promotion season in Korea — and nepo babies are taking charge

Published: 26 Nov. 2024, 18:54 Updated: 26 Nov. 2024, 19:36

Audio report: written by reporters, read by AI

From top left are GS Group's Hur Suh-hong, Samyang Group's Kim Gun-ho, HD Hyundai Group's Chung Ki-sun, LS Group's Koo Dong-hwi, LX Group's Koo Hyung-mo and Lotte Group's Shin Yoo-yeol

With 2024 ending, it's executive shake-up season — which typically includes promotions for members of Korea's chaebol (family-run conglomerates).

Young Korean conglomerate heirs have been taking top management roles and making aggressive investments in their strategic divisions, a management move that is common among those of their status as they secure succession. Their relatively young demographic — many are in the 30s and 40s — indicates an accelerated generational shift in leadership with the potential to benefit companies with quick decision-making and global expertise as well as eliminate family feuds over management.

Hur Suh-hong, a 47-year-old fourth-generation descendant of late GS Group founder Huh Man-jung, will be promoted from his current position as GS Retail's head of corporate strategy, investment and finance to the division’s CEO and president on Wednesday, industry insiders said Monday. Current Vice Chairman, CEO and third-generation heir Huh Yeon-soo will retire.

The younger Hur is the eldest son of Samyang International Chairman Hur Kwang-soo and a distant nephew of GS Group Chairman Huh Tae-soo. He entered the group in 2006 as an employee of GS Shop, the home shopping subsidiary under GS Retail. In 2019, he began working in strategy and new enterprise, first as head of GS Energy’s administrative support division and then as the leader of GS Holdings’ future business team.

Hur’s promotion opens a new stage of fourth-generation leadership for GS Retail and projects a wider trend of accelerated generational change within the group's management. Other fourth-generation family members in GS Group’s top management include energy and chemical affiliate GS Caltex co-CEO Hur Sae-hong and GS Engineering & Construction (E&C) CEO Huh Yoon-hong.

Samyang Group, which celebrated its 100th anniversary this year, said Monday that fourth-generation heir Kim Gun-ho, 41, would head a new specialty chemicals division while continuing in his current post as Samyang Holdings' president of strategy. Kim is the eldest son of Samyang Holdings Chairman Kim Yoon. He was promoted to president of strategy last year and, with the upcoming position, will also be in charge of production. Samyang Group separated its chemicals business into two divisions — one in charge of traditional chemical materials and the other specialty chemicals — as part of its restructuring.

Third-generation heirs are also moving to the forefront. HD Hyundai Group Vice Chairman Chung Ki-sun, 42, grandson of late Hyundai Group founder Chung Ju-yung, was recently named senior vice chairman. The promotion comes only one year after his promotion to vice chairman, which has analysts thinking that his leadership succession is coming to an end. His father, Chung Mong-joon, who is the controlling shareholder of heavy industry conglomerate HD Hyundai and chairman of the Asan Foundation, is not involved in management.

LS Group said in its annual human resources (HR) announcement on Tuesday that LS Holdings Chairman Koo Ja-yeol’s eldest son and third-generation heir-apparent of the founding family, 42-year-old Koo Dong-hwi, would be promoted to LS MnM CEO. Koo Dong-hwi joined the group in 2013 and has since held positions at LS Electric, LS Holdings and E1. He became the chief operating officer and vice president of LS MnM last year and is currently pursuing an initial public offering for the battery material developer by 2027.

At LX Group, which split off from LG Group in 2021, 37-year-old LX MDI Chairman Koo Hyung-mo, the eldest son of Chairman Koo Bon-joon and eldest grandson of LG founder Koo In-hwoi, was recently promoted from vice president to president. LX MDI is LX Group’s business consulting division and where information on affiliates’ management is gathered. Industry insiders think the younger Koo’s position at LX MDI means he will exert more influence in the group’s management.

There is also speculation regarding whether Shin Yoo-yeol, the 38-year-old executive director of Lotte Corporation’s Future Growth Office and Lotte Chairman Shin Dong-bin’s eldest son, will be promoted as part of the company’s succession plan in Lotte’s annual HR announcement that is expected Thursday. Shin Yoo-yeol was promoted to senior vice president of Lotte Corporation last year and serves in that position as well as head of Lotte Biologics’ global strategy division.

Industry insiders say the young heirs’ quick and aggressive decision-making is necessary in the current economy, wherein key industries are faltering in the face of slow growth. This is also a major reason why the chaebol successors are believed to be taking top management roles at younger ages, as most of the third and fourth generation heirs have experience working in hot sectors such as AI, robotics, advanced materials and food tech.

“Any decisions for large-scale investments or new business launches eventually have to be approved by the owning family; the young owners, who have a lot of global connections through their time studying abroad or through their business lessons, have a better understanding of, and adapt quickly to, new industries,” said an industry insider who requested anonymity.

Some companies also have responsible management at front of mind as the Korean government pushes its Corporate Value-up Program, which aims to incentivize improved corporate governance.

GS E&C Chairman Huh Chang-soo’s eldest son, 45-year-old Huh Yoon-hong, took over as CEO of the company last year while retaining his role of president. It was a break from GS E&C’s decade-long professional leadership from outside of the family.

Insiders in the construction industry say that “fourth-generation president Huh appeared like a savior to restore public trust after the parking lot of Incheon’s Geomdan apartment collapsed.” GS E&C had admitted and apologized for its failure to install essential rebars in the underground parking lot’s upper floor that collapsed last April.

Succession problems are another reason cited for their quick promotions. All conglomerates have been facing their own succession issues following two generations of leadership change. Most chaebol adhere to a principle of succession that favors the eldest son. A majority of those firms share the same concern of securing finances to pay inheritance taxes as heirs are passed down shares, which could amount to up to 60 percent of the inherited fortune. In family-run groups, where siblings and cousins take their turn in management roles, an increased number of descendants means a higher possibility of power-grabbing issues that create outside noise. Pinpointing a standout successor from the start establishes their management position and prevents issues of competition.

“In the case that management succession goes well, the company can benefit from [an executive] that has a good understanding of the business, makes quick decisions and aggressive investments,” said Lee Yoon-soo, an economics professor at Sogang University.

“However, it is necessary to have a serious conversation on what kind of governance or succession model is needed, and if professionals would be necessary, for the sustainable growth of a company, rather than an obsessive fixation on family members succeeding.”

BY CHOI HYUN-JU, PARK HAE-LEE [[email protected]]