Chung Ju-yung 1915–2001
Founder and former chairman of the Hyundai Group
Born: November 25, 1915, in Asan-ri, North Korea.
Died: March 21, 2001.
Family: Son of Chung Bong-sik and Han Seong-sil; married Byun Joong-seok; children: nine.
Career: 1931–1934, construction laborer; Bokheung Rice Store, 1934–1935, clerk; Kyongil Grain Company, 1936–1939, founder and manager; A-do Service, 1939–1943, founder and manager; Hyundai Motor Industrial Company, 1946–1987, founder and chairman; Hyundai Civil Industries, 1947–1987, founder and chairman.
Awards: Commander of the British Empire, Queen Elizabeth II, 1977; honorary degree, George Washington University, 1982; Olympic Medallion, International Olympic Committee, 1992; Grand Prize, Korea Academy of Business Historians, 1999; listed as one of the 10 greatest persons in Asia in the twentieth century, Far Eastern Economic Review, 1999.
Publications: Born in This Land, 1992.
■ Born of a peasant family in what is now North Korea during the period when the country was a Japanese colony, Chung Ju-yung showed an early inclination for entrepreneurship. After surviving the Korean War of 1950–1953, he set up two fledgling companies, one dealing in auto repairs and the other in construction. These companies formed the core of a vast industrial empire that became the Hyundai Group, one of South Korea's major chaebol, or family-owned business conglomerates. As much a nation-builder as an industrialist, Chung believed that businessmen should serve a larger purpose than the narrow mandate of profit; they were, in his view, also responsible for helping develop the strength of a nation and its people. He gave back to his society by setting up the Asan Foundation, whose philanthropic activities ranged from medical support and social welfare programs to research, development, and scholarship funds. Chung was also active politically, working tirelessly at the end of his life to promote economic development and cultural relations between the two sides of his divided country.
Chung Ju-yung was the first son of a large impoverished peasant family in Asan-ri, a village in what became North Korea after the Korean War ended in 1953. He came of age during the Japanese colonial occupation of Korea, which began in 1910 and lasted until the Allies defeated the Axis powers in 1945. Chung's early education was meager. He attended a primary school in Songjon and learned Chinese literature from his grandfather. His formal education ended when his parents withdrew him from school because they needed his wages to help support the family. Rather than submit to the likelihood of a lifetime of poverty, Chung twice tried to leave his village in search of better prospects in the large city of Seoul. In his first attempt to leave home when he was 16, he financed his journey by selling the family's only cow for a small fee. Chung finally succeeded in leaving his village for good in 1931 at the age of 18, when he found work as a laborer at several construction sites. Chung's construction assignments included Inchon harbor, a professional school in Boseong, and a taffy plant in Poongjeon.
After several years of construction work, Chung obtained a position as a clerk at the Bokheung Rice Store in Gyeonseong, a neighborhood in Seoul. Determined to go into business for himself, he established the Kyongil Grain Company, only to have to close it in 1939 when rice rationing was implemented by the Japanese authorities. The 24-year-old entrepreneur then turned to repairing cars via the A-Do Service, a company that he owned jointly with a Japanese partner. That venture lasted four years but was folded into its Japanese parent company in 1943.
Blessed with natural intelligence and a desire to learn, Chung picked up his education informally by reading business documents and the lectures of better-educated associates late at night. More importantly, he hired educated men who could fill in the gaps in his own schooling.
A DETERMINED EMPIRE-BUILDER
Aware of the business opportunities made possible by the end of World War II and the ousting of the Japanese from Korea, Chung founded two companies in rapid succession after the country's liberation in 1945—the Hyundai Motor Industrial Company in 1946 and Hyundai Civil Industries in 1947. With the former focused on auto manufacturing and servicing and the latter on heavy construction, Chung's business ventures were at the center of Korea's massive postwar drive for reconstruction and industrialization.
Hyundai Civil Industries was responsible for building much of South Korea's transportation infrastructure from the 1950s through the 1970s. It was considered the top company in its industry. Chung won major government contracts, including the Soyang River multipurpose dam in 1967, the Gyeongbu Expressway and a nuclear power plant in 1970, and the Ulsan shipbuilding yard in 1973, among many others. Through the efforts of his younger brother In-yung, who could speak English and was on friendly terms with U.S. Army engineers, Chung won contracts from the American military to build facilities for their personnel.
Hyundai also won major projects overseas. In 1965 Hyundai won the bid to build the Thailand Expressway. In the 1970s the company was granted a major contract in the Middle East. It successfully completed the Jubail industrial port in Saudi Arabia, at that time the largest construction project of the 20th century.
Chung continued to expand his empire into industrial chemicals and shipbuilding, turning Hyundai into one of South Korea's major chaebol. With no experience in shipbuilding, he created the Ulsan shipyard, the largest shipyard in the world. What made this project remarkable was that he set about to build both shipyard and vessel simultaneously, reasoning that the two tasks need not be completed sequentially. With orders from an Italian company, Hyundai delivered its first vessel within three years rather than the expected five.
As South Korea continued to industrialize at breakneck speed, Chung dreamed of building a car using only Korean technology and expertise. Setting his automotive company to that task, he introduced the Hyundai Pony Excel in 1986 amid a burst of national pride. Chung continued to explore new technologies during the 1980s and 1990s, incorporating semiconductors and magnetic levitation train technology into Hyundai's automobiles.
SUCCESS AT A PRICE
The relentless pace of building the Hyundai empire, often with limited or no previous experience, came at a heavy cost in terms of human lives as well as finances. The Gogryong Bridge construction project in 1953 nearly bankrupted Hyundai. The Jubail project also suffered from the company's lack of experience. The concrete Soyang River dam encountered several significant problems during its construction and drew much criticism of Chung.
Working conditions in Chung's factories were hazardous and led to visible conflicts with workers. Chung, however, never forfeited a project. Although his determination led to an impressive roster of achievements, Korean factories and plants became known as some of the most dangerous in the industrialized world. It was not until the 2000s that the company guaranteed the safety of its employees. Sensitive to criticism, Chung's successors at Hyundai were quick to document the annual increases in corporate funds dedicated to worker welfare throughout the late 1990s and 2000s.
A SECOND CAREER IN POLITICS
Chung resigned as active chairman of the Hyundai Group in 1987, although he remained its honorary chairman. To everyone's surprise, however, he announced that he was beginning a new career in politics. Chung maintained that economic power was not sufficient to guarantee a nation's strength; it must have wise leadership as well. Ever the nation-builder, Chung declared that South Korea's long-term security and economic competitiveness required unification with Communist North Korea. He thus made the initiation and expansion of economic relations between the two Koreas his short-term project, with national unification as the ultimate goal. Chung's Unification People's Party campaigned under the slogans "Importance of Economy" and "Unified Economy." The Party won 31 seats in the 1992 Korean presidential election, but Chung failed to win the presidency.
Chung retired from political activity after 1992 but decided to work toward his goal through an altogether different channel, namely tourism. The Mount Kumgang Tourism Project and related activities developed tourist facilities around scenic Mount Kumgang in North Korea near the South Korean border. Opened in 1998, the project permitted hundreds of thousands of people to cross the heavily guarded border (the DMZ or demilitarized zone) and visit the site.
Chung also continued his attempts to develop economic relations between the two Koreas. In 1998, at the age of 84, he worked with the government of Kim Dae-jung to stage an economic development summit between North and South Korea, an episode that unfortunately became tainted with scandal. President Kim had determined that relations with the Communist North were best stabilized by offering economic assistance and wanted to provide a $100 million donation as a way to jump-start economic development in North Korea. The problem was that Kim could not find a legal way to transfer the funds. Instead, he turned to his friend Chung, who was himself negotiating a $350 million contract to develop businesses in the North. Kim persuaded Chung to increase his investment by $100 million with money from secret loans provided by the government-controlled Korea Development Bank. The historic South-North summit took place, with Chung traveling across the border in a motorcade of cars containing some 500 "unification cows"—a gift to the North Korean people. But Chung's reputation suffered a severe blow when it was learned that state funds had helped facilitate the event.
Chung also turned to sports to reduce tensions by creating the Unification Basketball Contest, which was held alternately in Seoul and Pyongyang, the respective capitals of South and North Korea. By the mid-2000s, the two sides were holding regular talks on a multitude of issues aimed at reducing tensions in the Korean peninsula. Railway lines and other infrastructure projects linking the divided nation were reestablished. Agreements on various issues ranging from communications facilities to fishing rights were also achieved.
Chung's management style largely depended on the observer's perspective. His admirers in the Korean business community revered him as a father figure. Westerners, on the other hand, saw Hyundai as a tightly controlled organization whose founder took worker complaints as personal offenses. Chung described himself as an older brother or father, but recurrent conflicts between labor and management characterized his tenure at Hyundai. Although Chung took pains to minimize the impact of these conflicts, he nevertheless came to concede the need to address worker issues.
Chung had an abiding faith in the intelligence and diligence of his workers, holding that Korean human resources are second to none. His attitude was that of samgo choyeo, or inviting talented people to do their work patiently before granting them authority and responsibility. Chung's approach was reflected in the core values still held by Hyundai in the early 2000s—diligence, frugality, and love—and implemented by a management policy based on trust. Although Chung was a hard taskmaster, he did not hold himself aloof from his employees. A former laborer himself, Chung enjoyed engaging his men in bouts of Korean-style wrestling and volleyball. He also regularly attended training sessions for new employees.
Chung Ju-yung was widely recognized as one of South Korea's nation-builders. In 1977, he was unanimously elected chairman of the Korea Federation of Industries by his peers. He held that post for a full decade. In 1999 the Korea Academy of Business Historians awarded him its grand prize for establishing businesses. In the 1980s his influence helped reshape the South Korean economy from one dominated by government projects and requirements to a civilian-controlled economy, thus spurring the growth engine that has given South Korea the nickname "Miracle of the Han." The name refers to the Han River, which bisects Seoul from east to west.
Whereas many Korean businessmen of Chung's generation were focused almost exclusively on industrial development and expanding the assets of their chaebol as well as corporate profits, Chung early understood the importance of giving back to the wider community. In 1977 he founded the Asan Foundation, named for the village of his birth. Chung intended to make the scope of its activities comparable to those of the Ford or Rockefeller Foundations.
The Asan Foundation was organized into four major areas of service: medical support, social welfare, research and development, and a scholarship fund. Through its efforts, the Foundation established nine hospitals throughout South Korea, built Ulsan Medical College, and funded the Asan Life Sciences Research Institute. The Foundation also initiated cooperative arrangements between industry and academic institutions by supporting such academic research as the Sinyoung Research Fund.
In terms of sports, Chung lobbied relentlessly over a five-month period for South Korea to host the 1988 Summer Olympics. His success in bringing the Olympics to Korea highlighted the accomplishments of his generation in the eyes of the world and became a source of great pride to the people of Seoul. In 1992 the International Olympic Committee awarded Chung an IOC Medallion for his contributions to sports as a vehicle of international understanding.
Chung fell ill with pneumonia in the first week of March 2001 at the age of 85. He was admitted to the hospital but his condition quickly worsened. He died in his sleep on March 21, 2001. After his death the Hyundai Group was broken up into several smaller companies—the Hyundai Motor Group, Hyundai Heavy Industries, and Hyundai Engineering and Construction.
See also entry on Hyundai Group in International Directory of Company Histories.
sources for further information
Breen, Michael, The Koreans, London: Orion Business Books, 1998.
"Hyundai Founder, Asan Chung Ju-yung: A Giant Who Solidified the Foundation of Korean Economy and South-North Exchange," http://www.asanmuseum.com//english/page/content.asp?main_id=70&sub1_id=10&sub2_id=5&sub3_id=0&sub4_id=0.
Ward, Andrew, "Lunch with the FT: Kim Dae-jung," Financial Times, June 18, 2004.
—Carole S. Moussalli
"Chung Ju-yung 1915–2001." International Directory of Business Biographies. . Encyclopedia.com. (September 23, 2017). http://www.encyclopedia.com/economics/news-wires-white-papers-and-books/chung-ju-yung-1915-2001
"Chung Ju-yung 1915–2001." International Directory of Business Biographies. . Retrieved September 23, 2017 from Encyclopedia.com: http://www.encyclopedia.com/economics/news-wires-white-papers-and-books/chung-ju-yung-1915-2001
Chung Ju Yung
Chung Ju Yung
Chung Ju Yung (1915-2001) founded Korea's Hyundai Group, which remained his country's most powerful chaebol, or family-run conglomerate, for years. Chung's assemblage of corporate entities, which he was said to run by relying heavily upon his famous iron will, included the automaker Hyundai as well as large construction, shipbuilding, and electronics concerns. In his later years, Chung entertained political ambitions and ran for president of South Korea.
Stole Family Cow
Chung Ju Yung was born on November 25, 1915, in Tongchon, located in the northern section of Korea, then annexed to Japan. At the time of Chung's birth, Korea had been under harsh Japanese colonial rule for five years; the northern regions would eventually fall under communist domination as North Korea in 1948. Chung was the oldest in a family of eight that eked out a living on the land, and he was forced to abandon his education after grade school in order to work to help support his family. He attempted to run away on two occasions, and after stints on a railway construction site and as a dock worker, he secretly sold the family cow and fled from home with the money. After walking to Seoul, one of Korea's larger cities, Chung found a job working at a rice shop as a bicycle delivery person. He eventually bought the business, on credit, but harsh Japanese military rule made owning businesses difficult for Koreans. A small truck and repair garage he established in 1940 languished under the same harsh economic restrictions.
By the end of World War II and the ouster of the Japanese, Chung had begun a family with his wife, Byun Joong Suk, whom he had married at the age of 15 in 1930. Several of his brothers had by now also followed him from Tongchon to Seoul. At the war's close Japan had been vanquished by Allied forces, and Korea prepared for political and economic independence. With a major reconstruction effort underway, Chung moved from automobile-servicing to the construction industry and won several lucrative early contracts from the U.S.-run military government in the southern half of the country. His company's growth was again affected by the outbreak of war as northern and southern Korea battled alongside their respective controlling superpowers between 1950 and 1953. Following the war Chung's Hyundai Engineering and Construction thrived.
Company Expanded Alongside Country
Like those of other large chaebols, the fortunes of Chung's Hyundai group were boosted due to ties with South Korea's political elite. A military junta came to power in 1961 under Park Chung Hee, and the following year Chung's company won the Ssoyangang Dam project; it also built the Kyongbu (Seoul-Pusan) Expressway, South Korea's first major highway, which was completed in 1970. Park was determined to industrialize South Korea in order to free it from dependence on foreign aid, and Chung's business interests continued to expand along with this government policy. In the late 1960s he built an automobile manufacturing plant in Ulsan, on the country's southeastern coast. Initially it built two Ford Motor Company models for the South Korean domestic market, but in 1974 unveiled the first true Hyundai, the Pony. Chung's younger brother, Chung Se Yung, was put in charge of the auto group.
Chung kept expanding his Hyundai chaebol to include 86 companies at its largest. He was known to be a strong-willed business foe, constantly striving to stay ahead of other top Korean chaebols like Samsung and Daewoo. In 1971 Chung met with bankers from London's esteemed Barclays house in the hopes of gaining financing to begin a shipbuilding firm. To quell the bank's doubts, he showed them a 500-won bank note with an illustration of the world's first ironclad ship, built in Korea in 1592. As with all of Chung's other ventures, Hyundai Heavy Industries thrived and within 30 years had become the largest builder of merchant ships in the world. In the early 1980s, worried about the dominance of Samsung in the electronics market, Chung launched Hyundai Electronics, which soon flourished as a maker of semiconductor chips for computers. The tycoon's formidable business skills landed him a post as head of South Korea's Olympic Bidding Committee, and he was instrumental in drafting South Korea's winning proposal to host the 1988 Summer Games. The international sporting event was a turning point in the small, overcrowded nation's image.
A Demanding Boss and Parent
Daily breakfast meetings with his sons, who became top executives, took place at 5:30 a.m., but Chung was oftentimes awake hours before. The Hyundai chief "managed his sprawling industrial empire with an iron hand that befitted a Confucian patriarch," explained Financial Times writer John Burton. "He was said to hurl ashtrays and to slap managers who displeased him." Both Hyundai's automobile manufacturing and shipbuilding concerns were based in Ulsan, and it eventually became known informally as "Hyundai City." In time, South Korea itself would even be dubbed the "Republic of Hyundai" by critics observing the dominance of Chung's brand in all sectors of the Korean economy. The Hyundai name seemed to be everywhere in South Korea. It built trains, bridges, ships, and a plethora of consumer goods besides cars. Chung's close ties with the ruling governments, which were military in character until 1992, helped him battle labor-union movements, especially one at the Ulsan shipyard in the 1980s that dragged on for five years. At the time, South Koreans worked six-day weeks, with little vacation time, and earned some of the lowest wages in the industrialized world. Government riot police finally stepped in to quell the unrest at Ulsan in 1987, but a pro-democracy movement had taken hold countrywide, and the military juntas under Park and his successors were now considered illegitimate holders of power.
Despite his success in South Korea, Chung was interested in expanding his company beyond his country's borders. In the 1970s Hyundai Engineering and Construction bid for and won lucrative contracts for projects in the Middle East, including the construction of a vast oil terminal port facility. In 1985 Hyundai Motors produced its first cars for the American market and within a few years had made South Korea one of just a handful of export nations to hold a share of the U.S. automobile market. Yet Chung was eyeing a market closer to home: the heavily armed, isolated, and repressive socialist state of North Korea, where he still had family. Since the end of the Korean War in 1953, relations between the two Koreas were frosty at best; North Korea spent heavily on defense, and at one time boasted the fifth largest armed forces in the world; South Korea, meanwhile, was home to several thousand U.S. troops stationed at bases and alongside South Korean forces at the tense demilitarized zone (DMZ) that divided the two nations. North Korea maintained that South Koreans harbored a secret desire to be "liberated," while keeping its own citizens in a constant state of high alert by warning them that the U.S. and South Korea were planning to invade.
Returned Home with Cow
In 1989 Chung made a highly publicized visit to North Korea and announced that he would fund a tourism project in the Keumkang Mountains of his home province. He hoped to create a special coastal tourism zone in the east, near the DMZ, as a place where long-separated family members could reunite briefly. The plan fell through, however, and at times Chung, now in his 70s, began to voice criticism over his government's policies toward North Korea. In 1992 he announced he would be giving up several company posts in order to run for president. He launched his United People's Party (UUP) in February of 1992, but was bested by Kim Young Sam, President Roh Tae Woo's chosen successor. Chung won just 16 percent of the vote, but the UPP took 30 seats in the National Assembly. Kim became the first civilian president of the nation since the Korean War, and along with the new mood of democracy— and an impressive hike in the South Korean standard of living—came calls to dismantle the power of the chaebols.
Chung's political ambitions brought trouble for Hyundai. He was investigated and found guilty of diverting some $81 million in company funds to finance his campaign; his three-year sentence was suspended due to age, but several Hyundai officials were jailed and the state rescinded its policy of making favorable loans to the company. The government also began auditing Hyundai and Chung-family tax returns. Chung was still an ardent supporter of reconciliatory policies with the North and in 1998, following reports of widespread starvation in North Korea, he became the first civilian to cross the DMZ since the end of the Korean War. Prior to this moment, all travel between the two countries had to go through a third country, usually the Soviet Union or China. Chung, now 75 years old, walked the last part of the trip on foot. He brought with him 500 head of cattle from his own nearby farm as a gift to Tongchon, remarking that it was a gesture of reparation for taking his father's cow back in 1933. His visit was a major news event in South Korea; "Television networks interrupted their regular broadcasts with live footage of the trucks rumbling through the streets of Seoul on their way north," reported Time International correspondent Stella Kim. "Early Tuesday, the convoy stopped just short of the border, where more than 1 million heavily armed troops face off in a tense armistice… . A Buddhist priest in gray robes walked along the row of trucks, banging on a wooden block and praying that the animals would "survive until reunification.' "
Sons Warred with One Another
Chung met with North Korean leader Kim Jong Il, and within two years a North-South summit had taken place; this time Hyundai agreed to a $942 million investment plan in the north. Yet Chung faced more pressing concerns back in Seoul: a power struggle had erupted between his two oldest sons, with one enlisting the help of a South Korean government determined to break up the powerful chaebols. Chung had fathered nine children in all, but only five were likely born to his wife; the others were registered as part of his family anyway. There were two tragedies: the eldest, Chung Mong Pil, died in a car accident in 1982 and another, Chung Mong Woo, committed suicide in 1990. Mong Pil would have inherited control of the Hyundai empire at some point—the traditional chaebol practice—and the second eldest son, Chung Mong Koo, was thought to be next in line to succeed the father.
As the eldest living son, Chung Mong Koo was made chief of Hyundai Motors in 1998 and Chung gave his third son, Chung Mong Hun, the more lucrative construction and chip businesses. This launched an intense rivalry some say was fueled by the Chung sons' lack of allegiance to their family unit due to long-simmering resentment over legitimacy issues. Soon the infighting at the upper levels of the Hyundai Group reached an unparalleled level of acrimony, as Chung's health grew more frail and family members attempted to acquire control over parts of the business empire via stock deals. In 1999 Hyundai's combined sales stood at $80 billion, making Chung's empire the largest of the five main chaebols in South Korea during the last genuine year of their existence. Chung by then had been ordered to spin off some of the Hyundai businesses by the South Korean government, but the obstinate tycoon refused until debtors forced his hand in May of 2000.
Though he was said to be worth $6.2 billion, Chung lived in a modest home built from leftover construction materials from his company. He walked the three-mile trek to his office in Seoul daily until his health began to falter. He was an ardent fan of the Internet and liked to sing karaoke. He died of pneumonia on March 21, 2001, in Seoul, South Korea. His son Chung Mong Joon served as organizer of South Korea's hosting of the World Cup soccer tournament in 2002. After his death, the elder tycoon continued to generate respect; noted Guardian obituary writer Aidan Foster-Carter, Chung "personified his country's ascent from poverty to global success."
Automotive News, July 10, 2000.
Daily Telegraph (London, England), March 22, 2001.
Economist, November 23, 1991; January 11, 1992; June 13, 1992; December 12, 1992; June 20, 1998; February 6, 1999.
Financial Times, July 1, 2000; November 8, 2000; January 29, 2002.
Forbes, December 19, 1983.
Fortune, February 10, 1992.
Guardian (London, England), March 28, 2001.
Independent (London, England), June 17, 1998.
International Herald Tribune, June 20, 1998; March 28, 2000;June 10, 2000; March 23, 2001.
Newsweek International, September 4, 2000.
New York Times, March 22, 2001.
Time International, June 29, 1998.
Times (London, England), March 22, 2001. □
"Chung Ju Yung." Encyclopedia of World Biography. . Encyclopedia.com. (September 23, 2017). http://www.encyclopedia.com/history/encyclopedias-almanacs-transcripts-and-maps/chung-ju-yung
"Chung Ju Yung." Encyclopedia of World Biography. . Retrieved September 23, 2017 from Encyclopedia.com: http://www.encyclopedia.com/history/encyclopedias-almanacs-transcripts-and-maps/chung-ju-yung