International -- Intl' Business: South Korea
`BIG CHUNG' IS BACK IN THE SADDLE (int'l edition)
For South Korea, it was one of the most bitter dogfights of the decade. Chung Ju-Yung, founder and honorary chairman of the Hyundai group, dared to make a bid for the Korean presidency in 1991, challenging favorite Kim Young Sam. After Kim triumphed at the ballot box, he launched a campaign of retribution against Chung and Hyundai. Chung was forced to retire from day-to-day management after being convicted of improperly using company funds for his campaign. And Hyundai was denied financing from government-backed banks.
Now, Chung is back, with potentially big implications not only for the $60 billion Hyundai group but for relations between South and North Korea. What allowed the reemergence of "Big Chung" was Kim's Aug. 17 decision to pardon him on the campaign charges. Two days later, Chung paid a highly symbolic visit to the Blue House, the presidential office, that included a 23-minute courtesy call on his old rival.
Chung walked out looking as cheerful and as radiant as possible for the tough-as-nails 82-year-old. Reflecting the sensitive nature of the reconciliation, he declined to comment. All Kim would say is that he asked Chung to "concentrate on business and work together for economic development."
The immediate effect is that Hyundai companies are now cleared to rev up their overseas investments and participate in more government-backed projects at home. Several privately held units are expected to raise equity through share offerings, which will be available to international investors.
The reason Hyundai companies are hungry for capital is that Kim withdrew all government support, including hundreds of millions of dollars in subsidized loans that government-owned Korea Development Bank grants to Korea's major industrial companies. For nearly three years, the government barred Hyundai Heavy Industries Co., the world's largest shipbuilder, from going public. Both Hyundai Electronics Industries Co. and Hyundai Motor Co. were forced to slow the pace of their investments. Now, however, the electronics unit shouldn't face any difficulties in setting up an estimated $1 billion semiconductor facility in Oregon, and the auto unit will proceed with plans to build plants in Indonesia, Vietnam, and Malaysia.
FAMILY AFFAIR. Hyundai sources say Chung won't take part in daily management, which he left to his youngest brother, Chung Se-Yung. All major Hyundai units are run by five of his sons, who are likely to eventually take full control of the companies they run.
But Big Chung is expected to resume a higher profile on another front. "He may use his time to build business in North Korea," says Chung Mong-Joon, his sixth son and a member of the Korean National Assembly. Because of the government sanctions, Hyundai hasn't been able to explore business opportunities in the North. But top execs of the Samsung and Daewoo groups were allowed to travel to North Korea and begin negotiations on possible projects. Daewoo's trading company has already sent a group of engineers to run textile, handbag, and footwear plants in Nanpo. That's particularly bitter for Chung because he was the first Korean businessman to visit the North.
Chung's grand ambition has been to build a tourist resort in the North's Diamond Mountains, near his birthplace, Asan. So his comeback may do more than help Hyundai regain its dominance in the Korean economy: It could breathe new life into prickly North-South economic relations.By Laxmi Nakarmi in Seoul