Monday, September 11, 2006

The Dynamics of the Korean Family Management Model and Hyosung

A striking characteristic of Korean big business is the family management model. In-fighting for control among family members is often an issue. Hyosung is one of the few conglomerates in Korea without reports of feuds over management rights among family members.

This Korea Times points out the dynamics of family ownership and management...

Following Hyosung Corp.'s multi-billion dollar contract with Goodyear Tire and Rubber Company, the sons of the Korean conglomerate chairman Cho Suck-rai are emerging into the limelight for this achievement.

Of the three sons _ the eldest Hyun-jun, the second Hyun-moon and the youngest Hyun-sang _ it is the youngest, the senior vice president of Hyosung, who has recently hogged the spotlight.

Under the accord between the world's third-largest tire company Goodyear and the world's biggest tire cord maker Hyosung, the Korean conglomerate is to supply tire cords worth $3.2 billion to Goodyear for about 10 years. Tire cord is made out of polyester, nylon and other industrial fibers and is placed inside tires for reinforcement.

This is, by far, the biggest contract ever signed by Hyosung, according to the group officials.

As part of the deal, Hyosung will take over Goodyear's $80-million tire cord plants operating in Alabama, New York, Brazil and Luxembourg.

This is a balanced effort made by all three of them,'' a spokeswoman of Hyosung Group told The Korea Times. Although the senior vice president, Cho Hyun-sang, led the way in concluding this deal, he was given tremendous support and advice from his father, brothers and teammates.

With the latest development, Hyosung becomes the global No.1 in tire cord manufacturing, with a market share of 30 percent, while yearly sales are expected to be worth about one trillion won.

Although Cho Hyun-sang may be the talk of the town in the business community and media nowadays; his brothers have also made notable contributions to the company, the spokeswoman added.

Hyun-sang's older brother and second son of the chairman_ Hyun-moon _ who is the executive vice president, was the leader in sealing an agreement with Michelin, the world's largest tire manufacturer, last year.

This deal allows Hyosung to provide $650 million worth of steel cords _ another tire reinforcement product _ to Michelin by 2015 and operate the French tire maker's steel cord plant in the U.S. state of Indiana.

He was also behind acquiring China's Nantong Youbang Transformer earlier this year to expand Hyosung in the electric power system sector.

Meanwhile, the eldest son Hyun-jun, the senior executive vice president of Hyosung, has focused on ways to improve human resources and management systems.

He joined the company in 1997 to help his father rationalize the company, and since then, he has been providing expertise in upgrading and modernizing management and human resources to a global standard, said the spokeswoman.

Hyun-jun took the top seat of Hyosung's trading business in 2005. Since then, Hyosung's trading performance rose 50 percent to 1.5 trillion won last year from 2003.

The three brothers have always been taught to respect the elders and hierarchy under the strict guidelines of their grandfather and Hyosung's founder Cho Hong-jai.

This is clearly shown in their shares of the company in which the eldest owns 7 percent in Hyosung, followed by Hyun-moon's 6.62 percent and Hyun-sang's 6.61 percent.

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