SEOUL, South Korea -- The founder of South Korea's largest conglomerate endorsed his fifth son as his successor Monday, ending a two-week-long feud for control of the Hyundai group.
Chung Ju-yung, 84, selected Mong-hun, 52, as head of Hyundai in a departure from the Korean tradition of favoring the oldest son as the successor to a family business.The decision was announced after two weeks of bickering between Mong-hun and his oldest brother, Mong-ku, 62, both of whom claimed to have been chosen as successor. The elder brother will head up the group's auto units, Hyundai Motors Co. and Kia Motors Co.
Analysts said the family feud was likely to speed the breakup of Hyundai, which has $70 billion in assets and had $75 billion in revenues last year. "The feud illustrates how important and urgent a task it is to reform an inefficient Korean business style," said Lee Woo-yong, an economics professor at Sogang University.
South Korea's family-owned businesses, or chaebol, had expanded recklessly for decades with cheap bank loans in collusion with past military-backed governments. A dozen of them went under in 1997 as Korea's economy was hit by a financial crisis and an economic slowdown.
Since taking office in early 1998, President Kim Dae-jung has pushed chaebol to adopt modern management methods, shed money-losing subsidiaries and trim their debt.
In a meeting of dozens of chief executives of group subsidiaries Monday, Chung Ju-yung announced that Mong-hun would take over the reins of the company immediately.
The row began when Mong-ku, then co-chairman of Hyundai, demoted Lee Ik-chi, a close confidant of his rival brother. The move was seen as his effort to gain control of the group.
Hyundai's internal dispute attracted much public attention in Korea and touched off fresh debate over what critics call an undemocratic management style at the chaebol groups.
"It reveals that a representative conglomerate of the country still remains under the control of one man, without setting in motion a modern management system," the Chosun Ilbo, the nation's largest daily newspaper, said in an editorial.
Hyundai currently has 33 subsidiaries producing ships, cars, computer chips and a host of other products. All of the subsidiaries are controlled by the Chung family.
Hyundai announced last year that by 2003, it will be broken into five mini-groups specializing in cars, electronics, heavy industries, construction and finance.
Industry officials said the conglomerate will now be split and owned 70 percent by the fifth son, 20 percent by the oldest son and 10 percent by other Chung offspring.
Major subsidiaries under the fifth son's domain will include Hyundai Electronics Co., Hyundai Engineering and Construction Co. and Hyundai Merchant and Marine Co.
The shipbuilding arm, Hyundai Heavy Industries, is controlled by Chung Ju-yung's sixth son, Mong-joon, a legislator and a vice president of FIFA, the world's soccer governing body.