Ending the era of first-generation industrialists

`Modernization-generation retreats as digital-generation takes the stage.` The death of Hyundai Group founder Chung Ju-Yung was the last among the nation`s first-generation of corporate leaders, engineers of the `Miracle on the Han River` during the 1960s and 1970s. Now, the industrial world is entirely controlled by second-generation chief executive officers (CEOs) and in some cases third or fourth-generation corporate chiefs who were educated in Europe or the United States and have a different approach to business than their forebears. –-Ed.

The most prominent first-generation industrialists were Hyundai`s Chung Ju-Yung and Samsung Group`s Lee Byung-Chull. They built world-class corporate empires during the turmoil before and after the Korean War. With diligence and fortitude, they led Korea`s high-speed growth helped build the nation into an economic powerhouse. Of course, they also drew substantial criticism for their cozy ties with past governments and history of suppressing organized labor. Chung was the last of the founders of the nation`s four leading business groups -- Samsung, LG, Hyundai and SK. All were replaced by their sons.

The first-generation corporate founders built a firm basis for business in all industrial fields, including electronics, cars, chemicals, information technology, construction, heavy industries, aviation, trading, distribution and food processing. Samsung`s Lee Byung-Chull, LG`s Koo In-Hoi and SK`s Chey Jong-Hyun died many years ago. Shin Kyuk-Ho, chairman of Lotte Group and Cho Choong-Hun, chairman of Hanjin Group, are still active on the business front. The founders of Korea`s two leading chaebol, Samsung`s Lee and Hyundai`s Chung, were different in many ways. Chung focused on construction, cars and heavy industries, while Lee concentrated on textiles, consumer electronics, semiconductors and financing. LG`s Koo manufactured soap, toothpaste and other daily necessities as well as producing radios, electric fans, washing machines, refrigerators and TVs under the Gold Star imprint. SK`s Chey, who took over the group in 1973 from his elder brother and group founder Chey Jong-Kun, is regarded as a 1.5-generation founder. He focused on the petrochemical and information-communications fields. Meanwhile, Daewoo Group`s former chairman Kim Woo-Choong, whose watchword was global management, recklessly expanded the group, which is now being dismantled, and took refuge abroad.

The handing down of corporate ownership from first-generation founders to their sons is believed to be accelerating. Already, both LG and Kolon groups handed over management to the grandsons of their founders. Samsung and Hyundai-Kia are also expected to be taken over by third-generation managers. At Doosan and some other business groups, fourth-generation managers now being groomed for the top jobs. The system of hereditary succession among chaebol has drawn considerable criticism. Park Seung-Rok of the Korea Economic Research Institute said Hyundai`s Chung Ju-Yung and most other chaebol founders should be credited with lifting Korea out of poverty thanks to their unyielding entrepreneurial spirit. ``Building on their achievements is the task of current management. The status of the conglomerates in Korea`s corporate world could go up or down depending on their efforts,`` he said.

Park Won-Jae parkwj@donga.com