[2020 Business World Young Power] 3rd and 4th Generation Forward Deployment... Business World Signals Generational Change

Generational Shift Smooth for GS, Hanwha, Hyundai Heavy; Hanjin and CJ Face Turbulence
"Ambitious Young Executives" VS "Greenhouse Flowers" Mixed Expectations and Concerns

[Asia Economy Reporter Yoo Je-hoon] Although they have not yet ascended to the position of head of the group, the 3rd and 4th generation heirs who are gaining management experience at large conglomerates such as Hanwha, GS, and Hyundai Heavy Industries Group are the 'new leaders' attracting attention in the Korean business world. Evaluations of them are still mixed. While some expect them to be ambitious young managers who have steadily built up their management skills, others coldly assess them as greenhouse flowers. Inside and outside the business community, it is believed that whether these 3rd and 4th generation heirs achieve management results this year will determine the success of generational change.

◆ GS's Full Deployment of 4th Generation under the 'Heo Tae-soo Regime' = Another point to note in GS Group, which has welcomed new leadership under Chairman Heo Tae-soo, is the full deployment of 4th generation executives with the 'Hong (烘)' character in their names. They are successively occupying CEO positions in affiliates, forming one axis of GS's generational change.

Heo Se-hong (51), eldest son of Heo Dong-soo, Chairman of GS Caltex, emerged prominently at the end of 2018, and at the end of last year, Heo Yoon-hong (41), eldest son of former Chairman Heo Chang-soo, was promoted to president of GS Construction. Presidents Heo Se-hong and Heo Yoon-hong are classified as strong candidates among the 4th generation at GS. Although they are considered leading 4th generation heirs, their shareholding in the holding company GS Corporation is around 1%. Inside and outside the business community, it is expected that the succession structure will be determined based on their management performance.

Accordingly, Presidents Heo Se-hong and Heo Yoon-hong are actively seeking new growth engines to lead the stagnant group's growth. President Heo Se-hong is expanding business areas into mobility by utilizing GS Caltex's gas station sites to expand electric vehicle infrastructure. President Heo Yoon-hong, who previously served as head of GS Construction's New Business Promotion Team, has promoted modular housing business, smart farms, the Xi Artificial Intelligence (AI) platform, and new city development projects in Vietnam.

[Image source=Yonhap News]

◆ Hanwha 3rd Generation Growing Presence on the Back of 'Solar Power Success' = At Hanwha Group, the presence of Kim Dong-kwan (37), eldest son of Chairman Kim Seung-yeon and Vice President of Hanwha Solutions (Head of Strategy Division), is growing stronger. Vice President Kim was promoted from executive director to vice president last year after four years and was appointed head of the newly established Strategy Division at Hanwha Corporation at the end of last year.

Hanwha Solutions, where Vice President Kim holds the helm, is a merged company of the chemical affiliate Hanwha Chemical and the solar power affiliate Hanwha Q CELLS & Advanced Materials (Hanwha Q CELLS), representing the integrated corporation in the chemical and solar power sectors, one of Hanwha Group's three main business areas: defense & machinery, chemical & solar power, and finance. Vice President Kim previously led the solar power business at Hanwha Q CELLS, growing it into a core group business.

The Strategy Division at Hanwha Corporation, which Vice President Kim took charge of in the year-end personnel reshuffle, is a 'central department' responsible for setting future strategic directions and investment plans for the group's major businesses such as explosives & defense, trade, and machinery. In the business community, it is expected that Vice President Kim, who now oversees strategy parts at both the group's parent company Hanwha Corporation and the core chemical & solar power business Hanwha Solutions, will focus on generational change and discovering new business areas this year.

◆ Hyundai Heavy Industries 3rd Generation Expanding Footsteps = Hyundai Heavy Industries Group is entering a 'pause' phase in its 3rd generation succession process. While professional manager Kwon Oh-gap was promoted to chairman, Jung Ki-sun (38), eldest son of major shareholder Jung Mong-joon, Chairman of the Asan Foundation and Vice President of Hyundai Heavy Industries, retained his position in last year's personnel reshuffle.

However, Vice President Jung's scope is actually expanding. Hyundai Global Service, a specialized ship after-sales service company proposed by Vice President Jung as a new growth engine, saw sales and operating profit surge by 59% each in the third quarter of last year, establishing itself as a new growth driver for the group. The robotics business, which Vice President Jung devoted himself to, was spun off as Hyundai Robotics, aiming to achieve sales of 1 trillion KRW by 2024. He is also making a mark in overseas business. In July last year, Vice President Jung attracted attention by holding individual meetings with Saudi Crown Prince Mohammed bin Salman and Aramco CEO Amin Nasser as a 'preparatory successor.'

Inside and outside the business community, there is consensus that discovering new growth engines like this could be a turning point for future generational change. A business official said, "If the 1st generation heads founded the companies and the 2nd generation heads maintained them, it has become important for subsequent generations of management to discover new growth engines in response to new economic, social, and cultural environments," adding, "Depending on the achievements of the 3rd and 4th generation executives, the flow of succession and generational change could also change."

◆ Turbulence in Generational Change... Hanjin and CJ = On the other hand, there are quite a few companies experiencing 'turbulence' in generational change. Hanjin Group, which recently experienced a 'family rebellion,' is a representative example. Cho Won-tae (44), 3rd generation of the Hanjin family, was inaugurated as chairman in April last year, and Cho Hyun-min (37), executive director of Hanjin KAL, returned to the holding company last June after about a year since the 'water cup incident.' However, former Korean Air Vice President Cho Hyun-ah opposed Chairman Cho, lighting a warning signal for generational change at Hanjin Group. Inside and outside the business community expect this unstable system to continue until the shareholders' meeting in March this year.

At CJ Group, the generational change red light was lit when Lee Sun-ho (30), eldest son of Chairman Lee Jae-hyun and head of CJ CheilJedang, was caught smuggling narcotics (synthetic marijuana) last year. Lee was expected to be promoted to executive but was excluded from the promotion list due to this incident. With Lee's promotion blocked, Lee Kyung-hoo (35, female), eldest daughter and executive director of CJ CNM, was also retained. Instead, Jung Jong-hwan (40), executive vice president of CJ and son-in-law of Chairman Lee, was the only member of the owner family to be promoted to executive vice president.

Professor Oh Moon-sung of Hanyang Women's University said, "As large corporations repeatedly undergo succession, the shareholding ratio of the head family itself is decreasing, and recently, entities like the National Pension Service are actively engaging in shareholder activism through mechanisms like the 'Stewardship Code,'" adding, "Morality is also emerging as an important issue in succession and generational change."

This content was produced with the assistance of AI translation services.