Essay for International Business
Dr. Anne Cobb
February 18, 2012
The Rise, fall and Rise Again of
Hyundai Motor Company
The Hyundai Company was founded in 1947, following the Japanese occupation of Korea during WW2. The company’s founder, Chung Ju-yung, was the son of a poor farming family in one of the northern provinces. He left home at age 17 to pursue his dream of being an entrepreneur. Because of the Japanese occupation of Korea during WW2, Chung lost his fledgling rice wholesale business and worked several other jobs until the end of the war. In the postwar years, Chung started a repair service for American military vehicles and gained a solid reputation in that endeavor. This led to the creation of the Hyundai Company in 1947. With government backing, Ju-yung began doing business as an engineering and civil construction firm that built highways, bridges, and dams for the new South Korea. (Hyundai Group) Ju-yung kept a tight rein on his companies that kept them moving in the direction that he chose. As the businesses grew, Chung Ju-yung sought to expand through the 1950’s with contracts to build highways in Thailand and Saudi Arabia as well as port facilities in South Korea. It was easy to then enter the import-export business for the rapidly growing Korean economy, and Hyundai continued to grow with its new port management division. As the democratic nation of South Korea grew, the needed infrastructure was in large part built by some segment of Hyundai Industries. This close partnership with the government ushered in the creation of Korea’s first family-owned corporate conglomerate, or chaebol. (Hyundai Group) Hyundai soon became a diverse corporate giant and remained under the strict control of its founder, Chung Ju-yung. There was a strong need for a visionary like Ju-yung and his company during the reconstruction of South Korea in the two postwar period of the Korean War. With the aid of American Allies and the partnership of the new Korean democratic government, Hyundai Group grew and helped the country to enter the 20th century world stage as a viable and progressive nation. The government coup in 1961 by General Park Chung Hee (a Nationalist) set the stage for the industrial transformation of South Korea from an agrarian nation into the economic powerhouse that it has become. General Hee was determined to not let Korea remain merely an agricultural and backward country, he intended to set his country on a path to strength and independence, and secure a better standard of living for South Korean citizens. General Hee capitalized on the foundation of foreign aid from the U.S. following the Korean War that helped to rebuild the national infrastructure, and enacted a program of economic development that would lift South Korea quickly out of its war torn state. His first major step was to nationalize the banks and place them under control of the newly created Ministry of Finance. (Hyundai Corporation) He then contracted with Chung Ju-yung of Hyundai Engineering and Construction for projects to further improve the national infrastructure. Hyundai built roads, bridges and dams, and port facilities. This was financed by the new Nationalist government of General Hee; his policy making and control of the national banking industry made rapid growth possible. One of the most beneficial policies of those early years was to make loans available to firms involved in the industrialization of Korea from the national bank and from foreign investors. General Hee’s government controlled the nation’s growth through low cost loans from the nationalized bank, by initially promoting foreign investment and limiting imports through prohibitive tariffs. Foreign companies could export parts and components to Korea, but faced stiff tariffs for finished goods. This policy greater benefitted the Korean national...