How a Poor Korean Boy Built Hyundai?
Imagine a young boy living in poverty in a small village. His daily routine involves toiling in the fields for 17 hours just to secure a single meal. This boy's life takes a remarkable turn as he grows up to become the owner of a car company worth countless crores of rupees. This incredible journey is the story of Hyundai's founder, Chang Ju-Yung.
Born in 1915 in a humble Korean village, Chung Ju-Yung initially aspired to become a school teacher. However, his family's destitution severely limited his educational opportunities. As a child, he was compelled to labor alongside his family in the fields, sometimes enduring days without adequate food, proper clothing, or medical care.
Chung was determined to break free from this cycle of hardship. His inspiration came when he observed the relative prosperity of those living in nearby cities who did not have to labor incessantly in the fields. This stark contrast filled him with a deep sense of dissatisfaction and a longing for a better life.
One fateful day, a newspaper article about a construction project in a nearby city lit a spark within Chung. In 1932, at the tender age of 16, he made a daring decision: he was going to escape to the city to seek his fortune. Accompanied by a friend, he clandestinely departed for the city, walking nearly 160 kilometers to reach Kowon city, where he took up work as a construction laborer.
Life as a laborer was demanding, but for Chung, it marked the first time he could earn a living independently. This life persisted for two months until he was inevitably discovered and brought back to the family's farming life. While his family welcomed him back, Chung remained unsatisfied.
These two months of hard labor instilled a fervent passion for construction and civil engineering in Chung. He realized that working in the fields would never help him escape the clutches of poverty. Despite repeated attempts to run away to the city, his father invariably tracked him down.
In 1934, at the age of 18, Chung embarked on his fourth escape attempt, and this time, he succeeded. He reached Seoul, the capital of South Korea, and took on a series of various jobs, starting as a construction laborer, then a factory worker, and ultimately securing a position as a delivery boy at the Bokhyang Rice Store. His dedication and hard work quickly earned him recognition, and within six months, he had risen to the position of store manager.
In 1937, when the store's owner fell seriously ill, he made an astonishing decision: he handed over the store to Chung. At the age of 22, Chung transitioned from being an employee to owning a business. Over the next two years, Chung's tireless efforts expanded and solidified the shop's success. However, a devastating setback occurred when Japan, during World War II, sought control of rice shops, including Chung's.
Despite this hardship, Chung refused to surrender to fate. With the belief that earnest effort would lead to success, he began searching for a business venture beyond the control of the Japanese government. In 1940, he secured a loan of 3,000 won to establish the Ado service garage. Tragically, the garage was reduced to ashes just a month after its opening, but Chung was not one to give in easily. Despite the setback, he secured another loan of 3,500 won and built an even more advanced garage.
Chung recognized that one of the main concerns for customers was the lengthy time it took to complete car repairs. To address this, he made speed a central focus of his business. While competitors required 20 days for certain repairs, Chung's garage completed them in just five days. Such efficiency led to the rapid growth of his workforce, which had swelled to 80 employees by 1943.
During this period, Chung managed to repay his loans and move his family to Seoul. Tragically, his business was taken from him yet again when Japan needed his garage for war-related production during World War II. With this blow, Chung found himself back where he had started and was forced to return to his village with his family. This time, however, he had saved 50,000 won, and he was determined to establish a new business.
With the end of World War II, Korea's division was under the influence of the Soviet Union in the north and the United States in the south. This division arose due to their roles in fighting Japan during World War II. Chung returned to Seoul in 1946 and rekindled his car repair business. The business might have been the same, but the name was now new – Hyundai Auto Service.
While the car repair business flourished, Chung observed the construction of military facilities by the United States. Recognizing an opportunity in the construction industry, he established the Hyundai Civil Works Company in 1947. Though he lacked extensive experience in construction, his passion for the field was fueled by his earlier days as a laborer. At the age of 31, Chung embarked on this new venture, securing numerous small projects in the beginning. However, as the 1950s dawned, his company began to win major construction contracts. Construction soon became his primary business focus.
In June 1950, North Korea launched an attack on South Korea, prompting Chung to evacuate to Pusan with his savings. Yet, even in the face of such adversity, Chung remained unwavering in his determination. During the Korean War, the United States required tents, warehouses, and army headquarters, and Chung recognized that the American forces had ample resources and simply needed reliable and timely service. In response, he established a "can-do" attitude within his small team, promising to take on any construction project for the right price. Although the war presented numerous challenges and losses, once he committed to a project, Chung ensured its completion. This unwavering reliability strengthened his relationship with the Americans.
The war concluded in 1952, but Chung continued to receive contracts from the United States. As South Korea's government initiated the rapid construction of bridges, dams, and roads, Hyundai played a crucial role and experienced exponential growth in the construction business. Hyundai contributed to significant projects, including the construction of South Korea's largest dam, Soyoung Dam, and the essential Kyungbu Expressway.
By the 1960s, Chung, now in his early 50s, had established a thriving construction company. However, he remained unsatisfied, with an unquenchable desire to transition from building roads to constructing cars to drive on those roads. In 1967, he founded the Hyundai Motor Company. In 1968, Chung partnered with Ford to assemble Cortina cars, and this venture initially proved successful. After two years, conflicts arose between the two companies, with Ford opposing Hyundai's production of its cars. In 1973, Chung ended the partnership and began seeking new collaborators. Although he attempted partnerships with General Motors and Volkswagen for their manufacturing technology, both proposals were rejected. Ultimately, Hyundai joined forces with Japan's Mitsubishi Motors, which was willing to provide Hyundai with car manufacturing technology while allowing Hyundai to sell its cars.
Around the same time, the South Korean government mandated that automobile companies produce a "citizen car." This vehicle needed to be affordable, reliable, and composed entirely of South Korean parts. In response, Hyundai established a new plant in 1976 and introduced South Korea's first mass-produced car, the Hyundai Pony. This affordable car achieved great success within the domestic market, capturing 60% of the market share. Nevertheless, the total South Korean car market was limited to just 30,000 cars, rendering profitability elusive.
Furthermore, the Hyundai Pony fared poorly in foreign markets due to quality issues, such as paint fading in the heat and frequent mechanical problems. As a result, Hyundai Motor Company suffered losses for seven consecutive years. Advisers recommended that Chung shut down the company, but his decision shocked everyone. Instead of giving up, he planned to build a new car factory capable of producing 300,000 cars annually. His management team couldn't comprehend this decision—who would buy 300,000 cars in a market that only demanded 30,000?
Chung knew the answer. South Korea's rapidly growing economy meant that the demand for cars was set to soar in the coming years. Furthermore, Hyundai's new cars were designed for export to foreign countries. In 1980, the factory was constructed, and in 1982, Hyundai introduced the improved Pony 2. This car was not only a major success in South Korea but also gained international acclaim, with exports to Africa, Latin America, and Canada. In just a few years, Hyundai sold 400,000 cars, becoming profitable and establishing itself as a reputable global car company.
However, the greatest challenge remained: the competitive American car market, the world's largest. Hyundai recognized that Japan had a stronghold in the compact car segment, while the mid- and large American car markets were already saturated. To succeed, Hyundai targeted the sub-compact car market, where competition was virtually nonexistent. Furthermore, Hyundai acknowledged the significant second-hand car market in the USA and offered their new Hyundai Excel at the price of a second-hand car, complete with a five-year warranty. This strategy disrupted the American car market, as buyers of second-hand cars quickly transitioned to the Hyundai Excel. In 1986, Hyundai sold approximately 170,000 Excels in the USA, a number that surged to 260,000 cars in 1987. During these years, the Hyundai Excel became the top-selling imported car in the USA, an unprecedented achievement in the American market. Hyundai's success in the USA solidified its position as a major global car company.
In 1988, at the age of 72, Chung retired from Hyundai and became the honorary chairman. His brothers and sons continued to manage the company with the same unwavering determination. Today, Hyundai stands as the world's third-largest car company, having sold approximately 40,000,000 cars in just 2022.
Although Hyundai is globally renowned for its car business, few are aware that the Hyundai Group comprises 42 companies. Some of these subsidiaries include Hyundai Elevator, Hyundai Information Technology, and Hyundai Heavy Industries, the largest shipbuilding company globally. Thanks to Hyundai, South Korea surged ahead of Japan to become the world's foremost shipbuilding country. For South Korea, Hyundai is not merely a corporation; it is an institution that reconstructed the nation, generated countless jobs, and propelled South Korea to global recognition.
This extraordinary journey was initiated by a boy from a village deprived of even the most necessities such as food, education, and healthcare. However, his boundless passion, vision, and unwavering desire for improvement propelled him to transform his life and build an empire.