[MZ Successor]② Jeong Gi-seon Dreams of the Sea with Shipbuilding, Energy, and Machinery

HD Hyundai and Korea Shipbuilding & Offshore Engineering Registered Executives
Designing Future Businesses Centered on Innovative Technologies

Editor's NoteThe new year has begun, but the business environment faced by companies remains challenging. With the arrival of the '3 highs and 1 low' complex crisis?high inflation, high exchange rates, high interest rates, and low growth?companies are struggling to find solutions to overcome the crisis. One of the best places to closely observe efforts to turn this crisis into an opportunity is in management leadership. It is no exaggeration to say that the rise and fall of groups depend on the choices made by the third and fourth generation MZ generation successors who have stepped to the forefront of management to inherit family businesses. We take an early look at the activities of those leading corporate change, whether by planning new businesses, pioneering markets, or improving company management systems in line with changing times.

[Asia Economy Reporter Choi Seoyoon] Born in 1982, Jung Ki-sun, CEO of HD Hyundai, was appointed as a registered executive of the holding company HD Hyundai and the group's key intermediate holding company Korea Shipbuilding & Offshore Engineering in March last year. After his father, Jung Mong-joon, chairman of the Asan Foundation, stepped down from management in 2002 following his advisory role, HD Hyundai, which had been under a professional management system, entered the era of third-generation owner management.

Jung CEO appears without fail at events where the group vision is announced or major group events take place. He was also the one who unveiled the group's new vision, 'Ocean Transformation,' at CES 2023, the world's largest electronics and IT exhibition.

With a 40-something owner stepping to the forefront of management, HD Hyundai, which had a vertical and conservative organizational culture, began to change. The group’s official name, which represented its 50-year history, was changed to 'HD Hyundai,' embodying the meaning of dynamism and change, and the group declared its departure from the manufacturing image by establishing its new headquarters, the Global R&D Center, in Pangyo, known as an IT hub.

Employee welfare was also dramatically expanded, including providing up to 18 million KRW per person for kindergarten education and establishing an in-house English kindergarten. Jung, who has a modest and humble personality, leads the creation of a flexible organizational culture by taking selfies with employees without formality or visiting offices with donuts in hand.

In terms of business, the core focus was completely shifted to 'technology.' Jung presented future core businesses for the group such as autonomous navigation, eco-friendly ships powered by hydrogen fuel cells, and AI-based marine big data solutions. The establishment of 'Avikus' as the first in-house venture by spinning off the autonomous navigation research lab was also possible due to Jung’s passion for technology.

Lee Dohyung, CEO of Avikus, said, “When you are just a department within a large corporation, you need to get approval from 10 people even to buy a single sensor. Here, we just say ‘Shall we buy it?’ and ‘Let’s buy it.’ Because we can focus solely on technology development, our work speed is incomparable to other shipbuilders.”

On the 4th (local time), at the HD Hyundai press conference held in Las Vegas, USA, where the world's largest electronics and IT exhibition 'CES 2023' is taking place, Jung Ki-sun, President of HD Hyundai, introduced the group's vision, 'Ocean Transformation.' Photo by Choi Seo-yoon

Jung is the grandson of the late Jung Ju-young, honorary chairman of Hyundai Group, and the eldest son of Chairman Jung. He graduated from Yonsei University with a degree in economics. He was commissioned as a 43rd class ROTC officer and served in the Army 701 Special Forces Brigade in Paju, Gyeonggi Province, in 2007, retiring as a lieutenant. Chairman Jung is also a 13th class ROTC graduate. In other words, they are an ROTC family.

After discharge, he joined Hyundai Heavy Industries' finance team in 2009. He later completed his MBA at Stanford University, worked at Boston Consulting Group, and rejoined Hyundai in 2013 as senior manager of the management planning team. He was rapidly promoted to managing director in 2015, executive director in 2016, and vice president in 2017. From 2017 to 2021, he concurrently served as CEO of Hyundai Global Service, leading the discovery of future growth engines such as hydrogen and AI.

In March 2015, Chung Mong-joon, chairman of the Asan Foundation, is seen entering the late Honorary Chairman Chung Ju-yung's residence in Cheongun-dong, where the 14th memorial service of the late Honorary Chairman Chung Ju-yung of Hyundai Group was held, accompanied by his eldest son Chung Ki-sun, president of HD Hyundai (center), and his wife Kim Young-myung, chairwoman of the Yeol Foundation.

Jung attracted attention inside and outside the business community as a 'prospective successor' when HD Hyundai Group transitioned to a holding company system in 2018. Before becoming the second-largest shareholder, Jung, who had no shares in the holding company, purchased 831,000 shares (5.1%) of Hyundai Robotics (now HD Hyundai) through an off-hours block trade for 354 billion KRW, instantly becoming the second-largest shareholder.

Jung had already proven his management capabilities before becoming the second-largest shareholder. As managing director in 2015, he led the strategic partnership project with Saudi Arabia's state-owned company Aramco. This relationship led to Aramco’s 1.4 trillion KRW investment in Hyundai Oilbank in 2019. Jung has met Crown Prince Mohammed bin Salman several times and built a rapport. When the Crown Prince visited Korea in November last year, they discussed future businesses, showcasing their friendship.

His acquisition of Hyundai Doosan Infracore in 2021 is also considered one of his achievements. Doosan Infracore, Korea’s top construction machinery company, was a 'prime' company reluctantly put up for sale as Doosan Group came under creditor management.

At that time, third and fourth generation owners such as Heo Yoon-hong, CEO of GS Construction, and Yoo Seok-hoon, vice president of Eugene Corporation, also participated in the bidding, but Jung emerged as the final winner. It is evaluated that Jung’s strong will to grow the construction machinery sector together with the existing subsidiary Hyundai Construction Equipment played a significant role. Hyundai Doosan Infracore’s cumulative operating profit up to the third quarter of this year reached 266.2 billion KRW, surpassing the previous year’s total of 264.5 billion KRW.

Jeong Gi-seon, President of HD Hyundai, and Khalid Al-Faleh, Minister of Investment of Saudi Arabia, are discussing ways to expand business cooperation at the Four Seasons Hotel in Jongno-gu, Seoul, in November last year. Photo by HD Hyundai

Recently, the STX Heavy Industries acquisition battle has emerged as another test of Jung’s management skills. This time, he faces off against his 'close friend' Kim Dong-kwan, vice chairman of Hanwha Solutions.

Hanwha has recently become a major competitor to HD Hyundai by acquiring Daewoo Shipbuilding & Marine Engineering, which HD Hyundai failed to acquire. Jung’s father, Chairman Jung, and Kim Seung-yeon, chairman of Hanwha Group, were elementary school classmates. Jung and Kim, who are of similar age, have naturally built a friendship since childhood. Regarding this, Jung said, “We are really close, but recently it has been difficult to meet Kim.” Their friendship has temporarily taken a backseat to business.

Jung’s stake in HD Hyundai is 5.26%, significantly less than his father Chairman Jung’s 26.6%. To inherit shares from his father for a complete management succession, he would have to pay about 770 billion KRW in gift tax. This figure is based on the 50% inheritance and gift tax rate for large corporations, which can rise to 60% including the major shareholder surcharge.