[New Business World 3rd and 4th Generation]③ Succession Structure Centered on Kim Dong-gwan... Hanwha 3rd Generation Three Brothers, Three Distinct Management Styles

The three third-generation heirs of Hanwha Group?Kim Dong-kwan, Kim Dong-won, and Kim Dong-sun?are taking the lead in management with their distinct "three-color management" styles. Earlier this year, the spin-off of Hanwha Solutions' department store division, 'Galleria,' marked the starting point of third-generation management.

‘Defense & Solar Power’ · ‘Finance’ · ‘Hotel & Retail’ Three-Way Division

The eldest son, Vice Chairman Kim Dong-kwan, currently oversees the group’s core businesses such as defense, solar power, and petrochemicals. The portfolio of future growth engines for Hanwha Group?including solar power, defense, and aerospace?are businesses that Kim has led since joining Hanwha. These businesses either did not exist or were small-scale just a decade ago but have now become the backbone of the group. Hanwha Ocean, acquired to create synergy with the defense sector, turned profitable immediately after the final acquisition. At the end of this year, they also hit a "contract jackpot." Hanwha Aerospace and Hanwha Systems, Hanwha Group’s defense affiliates, achieved export contracts worth a total of 3.7 trillion KRW. After the contracts, Vice Chairman Kim said, "In the midst of a turbulent international situation, we have taken another step forward as Korea’s leading defense company," adding, "We will continue to seek roles in energy and maritime security."

The second son, President Kim Dong-won of Hanwha Life Insurance, is solidifying his position as the successor leading Hanwha Group’s financial affiliates by driving overseas business and digital transformation. Since Kim became Chief Global Officer, Hanwha Life Vietnam’s net profit has steadily increased. The net profit for the third quarter of this year was 26.9 billion KRW, a 51% increase compared to the same period last year. As the domestic life insurance industry reaches saturation due to demographic changes, insurance companies are actively expanding overseas, and Hanwha Life is recognized for having early secured the Vietnamese market.

The youngest son, Vice President Kim Dong-sun, Head of Hanwha Galleria’s Strategy Headquarters, is in charge of the hotel and retail sectors. The American burger brand ‘Five Guys,’ introduced by Kim, posted stable results in the third quarter, marking a satisfying first performance. Vice President Kim is responsible for everything from the domestic launch to store operations. Since October, the second store located at The Hyundai Seoul in Yeouido has also been operating.

Weak Control over Hanwha Corporation Remains a Challenge... Hanwha Energy’s Importance Likely to Rise

The three brothers’ control over the group’s holding company, Hanwha Corporation, is limited. Vice Chairman Kim Dong-kwan holds 4.91%, while President Kim Dong-won and Head Kim Dong-sun each hold 2.14% of Hanwha Corporation’s shares. Although the brothers’ combined shareholding changed for the first time in 15 years earlier this year due to inheritance from their late mother Seo Young-min, the largest shareholder of Hanwha Corporation remains Chairman Kim, who holds 22.65%. While Vice Chairman Kim is expected to become the next head of the group, securing shares is not easy. The brothers must receive shares as gifts from the Chairman, but astronomical gift taxes pose a problem?approximately 300 billion KRW must be paid. They are likely to use installment payments over several years to pay the gift tax, but the burden remains significant.

Another method discussed to strengthen control is through ‘Hanwha Energy,’ which is 100% owned by the three brothers. Hanwha Energy’s shares are divided among Vice Chairman Kim (50%), President Kim (25%), and Head Kim (25%), and it holds 9.7% of Hanwha Corporation’s shares. Analysts suggest that as the third-generation management era fully begins, Hanwha Energy’s role could grow. By increasing Hanwha Energy’s corporate value and then merging it with Hanwha Corporation, the brothers could enhance their control.