Hyundai Corp. chairman bets on diversification for survival

Hyundai Corp. Chairman Chung Mong-hyuck is pursuing a strategy of business diversification, expanding beyond traditional trading into overseas equipment rentals, food production, venture investments and renewable energy to strengthen the company’s resilience amid growing global uncertainty.

In a recent interview with Maeil Business, Chung said survival has been his guiding management principle since Hyundai Corp. became independent of Hyundai Heavy Industries Group, now HD Hyundai, in 2016. He said trading companies must treat geopolitical disruptions and unexpected market changes as permanent features of their business environment rather than exceptional events.

Chung, a nephew of Hyundai Group founder Chung Ju-yung, has led Hyundai Corp. since 2010, overseeing its transformation from a traditional trading house into a diversified investment and business group. The company, which marks its 50th anniversary this year, posted record revenue of 7.55 trillion won ($5.68 billion) and operating profit of 140.1 billion won last year. It also reported record quarterly results in the second quarter of this year.

Under Chung’s leadership, Hyundai Corp. has expanded into construction equipment rentals in Australia, marine fuel supply in Singapore and mushroom production in the United Kingdom. The company is also exploring opportunities in automobile recycling and solar energy.

The following are excerpts from the interview.

Q: How do you respond to growing geopolitical uncertainty, including wars?

A: Trading companies have always operated in uncertain environments. Unexpected crises are not extraordinary events but part of everyday business. What I caution against most is assuming that a black swan event cannot happen.

We must prepare for events that seem almost impossible. If you treat uncertainty as an exceptional variable, it can destabilize your business. But if you accept it as a constant, your approach changes.

When Russia invaded Ukraine in 2022, we focused less on the war itself than on how it would change market dynamics. As traditional trade routes were disrupted, demand and supply shifted toward neighboring countries such as Kazakhstan and Uzbekistan.

We recognized the opportunity and moved quickly into those markets, particularly in the automotive sector. Those businesses continue to operate steadily today.

Q: What prompted Hyundai Corp. to diversify its business portfolio?

A: I drew considerable inspiration from Japanese trading houses. They have developed business models that connect trading, investment and manufacturing to create new sources of revenue.

I concluded that Hyundai Corp. also needed to move beyond the traditional trading company model. Trading alone cannot guarantee sustainable growth. We needed to diversify risk through investment and eventually move into acquiring manufacturing companies.

Our food business is one example. We partnered with a South Korean mushroom specialist to enter the British market for organic Asian mushrooms.

We now supply products to approximately 2,000 Tesco stores across the United Kingdom, from large supermarkets to smaller Express outlets. There is enough growth potential that we may need to expand production capacity as distribution increases.

We also wanted to promote the Korean name for shiitake mushrooms, which are generally known overseas by their Japanese name. We eventually succeeded in getting products sold under the Korean name “pyogo” into a premium British food retailer.

It was an opportunity not only to export Korean products but also to promote their identity.

Q: What did you learn from Hyundai founder Chung Ju-yung while growing up in his household?

A: The most important lesson was to be strict with yourself.

Even when someone caught a cold, he would scold them, asking how a person who could not take care of their own health could possibly run a company.

He finished breakfast in just a few minutes and was extremely punctual. If you were even 30 seconds late, you could miss breakfast.

He was generous toward others but exceptionally demanding of himself.

Q: When did Hyundai Corp. begin expanding its overseas investments in earnest?

A: We began in 2019, starting with the acquisition of a marine fuel bunkering company in Singapore. We then established a venture capital business in 2020.

This year, we have reached a point where the venture capital business can cover its own operating costs without external support and avoid losses.

Our objective is not simply to generate financial returns. We want to become strategic partners with the companies we invest in and help expand their businesses.

Ultimately, we aim to develop an investment model that can lead to corporate acquisitions.

Q: Which investments have produced the most significant results?

A: Our Australian construction equipment business and investments in automotive parts companies are good examples.

Previously, we primarily sold Hyundai construction equipment in Australia. After acquiring a local company, we expanded into equipment rentals.

That allowed us to build a recurring revenue stream rather than relying solely on equipment sales. We have since made four or five additional investments related to that business.

Our Singapore bunkering operation has also delivered remarkable growth in both revenue and profit.

Q: You have recently shown interest in environmentally friendly recycling businesses. What opportunities do you see?

A: Over the past two or three years, we have examined a wide range of business opportunities, including environmentally friendly recycling.

One example is the recycling of end-of-life vehicles in Japan.

More recently, we have also been looking for opportunities in the solar energy sector.