Korea's Big Dreamer

DONALD MACINTYRE SeoulA group of aging South Koreans did something last week that most of them had probably never imagined possible: they got on a luxury cruise liner and sailed to North Korea. There was 97-year-old Shim Jae Rin, whose family was trapped in the North at the end of the Korean War in 1953. And Lee Taek Kyu, 81, who left a daughter in North Korea and has long dreamed of returning to pray at his grandfather's grave. With ordinary South Koreans barred from the North since the war, the trip was the stuff of dreams for most of the 900-plus tourists on board. Perhaps the only passenger who never doubted this extraordinary excursion would take place was the man who organized it, Chung Ju Yung, honorary chairman of the giant firm Hyundai.Chung, who turns 83 this week, grew up on a hardscrabble farm in the North, helping his father raise vegetables. As he left a childhood of poverty behind him and built Hyundai into South Korea's largest chaebol, or conglomerate, he never lost his nostalgia for Mount Keumgang, a spectacular stretch of rocky peaks near his hometown, just north of the border with South Korea. At family gatherings, Chung would talk about his dream of going back to develop the area, recalls nephew Chung Mong Gyu, chairman of Hyundai Motor Co. Last week's trip--a five-day visit to Keumgang--was the first step. I thought it was unrealistic, says nephew Chung. Now it has come true.But the elder Chung's dream comes with a price. Hyundai will shell out almost $1 billion to North Korea just for the rights to develop Keumgang. Later, Hyundai will need to raise what it calls a huge amount to build hotels, ski resorts, spas and even an airport. It is the kind of build-first, ask-questions-later scheme that helped puncture South Korea's economy last year, critics say. And it's kicking off just as the government is prodding the chaebol to cut debt and invest more responsibly. It isn't Hyundai's only big-ticket project, either: the firm just snapped up South Korea's bankrupt Kia Motors. They are spending too much, says Rhee Byong Whii, a general manager at Yuwha Securities. They are taking a big gamble.Chung's love of long odds is legendary. In the 1930s, he got his first steady job as a rice-shop delivery boy by assuring the owner he could ride a bicycle. He couldn't, so he spent the next four nights secretly practicing until he could balance heavy bags of rice without crashing. Three years later, he was running the store. After the war, he plunged into new ventures with just as much audacity--and just as little experience. When he set his sights on shipping in the early 1970s, Chung won contracts to build two massive oil tankers for a Greek shipping tycoon before Hyundai had built so much as a rowboat. It didn't even have a shipyard at the time.PAGE 1|The plunge into North Korea may be the old man's biggest gamble yet. Hyundai doesn't know how much it will cost to build everything at Keumgang, and its estimate of a million visitors a year by 2004 is based more on guesswork than on market surveys. Besides, the unpredictable regime in Pyongyang--now sparring with Washington over U.S. suspicions that the North has restarted its nuclear weapons program--could change its mind about investment from the South. Yet Keumgang is just the opening move in Chung's North Korea strategy. Hyundai also has plans to develop an industrial park near Keumgang that would use cheap North Korean labor to assemble car radios and other products. The conglomerate might build cars there one day, says nephew Chung. There's even talk of drilling for oil.It all fits nicely with South Korean President Kim Dae Jung's sunshine policy, aimed at thawing relations with North Korea by expanding business ties. But Chung's go-for-broke methods are exactly what President Kim had in mind when he promised to rein in the chaebol earlier this year. Kim wants a more transparent, U.S.-style Korea Inc., where company heads are accountable to investors. The days when autocratic entrepreneurs like Chung can call all the shots may be numbered--at least if Lee Hun Jai gets his way. The government's point man on chaebol reform, Lee doubts Hyundai can cut its debts fast enough to meet government targets (the chaebol says it can). But he is confident that reforms aimed at empowering investors will eventually force all the chaebol to change their ways.In the future, financial markets, not one man, will decide whether grandiose projects like Keumgang make sense, says Lee, adding: I call this 'taming wild horses.' The chaebol have to adjust to life inside the fence. For Chung, whose lifelong mission has been to knock down fences, that will be a difficult adjustment indeed.With reporting by Stella Kim/Seoul|2