Quotes of the Day

Ulsan is not the Asia of mountaintop monasteries, palm-fringed beaches or opulent royal palaces. A tourist guide for the gritty South Korean coastal city spotlights the petrochemical complex as a major attraction. The streets are mostly jumbles of gray, concrete buildings. Fume-belching smokestacks line the Taehwa River. Looking out from a grass-topped hill near the coast, all you can see is industrial wasteland. Below sprawls a mammoth shipyard, a sea of towering cranes, boxy brown office buildings, and dark factories as big as airplane hangars. The roar of trucks drowns out that of the ocean. Rows of docks and heavy machinery seem to have mauled the shoreline forever. There isn't a pagoda in sight.

Ulsan doesn't need to be pretty. The shipyard, run by South Korean industrial behemoth Hyundai, is the world's biggest. House-sized steel chunks of oil tankers and container vessels are wheeled out of the factories on giant, flatbed lorries. The cranes haul them into place along the docks, where welding machines stitch the pieces together, sometimes into ships three times as long as a football pitch. Those ships venture out in all directions, carrying the oil, chemicals, cars and toys that make the world's economy go round. Ulsan's monuments are not a Taj Mahal or an Angkor Wat, testaments to Asia's past glory, but its shipyards, car factories and ports—symbols of the region's prosperity and importance today.

The grassy hill doesn't overlook urban blight, therefore, but global might. What happened atop it three decades ago tells you why—and why it means so much to Woo Doo Myung. Now 57, Woo can rightly lay claim to be one of South Korea's industrial pioneers. He came to Ulsan from Seoul in 1972 for a job building Hyundai's first oil tanker. Back then, Ulsan was a very different place. The shipyard had only two docks and a handful of scattered buildings. Hyundai was in its infancy. No one in South Korea had ever produced anything as big as an oil tanker, and the shipyard was in utter confusion. "We didn't even know how to read the blueprints," Woo recalls. He slaved 17 hours a day welding together the massive steel plates of the ship's hull, snatching only a few hours of sleep each night at a company-run dormitory. The workers struggled to make the huge pieces fit together. Hyundai founder Chung Ju Yung marched along the docksides, rallying the men to work harder with bold promises. "You'll have a TV and a refrigerator in five years," he told them. "And a car in 15." At the time, such goods seemed an impossible dream—Woo was earning a mere $360 a year.

For two years the workers toiled, until finally the tanker was ready to be launched. Woo watched anxiously from the shore. Would the ship actually float, he wondered? Would all of their hard work go to waste? The tanker drifted off effortlessly, and the docks erupted into relieved cheers and applause. "You can't imagine how proud we felt," Woo says. "No one believed it was possible." Chung invited the entire staff to a lavish celebration on top of that grassy hill. They set up makeshift shrines and offered rice cakes to the gods in thanks, then drank, danced and sang through the night. "We were usually too poor to eat meat," says Woo. "That night, we ate a lot of meat."

Today, Woo can eat as much meat as he likes. Chung's promises of future riches proved vastly understated. Woo still works at the yard, providing safety training to the shipbuilders. He earns a respectable $60,000 a year, owns a large apartment, and he and his wife each own a car. Both of his children are doctors. Woo's rise to wealth is far from unique. In 1960, per capita income in South Korea was only a bit more than $150 a year, making the country poorer than Iraq, Liberia or Zimbabwe. Since then, incomes in South Korea have surged more than 90 times to $14,100. The nation is now the 11th largest economy in the world, and it dominates high-tech industries such as LCD panels and memory chips. South Korea's boom has been echoed across the region. In Taiwan during the same period, per capita income jumped 88 times, in Singapore, 62, and in Thailand, 25.

Economists call it the Asian economic miracle, and a Miracle it was. Hundreds of millions of Asians who lived in mud huts and barely had enough to eat now dwell in high-rise apartments with stuffed refrigerators. They watch DVDs on plasma TVs, sip Starbucks cappuccinos and chat on mobile phones instead of wading in rice paddies behind ox-drawn plows. Asians were once lucky to complete a basic sixth-grade education; today they have the cash to send their kids to Harvard. And it all happened in one generation. Of all the major trends that have influenced the past half-century in Asia—the rise of democracy, war and revolution, the threat of terrorism—it is the Miracle that has touched the most lives, and been the biggest factor in shaping the Asia we know today.

Ulsan was at the heart of the Miracle. Before the factories came along in the mid-1960s, it was a miserable village of clay-and-thatch huts, and most residents were poor rice farmers and fishermen.

Seo Byung Jo, who was born in Ulsan in 1932 when Korea was still a Japanese colony, describes life there before the Miracle as "not a human existence." His family of five survived on a bowl of rice in the morning and another of thick soup for dinner. The low point for Ulsan came during the Korean War in the early 1950s. Hungry children followed U.S. Army trucks hoping for handouts from the soldiers, who tossed a few biscuits as they passed. "When the children ran for the cookies," Seo recalls bitterly, "the soldiers would take pictures and laugh." That sad stage in Ulsan's history has since been paved over. Rows of high-rise apartment blocks with parking lots packed with cars line the streets. In the bustling nightlife district of Seongnam, crowds of jeans-clad twentysomethings stroll past bright neon signs munching McDonald's fries or cram the local Pizza Hut. A giant Ferris wheel covered in flashing green, red and yellow lights hovers next to the ritzy Lotte department store. Ulsan residents still head to the shore to eat fish, but now in pricey sashimi restaurants. KOREA INC.
Most people don't like dictators, but many South Koreans are different. It's Sunday afternoon, and Jin Yeon Bae, a 38-year-old farmer, has brought his three children to visit the house where Park Chung Hee was born in the town of Kumi, about a 90-minute drive up a winding freeway from Ulsan. Though he ruled South Korea for 18 years, Park suffered the same humble beginnings of most Koreans. His former home is a 100-year-old clay-and-wood hut; a worn wooden desk on which Park would scribble out his grammar-school homework still stands in one claustrophobic room. Park, a former army officer who seized power in a 1961 coup, was a brutal man whose all-pervasive security forces tortured dissidents and beat up protesters. (Ironically, Park's reign ended in 1979 when his own security chief shot him under mysterious circumstances during dinner near the presidential palace.) But today, Jin and most other Koreans have forgiven him for his cruelty. Jin takes one of his daughters inside a shrine next to the old home and stands silently in front of flower-ringed pictures of Park and his wife, paying his respects. "I know he did things that were wrong," Jin says. "But he was what we needed at that time. Certain things had to be sacrificed. He made Korea rich. This would not have happened without such a strong leader."

Non-Koreans might see Jin's exoneration of Park as twisted, but if you're as poor as the Koreans were, a full belly seems more important than a free press. Park is easily the most important figure in South Korea's Miracle. Many of the photographs lining the walls in the Kumi shrine play up Park's economic achievements. In one, he's christening a new highway with champagne; in another, he stokes a furnace in a formal suit, a flower pinned to the jacket lapel. Though many economists credit Japan with forging the state-driven economic model that created the Miracle—all of the other Asian tigers have been described as mere followers, like geese flying in a well-ordered V—Park took the strategy to another level. Unlike Japan, which had already been industrializing for nearly 100 years by the 1960s, Park was starting from scratch. He corralled what meager resources South Korea could muster and pushed them into favored industries. South Korea—like other Asian countries that enjoyed the Miracle—first utilized its plentiful cheap labor to make shirts and shoes, and then moved into heavier industries, like Hyundai's cars and ships. But most of all, Park chose champions, energetic entrepreneurs who could make his vision for the country become reality. In the process, Park created the chaebols—the massive conglomerates that built South Korea—and the tightly wound government-business cabal that became known as Korea Inc.

Hyundai's Chung Ju Yung was one of those champions. At its height in the 1990s, Hyundai made ships, cars, microchips, elevators, steel, and shipping containers. It constructed apartments, brokered stocks and managed mutual funds. Businessmen joked that South Korea should be renamed the "Republic of Hyundai," and the press dubbed Chung "King Chairman." Ulsan is very much the town that Hyundai built. Hyundai's shipyard, car factories and other plants directly support a quarter of Ulsan's population. Ulsan residents live in Hyundai-built flats, drive Hyundai cars, shop in Hyundai department stores, study at Hyundai-founded University of Ulsan, and elected Chung's son, Chung Mong Joon, as their delegate to the national parliament. There is even a Hotel Hyundai.

Chung's beginnings, though, were just about as humble as Park's. Born in a village that is now in North Korea, Chung moved to Seoul in the 1930s, where he ran an auto-repair shop, then took on building projects for the U.S. Army and the South Korean government. Park befriended him in the 1960s, when Chung oversaw the construction of the nation's first cross-country highway. According to former BusinessWeek journalist Mark Clifford's authoritative book Troubled Tiger, Park once made a spot inspection of the work at dawn by helicopter, only to find the tireless Chung already awake, pushing on his workers from the roadside. During the construction, Park supposedly asked Chung, "Do you know anything about cars?" Chung mentioned the auto-repair shop, and Park told him: "You're building the road. Now we need cars." In 1967, Chung came to Ulsan and launched carmaker Hyundai Motor. Five years later, he added the shipyard.

Chung's factories were more than just places to work; they were beacons of hope. Kim Tae Yong, now 49, recalls when Chung's factories first began to appear in Ulsan. On his way home from middle school to his family's four-room hut, where he was crammed in with his six brothers and sisters, he would climb up a hill near the coast and look over Hyundai's shipyard. For a poor fisherman's son in hand-me-down clothes, the sight of the massive ships was enthralling. But it provided even more—the view gave Kim a glimpse of his future. "Whenever we saw the big machines working, we thought it was just great," he says. "I thought: I want to work there. Fishing and farming weren't providing enough money for my family to survive."

After graduating from high school and serving his mandatory military service, Kim's dream came true. In 1979 he applied for a job at Hyundai Motor, and after a brief interview and two weeks of training, he began checking car quality on the assembly line. On his first day, he walked into the cavernous factory and became mesmerized just like he had been as a teenager. The long production lines were a whirl of machinery and frantic workers. "Everything was new," he says. "The machines were new, the factory was new. I was wondering: Am I really working at this place? I was very optimistic. I thought I was going to have this job for the rest of my life."

But Miracles don't last forever. One summer day in 1998, Hyundai Motor employee Choi Byung Joon received a yellow envelope. Inside, a note informed the 43-year-old that he was being "retired." Choi was shocked. "I thought the sky was falling," he says. "I went home to tell my wife. For many hours, we were drinking and smoking and wondering how we were going to survive."

Choi wasn't alone. Asia was in the throes of a financial crisis, and workers were getting sacked all over the region. The Crisis began far away in Thailand in 1997, with a loss in confidence in the Thai baht, and spread like an epidemic across Asia. Nearly all the tigers faced national bankruptcy. In Indonesia, the Crisis forced the resignation of strongman Suharto amid wild rioting in the streets of Jakarta. In South Korea, the Crisis exposed the faults of Park's Korea Inc. The cozy chaebol-government connections may have made the country rich, but by the 1990s, the system was rotten and corrupt, the chaebols were debt-ridden and bloated, and Korea Inc. came tumbling down. In 2000 the massive Hyundai conglomerate began to break apart, and in 2001 Chung died, his empire in shambles.

Choi's life collapsed with it. After four months without work, he found a job at one of Hyundai's suppliers, but at one-third his previous salary. His savings dwindled; and he had to fight off thoughts of suicide. Though he has since found a better paying job, the large debt he has built up has made it impossible for his life to get back to normal. Fed up, his wife abandoned him and their two children. "I'm in a very desperate situation," Choi says. "There is no hope." What keeps him going is a belief that one day he will work at Hyundai again. Management had promised that when the economy improved, laid-off workers like him would be rehired, and it's a promise he clings to frantically. About half a dozen times a month, he and a handful of others stand outside the front gates of the Hyundai car factory in Ulsan and chant: "Keep your promise!" (A Hyundai Motor spokesman says 95% of laid-off workers have been rehired, and the company hopes to re-employ the rest.)

The promise that Ulsan once held out for South Korea, however, is fading. Ulsan's best days may be behind it. These days, companies like Hyundai Motor, chasing global markets, are investing in China, India, even the U.S., instead of in Ulsan. The new industries now driving the South Korean economy are popping up elsewhere in the country, like in Park's hometown of Kumi. A short drive from Park's clay-and-wood hut sprawls a massive industrial park where companies like Samsung and LG make the mobile phones, flat TVs and other hip digital gadgetry for which South Korea is becoming renowned. At LG.Philips LCD's newest factory, glass for the LCD panels is escorted to the assembly line on automated carts that use puffs of air to hold the sheets in stacks. The sheets are so thin that if touched by the human hand, the glass would crumble. Employees walk about the clean rooms clad in white suits worthy of a space-shuttle launch.

Whatever the changes, the generation that created and experienced the Miracle is still grateful. In Ulsan, Hyundai Motor's Kim Tae Yong still has the same job he started doing 26 years ago, and now commands a $65,000 salary. His living room is cluttered by a piano, a large TV set, and rows of old photographs—in one, he poses in front of the Capitol building in Washington. He flips through the pages of a brochure for the brand-new, four-bedroom apartment he recently bought in an Ulsan high-rise. It's still under construction, and Kim can't wait to move in. The complex includes a parking lot, where he can put his luxury sedan, and a basketball court and a soccer field next door. "When I was young, I never thought I'd live this way," he says. In Ulsan, and all across Asia, millions are voicing the same sentiment, and trusting in an even better tomorrow.

• Michael Schuman
• A South Korean backwater called Ulsan is where Asia's quest for a better life was forged