When he attended design preview meetings for the Genesis luxury sedan, Hyundai Motor heir-apparent Chung Eui-sun suggested features he'd seen on high-end European rivals, such as a pop-up navigation screen and a gearshift that rises and retracts.
But the ideas faced opposition from engineering chief Yang Woong-chul, who was worried about the technology, and Chung did not insist, said a person who sat in the monthly meetings. The features did not make it into the car, launched late last year.
The story neatly illustrates the challenge facing the design-loving, consensus-building "E.S.", the only son of group chairman Chung Mong-koo, in driving change at the company when he eventually succeeds his famously autocratic father.
"M.K. orders this and that. But that is not the way E.S. does business," said the person present at the meetings. "E.S. wants to take Hyundai's design to the next level. But he has faced a lot of hurdles."
"M.K." Chung, who turned a once obscure Asian also-ran into the world's fifth-largest car maker, gives no sign, at 76, that he plans to step down soon. But investors are increasingly preparing for the transition to the third generation of leaders of the family-run conglomerates, or "chaebol", that dominate Asia's fourth-largest economy.
Having spent his career in his father's considerable shadow, E.S. Chung must still prove his mettle as a leader, some company watchers say, and will be challenged to modernize a corporate culture regarded as among the most hidebound in South Korea.
Despite a successful four-year stint as president of Kia Motors (000270.KS), during which the Hyundai affiliate grew faster than its parent and won kudos for making attractive cars, E.S. Chung, who as the 44-year-old vice chairman of Hyundai Motor (005380.KS) is the third-youngest of its 258 top executives, is a relative unknown.
Like his contemporary Jay Y. Lee, who is in line to take the reins at rival Korean export powerhouse Samsung Electronics (005930.KS), E.S. Chung will also be challenged to turn his company from fast-follower to trendsetter as it tries to sell better and more expensive products to differentiate from an expected wave of cheaper Chinese models.
"As Kia president, E.S. was in the spotlight and exposed and trained more than Samsung's Jay Y," said Park Yoo-kyung, a director in Hong Kong for Netherlands-based APG Asset Management, which holds shares in Hyundai companies.
"But investors all share jitters that they do not know much about these third-generation leaders."
Chung, who has avoided giving interviews, declined to speak with Reuters for this article. Hyundai also declined to comment.
NOT A BULLDOZER... OR A BALL-HOG
The elder Chung is known for his obsession with quality.
About a decade ago, he ordered that 500 of Hyundai's first NF Sonata sedans be sold only to employees at bargain prices, Lee Hyun-soon, a former Hyundai vice chairman, told Reuters. The reason: the engines made a slight noise when they were cold.
"The sound - smaller than a mosquito buzzing - went away 20 seconds after the engine was started, but he did not tolerate it," Lee said.
M.K. inherited that forceful style from his father, Chung Ju-yung, who turned a small auto repair business into a sprawling chaebol that, as much as any, helped lift South Korea from post-war poverty into an industrial powerhouse within a generation.
He did not take over the business until he was 58, but made up for lost time with a hard-charging approach and attention to detail that enabled Hyundai to improve quality even as it rapidly grew output in the past decade, sometimes cutting three to four months off the time needed to build factories.
"The chairman said, 'Just do it'. And executives made it," Lee said. "He is a bulldozer."
E.S. Chung is different, those who know him say. While he has a serious demeanor and rarely smiles in public, in private he is said to be warm and approachable.
"While the chairman is capricious and spontaneous, E.S. is the opposite," Lee said. "E.S. is a nice guy, but at the same time he is very rational, meticulous and calm."
A long-time friend of the sports-loving younger Chung, who earned an MBA at the University of San Francisco before working at the New York office of Japanese trading house Itochu Corp (8001.T), described his approach on the basketball court.
"E.S. is not a ball-hog like other people; he passes the ball around," the friend said.
Unlike the stereotype of the workaholic Korean executive, E.S. is known to try to spend weekends with his wife and three children, enjoys skiing, and sometimes communicates with colleagues using the local KakaoTalk chat app.
He succeeded his father as chairman of South Korea's powerhouse national archery association and is a regular attendee at major competitions.
Kim Ki-chan, a management professor and a director of Hyundai Mobis (012330.KS), the group's auto parts affiliate, recalled a dinner several years ago when E.S. circulated around the room to drink with each of the 20-plus Kia staff present.
"It was not a traditional Korean drinking scene where the CEO is sitting at the center and not moving around," said Kim.
THINKING BIG
During a visit to the Detroit auto show shortly after taking charge at Kia Motors, E.S. admired the stylish and expensive Land Rovers and Porsches.
"We have to make cars like this," Chung told his entourage, a person who was there recalled.
"I thought: if he is the successor, he should be more realistic," the person said, declining to be identified. "At the time, I thought he was clueless."
Confounding that first impression, E.S. Chung's time at the helm from 2005 to 2009 saw sales at Kia, which had been losing money, jump 70 percent while its operating profit doubled.
In a pivotal 2006 hire, he poached Audi and Volkswagen designer Peter Schreyer to lead a design revival at a brand known for bland "econoboxes" that sold at cheaper prices than their Hyundai stablemates.
Starting with the boxy Soul, Kia began cranking out cars that were stylish and cool. Kia engineers teamed with designers to give a sporty coupe-like makeover to its Optima mid-sized sedan, with a longer hood and a shorter rear deck.
Schreyer, who now heads design at both Hyundai and Kia and declined to be interviewed, said in 2012: "E.S. is open-minded. He understands our important creativity."
BRAND IMAGE
While no one will mistake a Kia or a Hyundai for a Porsche, Chung has followed through on the group's styling and brand push. Returning to the Detroit show in 2011, he announced Hyundai's new brand direction, called "modern premium".
"Our goal is not to become the biggest car company. Our goal is the most-loved company," he said.
Boosting the brand image would enable Hyundai to charge higher prices - a transition that company watchers say could take years for a car maker known for lower-priced offerings.
"There is nothing wrong, in my opinion, with having a premium image, but not everyone can do that," said Dave Sullivan, analyst at consultancy AutoPacific. "The DNA of the brand - most car for the money backed by the best warranty - has disappeared."
While both father and son tend not to participate in annual shareholder meetings, quarterly results calls or union wage talks, E.S. Chung has been known to reach out to shareholder activists and is said to be mindful of labor relations.
Park Tae-ju, a professor at the Employment & Labour Training Institute who has advised Hyundai on its shift system, said E.S. Chung met with labor experts over drinks to seek advice on industrial relations, and expects a more cooperative labor environment with the young executive at the helm.
Hyundai's labor relations are among the most acrimonious in the country, with near-annual strikes.
E.S. Chung also initiated meetings with shareholder activist Kim Sang-jo before Kim's group in 2008 sued M.K. Chung for unfairly subsiding Hyundai Glovis (086280.KS).
"E.S. is a very reasonable person," said Kim, an outspoken critic of governance at South Korea's big family-run chaebol. "Most of all, he understands very well that the world has changed from his grandfather's or father's generation."
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