Cho Choong Hoon, Builder of a Korean Business Empire -- Rest in Peace

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Subject: Cho Choong Hoon, Builder of a Korean Business Empire

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South Korea

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Date Posted: November 19, 2002 7:57:50 EDT

Cho Choong Hoon, who rose to become a prototypical leader of a Korean chaebol, or conglomerate, that included Korean Air Lines, the country's flagship airline, died on Sunday at a hospital here. He was 82.

Starting out in the port city of Inchon with a single truck in 1945, the year of the Japanese surrender that ended World War II and Japanese rule over the Korean peninsula, Mr. Cho built his empire in the style of a generation of businessmen responsible for Korea's economic rise.

Mr. Cho's conglomerate, the Hanjin Group, ranks eighth among Korean conglomerates, with assets valued at more than $20 billion. Besides Korean Air, the 21 companies in the group include Hanjin Shipping, Hanjin Transportation, Hanjin Heavy Industries and Meritz Securities.

Mr. Cho, like many other Korean business leaders, owed much of his initial success to United States military contracts, first during the Korean War and then during the Vietnam War. His trucking company carried ammunition and other supplies for American forces on the ground during the Korean War. During the Vietnam War, his shipping company transported military supplies while his construction operation developed ports for the Navy and military contract vessels.

For most of his career, Mr. Cho had the title of group chairman. He differed from the leaders of other chaebols in that he focused on one major industrial segment, transportation, rather than investing in a wide range of enterprises and industries.

Like other chaebol leaders after the Korean War, Mr. Cho formed a close relationship with Park Chung Hee, the general who helped foster Korea's rapid growth after seizing power in 1961.

Mr. Park, who ruled for 18 years until his assassination in 1979, divided industrial areas among corporate leaders whom he trusted and viewed as capable of competing internationally, in keeping with his vision of Korea as an industrial power. On the basis of Mr. Cho's achievements in transportation, Mr. Park selected Mr. Cho as the businessman to privatize the government-owned airline.

While merchant ships and cargo containers bearing the Hanjin name traverse the globe, Mr. Cho was proudest of his success in building Korean Air Lines into a major international carrier with a unique distinction: it is the only international airline that has its own manufacturing division. Korean Air Lines makes aircraft parts for Boeing and Airbus and assembles planes for the Korean air force.

As chairman of Korean Air, Mr. Cho's greatest failures began in 1983, when a Soviet MIG fighter shot down a Boeing 747 with 269 people aboard after it strayed into Soviet air space. More than 800 people died in crashes of Korean Air planes between 1983 and 1999.

President Kim Dae Jung publicly blamed the "management style" of the group for the crashes, forcing Mr. Cho to accept responsibility and resign as Korean Air chairman. Mr. Kim's anger also reflected concern over the finances of the Hanjin group, which had accumulated a debt-equity ratio of 10 to 1 before the Korean economic crisis of 1997, during which Hanjin Engineering and Construction was merged with Hanjin Heavy Industries.

Mr. Cho remained group chairman but installed his son, Cho Yang Ho, as chairman of the airline. In the traditional style of the leaders of Korean chaebols, Mr. Cho divided power over his companies among his four sons as his health deteriorated in recent years.

Cho Yang Ho is expected to become chairman of the group while retaining control over Korean Air. The other sons all serve as vice chairmen of other group companies, at which they are in line to succeed their father as chairman � Cho Nam Ho at Hanjin Heavy Industries, Cho Soo Ho at Hanjin Shipping and Cho Jung Ho at Meritz Securities. Mr. Cho is also survived by his wife, Kim Jung Il, and a daughter, Cho Hyun Sook.

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