Hyosung Group Chairman Cho Hyun-joon

By Lee Kyung-min

The children of Hyosung Group Chairman Cho Hyun-joon and those of his younger brother, Vice Chairman Cho Hyun-sang, were found to have increased their shares in the group's key affiliates over the past two months, which is viewed as a long-term plan to transfer power to the fourth generation of family ownership, industry watchers said Tuesday.

The purchase of a considerable number of widely undervalued shares in a bearish market will effectively strengthen the control of the six Hyosung owner family members younger than 20 years of age, anchored further by high dividend payouts from the group's rapidly growing affiliates Hyosung TNC, Hyosung Chemical and Hyosung Advanced Materials.

Civic groups say the record-high earnings registered under the five-year leadership of Cho Hyun-joon will be eclipsed by corporate responsibility issues and owner risks, as evidenced by the ongoing criminal trial of the chairman over antitrust law violations and collusion charges.

Hyosung Group Vice Chairman Cho Hyun-sang

Teenage owners

According to the Financial Supervisory Services, the six children ― three each of the two brothers ― have purchased a combined 8.3 billion won ($ 6.9 million) worth of shares of the group and three affiliates over the past two months.

The three children of the chairman are aged 19, 16 and 10, respectively, whereas those of the group vice chairman are aged 12, 10 and seven, respectively.

The oldest daughter of the chairman purchased 950 million won in group affiliate shares last December and last month.

The second-oldest daughter bought the same amount of shares in the same period, whereas the youngest son purchased 1.6 billion won worth of shares.

Similarly, the three children of the vice chairman each bought affiliates' shares to the amount of 1.6 billion won.

The recent purchase followed a combined 4 billion won worth of shares bought by the six in 2019, shortly before the local equity market crashed at the beginning of the COVID-19 pandemic. The first time fourth-generation owner family members bought the group affiliates' shares was in 2008.

The large share purchases are likely to continue, backed by group affiliates registering combined record-high sales of 21.28 trillion won last year, and an operating profit of 2.77 trillion won ― more than double the 967.5 billion won of 2019.

"Owners of large conglomerates in the country, of which Hyosung is one, should promptly abandon the old, regressive mindset that their children are entitled to the family wealth from a very young age, and adopt a new, forward-looking business approach that recognizes employees' contributions to corporate growth, as well as corporate social responsibility," said Kwon Oh-in, the economic policy director at the Citizens Coalition for Economic Justice (CCEJ).

"This is why large conglomerates are criticized for deepening the wealth divide."

However, Hyosung refuted the claim. "There are no illegalities in the share purchases. The young owner family members bought the shares to help lift share prices and increase shareholder value," a Hyosung spokesperson said.

The specifics remain unknown over how the shares held by Hyosung Group Honorary Chairman Cho Seok-rae, the father of the current chairman and vice chairman, will be distributed to his children and grandchildren.

The honorary chairman holds a 9.48 percent stake in Hyosung, 10.18 percent in Hyosung Advanced Materials, 8.25 percent in Hyosung TNC and 6.7 percent in Hyosung Chemical.