Kim Woo-choong
South Korean tycoon who built up the Daewoo industrial empire but ended his career in disgrace
KIM WOO-CHOONG, who has died aged 82, was a South Korean former newspaper boy who in 1967 founded Daewoo with five employees and $10,000; over the next 30 years he built it into the country’s second largest industrial conglomerate, or “chaebol”, after the Hyundai Group.
Daewoo (the name means “great universe” – Kim always aimed big) started out trading textiles to the Asian market, and diversified into shipbuilding, construction, electronics, cars, cosmetics, and numerous other sectors.
As South Korea rose from the ashes of the Korean War, in common with the heads of other chaebols, Kim always managed to find loans on favourable terms, with government backing, to finance his new ventures. Kim represented a younger, brasher, more entrepreneurial model of chaebol leader by comparison with the rigid leadership style of groups such as Samsung and Hyundai; he was also one of the first to float his company on the stock exchange to access more capital.
A 15-hours-a-day, seven-day-aweek man who took his first day off in 1990 aged 54, when a son was killed in a car accident, “Chairman Kim”, as he liked to be known, ran his empire as a personal fiefdom. While other chaebols built their empires from nothing, he built his largely through taking over troubled companies, often at the request of the military regime, which had seized power in 1961.
At the zenith of the South Korean “economic miracle”, Kim became fashionable with politicians and business gurus in the West who admired the work ethic he described in his “philosophical” book Every Street Is Paved With Gold (1988), a masterpiece of selfaggrandisement with chapters such as “Why I Work Like a Madman”.
Proud of his frugality (he was said to wash his own underwear) Kim recalled firing an employee because he had several cars and his wife had a mink coat: “There was no excuse for his wife to have a mink coat.” The book was decorated with encomia from Henry Kissinger and the Forbes family.
In the 1970s and 1980s Kim pushed Daewoo into foreign markets. In the 1990s, under his slogan of “global management”, he went on a worldwide shopping spree, buying dilapidated car and home appliance plants in former Communist and developing nations. At the height of this drive, Daewoo took over a company every three days, and by the late 1990s had acquired a farflung network of branch offices, subsidiaries and affiliates, with sales of around $60 billion and more than 320,000 employees in 110 countries.
In 1997, however, South Korea was hit by Asia’s financial crisis and the banks began tightening their purse strings. The government of President Kim Dae-jung was forced to ask the IMF for a $58 billion bail-out and urged the country’s conglomerates to slim down, sell assets and focus on profitability.
Most did, but Kim responded by announcing a series of restructuring plans, most of which were never carried out, and gambled on his belief that continued expansion would allow him to grow his way out of trouble.
But the developing world’s demand for cheap cars, televisions and other Daewoo goods did not grow as rapidly as he expected. Creditors began calling in shortterm loans that accounted for more than half Daewoo’s total borrowing, which by 1997 had risen to five times its reported equity.
After Kim frantically shifted capital from affiliate to affiliate, in July 1999, a month after the company reported strong results (based on what investigators later claimed were cooked books), Daewoo collapsed under debts of US$80 billion – at the time, the world’s biggest bankruptcy.
Soon after Daewoo’s demise, as the authorities started closing in on Kim for fraud and embezzlement, he failed to return from a business trip to China. Wanted by Interpol, he spent six years on the run, while former employees published their own “Wanted’’ poster, offering a $500 reward for information.
Reports of his whereabouts filtered through from Hong Kong, Morocco, Singapore, Sudan, the US and even North Korea. There were claims that he was holed up in a villa near Nice and a castle in Austria. Rumours of heart surgery in Frankfurt turned out to be true.
The story of the rise and fall of Daewoo was seen as the story of South Korea, and the conglomerate’s allegorical power gave its decline an uncomfortable significance for the government. While other Daewoo executives were prosecuted, the government did not seem keen to pursue the former chairman. In June 2005, however, in declining health and tired of life as a fugitive, Kim returned home, as he put it, “just like a dying fox who points his head towards his hometown to resolve his past issues”.
In 2006 he was sentenced to 10 years in jail, convicted of accounting fraud, embezzlement and other financial crimes. He was ordered to hand over 21 trillion won (£12 billion) and was fined 10 million won. Kim arrived at court in a wheelchair, clad in hospital pyjamas and with an intravenous drip attached to his arm, a feeble relic of the once ebullient tycoon. His sentence was suspended for a year because of heart problems and in 2008 he was pardoned under a presidential amnesty.
One of five children, Kim Woochoong was born in the southern city of Daegu on December 19 1936. He lived through Japan’s brutal occupation, then during the Korean War his father, a schoolteacher, was abducted by North Korean soldiers and never seen again.
The teenager became the family breadwinner, taking on a newspaper round and outdoing his rivals by getting up early and running rather than walking the route. He recalled being constantly hungry: “People were so destitute that it was easier to die than to live.”
He attended Seoul’s Kyunggi High School with money his family scraped together and graduated from Yonsei University in 1960 with a degree in Economics.
He got a job at Hansung Enterprises, a textile firm owned by a friend of his father’s, and after seven years borrowed $10,000 to start Daewoo. One early contract involved selling shirts for $1 to a Japanese agent, who sold them to US wholesalers for $2.30. Determined to cut out the middleman, Kim travelled in 1970 to Sears, Roebuck in Chicago and badgered a sales manager into agreeing a sample order, leading to a contract that enabled him to cut retail prices. Before long, JC Penney and Montgomery Ward had signed on, leading to a $200 million export market for Daewoo.
Kim soon gained the attention of South Korea’s dictator President Park Chung-hee, who had been an elementary school pupil of Kim’s father. In 1976 Park placed Kim in charge of a loss-making statecontrolled machinery company, Hankuk, which he turned round to profitability within a year.
Two years later Park twisted his arm to take over a near-bankrupt project to build a shipyard at Okpo, on Koje island. “I did not have a chance to say no,” Kim recalled. In fact the government announced the move – which pushed Daewoo heavily into debt – when he was out of the country. By 1998, Daewoo was ranked 18th in Fortune magazine’s Global 500 in terms of revenue. But its business model, based on debt-financed expansion, was a house of cards.
In retrospect, Every Street Is Paved With Gold proved to be full of unintentional comedy. “You should never lose your reputation,” was one of the book’s business tips, while in a section on “how to use crises” he advised: “The more you dig, the deeper the hole, and the deeper the hole the more water from the well. This is what it is all about.”
Kim is survived by his wife Chung Hee-ja and three children.
Kim Woo-choong, born December 17 1936, died December 9 2019