Friends turned rivals: Korean shipbuilding heirs enter MASGA race
As Korea looks to advance with its "Make American Shipbuilding Great Again," or MASGA, initiative, two chaebol leaders — HD Hyundai Chair Chung Ki-sun and Hanwha Group Vice Chair Kim Dong-kwan — face daunting tasks to successfully enter the United States market and continue to bolster global competitiveness.
With the total amount of the investment in the MASGA project set at $150 billion between Seoul and Washington, Kim and Chung — each of them third-generation scions in their early 40s — have emerged in the spotlight as they search out the best business decisions moving forward.
Kim and Chung, who were born in 1983 and 1982, respectively, and grew up as close friends, saw their friendship turn into rivalry when Hanwha took over Daewoo Shipbuilding and Marine Engineering in 2022 at a price of approximately 2 trillion won ($1.36 billion today) and rebranded the shipbuilder into Hanwha Ocean in 2023. That came about after HD Hyundai failed to acquire DSME earlier in 2022 due to the European Commission’s disapproval of the merger.
Quiet, yet substantial
Kim, the eldest of Hanwha Group Chair Kim Seoug-youn’s three sons, leads the conglomerate’s defense and energy units, including Hanwha Aerospace, Hanwha Ocean and Hanwha Solutions. Since becoming vice chair in 2022, Kim has actively sought to expand Hanwha's defense business, heading the DSME acquisition.
Although Kim has deliberately shied away from media interactions throughout his ascent to the de facto leadership position at Hanwha, he has actively taken charge of handling the business when it mattered the most.
When Hanwha Ocean made its public debut at the International Maritime Defense Industry Exhibition in Busan in June 2023, Kim stood in front of numerous reporters at Hanwha Ocean’s exhibition booth in what was a very rare appearance for him.
“With Hanwha Ocean joining (the group), we are confident that it will create synergy in many areas with Hanwha Aerospace and Hanwha Systems,” he said. “We will prepare investments and mid- to long-term strategies so that (Hanwha Ocean) can be recognized both within Korea and overseas.”
Outspoken and active
Chung, who was promoted to the chair of HD Hyundai last month, has rapidly risen to the top position as he became vice chair in 2023 and executive vice chair last year. Unlike Hanwha’s Kim, Chung has been vocal in interactions with the press.
Chung’s quick leadership progress was foreshadowed when he participated in the CES 2022 trade show in Las Vegas as the CEO of what was then Hyundai Heavy Industries Holdings and Korea Shipbuilding & Offshore Engineering to underscore the shipbuilding conglomerate’s debut at the global tech convention and its vision to become a “future builder.”
Following the showcase at CES, Chung and HD Hyundai took part in the same annual event for the next two years, with Chung holding press conferences in front of hundreds of reporters from across the world.
When Chung delivered a keynote speech at CES 2024 on how HD Hyundai will aim to transform construction sites through digitalization, automation and carbon neutrality, he was the only Korean businessperson to do so and became the first to be a keynote speaker outside the field of information technology.
MASGA and beyond
So far, Hanwha and HD Hyundai, the seventh- and eighth-largest conglomerates in Korea by total assets, respectively, have seemingly taken different paths to enter the US shipbuilding sector. The former acquired the Philly Shipyard to secure a local foothold, while the latter teamed up with Huntington Ingalls Industries, America’s biggest military shipbuilder, to leverage the local partnership.
Hanwha committed a $5 billion investment in expanding and advancing facilities at the Hanwha Philly Shipyard to boost American local shipbuilding and maritime infrastructure. HD Hyundai, meanwhile, vowed to launch a $5 billion investment fund in cooperation with Cerberus Capital for acquiring US shipyards and upgrading them.
Industry sources say the two shipbuilding conglomerates will have to share what is available instead of trying to beat out the other and dominate the market.
“The longstanding friendship between (Kim and Chung) will have to play a role to mitigate possible obstacles or conflicts of interest when pushing forward with MASGA initiatives,” said a shipbuilding industry official.
“They will inevitably fight for the same prize in securing orders for building US military ships or even commercial ships if the US can amend the Jones Act. However, the two Korean shipbuilders will need to cooperate in certain ways to prevent being put in a disadvantageous or unfair spot.”
Another source noted that the close ties between the leaders of Hanwha and HD Hyundai will be beneficial in strengthening Korea's shipbuilding industry.
"(Kim and Chung) know how important the shipbuilding industry is for the country," said the source. "With China ramping up its shipbuilding sector and the US looking to revive its own, Korean shipbuilders must come together to survive."
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