Seoul Man: A Memoir of Cars, Culture, Crisis, and Unexpected Hilarity Inside a Korean Corporate Titan (4 page)

If you’re new to almost anywhere in Asia, nothing prepares you for the crushing multitude of bodies seemingly packed into every available space. Seoul is the third-densest big city in the world, trailing only Delhi and Mumbai.

Koreans seemed to thrive on this closeness. One of the first
things I noticed in my new country is how physically intimate Koreans are with their friends of the same sex. Walking through the lobby on my first day of work, I saw several pairs of (and here I was guessing) heterosexual women walking arm-in-arm. It is common to see a young salaryman walking with an arm slung around the shoulder of his male friend, in a way that looks antique, like
Huck Finn
, to Americans. We Americans, on the other hand, like our personal space, even with our closest of friends. Koreans seemed at home in crowds and comfortable being up close. This was going to take some getting used to.

Part of the power of Seoul’s density comes from its monolithic population. Everyone in Korea of course does not look alike, and you learn to see that the longer you live there, but they look alike enough to a newcomer that it creates an overwhelming feeling of being the only Other in a sea of sameness. I wasn’t just the only American in the Hyundai lobby on my first morning. I was the only American at Hyundai headquarters, full stop. Of the few thousand employees who worked there, fewer than a dozen were non-Koreans. So I already stood out. At six foot two, white, and XL size, even more so.

But, as much as it felt that way at the moment, I was not alone. When I arrived in Korea and at Hyundai, all three of us—the country, the company, and I—were heading into uncharted territory: our midlife crises.

These were not the hedonistic, leave-your-wife-and-get-a-Corvette midlife crises. These were the kind where you realize you’ve spent your entire adult life pushing, climbing, and striving toward something and then, in your forties, pulling up like a distance runner taking a break, putting your hands on your hips, and taking a look around. Evaluating where you are and comparing it to where you thought you’d be. Who you are and comparing it to who you thought you’d be. In the worst cases,
wondering, “Is this all there is?” In the best cases, trying to figure out your second act.

In 2010, Hyundai Motor was forty-three years old, having been established in 1967. I was forty-six, having been established in 1963. And although South Korea became its own nation in 1948, the late forties and fifties were a terrible, directionless time for the fledgling country, which took the worse end of a brutal three-year war waged by North Korea and afterward staggered through two inept administrations, corruption, internecine squabbling, and abject poverty. Modern South Korea, the beginning of what we see today, did not start until military strongman Park Chung-hee’s coup in 1961 put the nation on its path to prosperity and modernity. In this respect, in 2010, South Korea was only forty-nine years old.

We were all trying to engineer the next stage of our lives. The stakes were high.

Hyundai could keep chugging along, cranking out very good if unremarkable cheap cars. Or it could try something radical and untested and aspire to become something much more than what it was and what people expected it to be. If Hyundai faltered, its moment might not come again. Soon it could be bypassed by waves of Chinese economy cars and might never rise above the level of being the Brand That’s Almost As Good As Toyota.

Korea could rest on its laurels, congratulating itself for how far it had come so quickly—maybe the fastest industrialized development in history—and enjoy the fact that Samsung, Hyundai, and LG Electronics had become global brands. But the country knew that if it started coasting, it faced the prospect of becoming another Japan: zero population growth coupled with a swelling over–sixty-five population weighing down a stagnant economy overly dependent on national champion conglomerates that may be past their prime. Korea’s leaders understood that just doing
more of what got Korea to where it was in 2010 was not enough if the country was going to write the next chapter of its remarkable growth story. Korea had to become something else besides what it was.

If I washed out as a PR executive in a foreign company, we’d still have Rebekah’s Foreign Service job, free housing for two years, and a grand adventure. But I didn’t want to wash out. I had only fifteen to twenty prime earning years left and was heading a family for the first time. If I could succeed at this job, I could set us on solid financial footing for years to come in a way I never could on a journalist’s salary. More important, I was starting a family late in life. Most middle-aged family men had already made their radical change from bachelorhood to husband and father in their twenties and thirties. I was a forty-six-year-old first-time newlywed. Like an old stag deer, I had long settled into my life patterns, wearing footpaths around Washington, between friends, and within the
Post
. Now, for the first time in my adult life, I had to pay attention to someone else’s opinion of me. And start a new career. And do it in a foreign country. That was my midlife crisis.

The big question was: How would Hyundai, Korea, or I know if we had made it through our midlife crises? How would we know if we had succeeded in writing a second act? With businesses and governments, you can establish quantifiable measurements, or KPIs—key performance indicators, as they’re called. Former South Korean president Lee Myung-bak campaigned on a catchy “747” platform: he wanted to achieve 7 percent GDP growth, reach a $40,000 per capita income, and make Korea the world’s seventh-largest economy. Hyundai worked to achieve a top-three quality ranking among its global competitors. But would Korea have to look beyond GDP growth and employment? Would Hyundai’s midlife transition require new metrics? What
about me? How would I know—
when
would I know—if I’d done it? What were my KPIs?

It was my great good fortune to have arrived at Hyundai at the moment it was launching its grand experiment and just as Korea began trying to reimagine itself. My global PR team would be instrumental in Hyundai’s next big step, and I had a press box seat for the beginning of Korea’s attempted transformation. The number of foreign executives who had worked at the big Korean
chaebol
—ever—could be counted on two hands. This was history being made, and I had insider access that almost no other
waygookin
could or would have.

HYUNDAI’S MAKEOVER

When I joined Hyundai, the company was a couple of years into a strong run of growing sales and increasing reputation around the globe, especially in the U.S. The world’s biggest automakers—Chevrolet, Volkswagen, Toyota, Nissan, Honda—saw Hyundai as you might see a car coming up fast in your rearview mirror.

Starting in 2008, Hyundai began an aggressive overseas capacity expansion. It raised new automotive manufacturing plants in the Czech Republic, India, and China and had blueprints for new plants that would open in the next few years in Russia and Brazil. In 2008, Hyundai sold 2.8 million cars globally. By the end of 2013, it was 4.7 million. Combined with its sister company, Kia, Hyundai had become the world’s fifth-largest automaker, trailing only GM, Toyota, Volkswagen, and—barely—Ford. Even without Kia, Hyundai’s global market share was 5 percent, the same as Fiat Chrysler’s and bigger than Honda’s. In the U.S., Hyundai sold nearly 540,000 cars in 2010—more than Dodge.

To me, as with most Americans who hadn’t paid close attention to the Korean auto industry during the 2000s, Hyundai
still had the air of a joke about it. It entered the U.S. market in 1985 with the low-priced Excel and followed with other inexpensive models and chirpy advertising. They were seen as a cheaper, pluckier alternative to Japanese cars, already well established in the States.

But as the eighties turned into the nineties, the first Hyundai cars aged poorly. Subsequent generations of offerings to the U.S. market were badly turned out, with low quality and rust problems. The nadir came in 1998 when Hyundai sold only a little more than 90,000 cars in the U.S. Hyundai became to the nineties what Yugo had been to the eighties: a punch line.

So it’s no surprise that most Americans missed Hyundai’s radical management philosophy shift in 1999. Switching from a manufacture-and-export model, Hyundai established an aggressive and sprawling quality management regime, appointed a vice chairman of quality, ramped up R & D efforts, benchmarked the best Japanese competitors, and set seemingly unrealistic goals. As former Hyundai Motor America CEO John Krafcik used to say: “We keep setting targets we don’t know how we can meet.” Even better, Hyundai’s head of R & D once told reporters: “We make 7 million cars a year and we have to have the same quality as BMW, which makes only 2 million.” Mass production is the killer of quality: the more cars you make, the greater the chance of quality problems. Yet Hyundai demanded elite, European levels of quality in its cars and expected its designers, engineers, and manufacturers to deliver. By 2009 this strategy was beginning to pay off. Hyundai’s quality was becoming the equal, if not superior in some metrics, to that of its Japanese rivals.

The quality improvements came incrementally over a decade. But in 2009, in one grand and unexpected flourish, Hyundai shocked the auto industry when it debuted a groundbreaking new design on its big-selling Sonata sedan. Called “Fluidic Sculpture,”
the look was all curves and swoops. In one move, Hyundai had leaped from bland fast follower to industry design leader, forcing competitors such as Nissan and Toyota to overhaul or at least examine their own cars’ designs.

Critics favorably compared the new Sonata’s design to the Mercedes C-class. A bold character line swept along the side of the Sonata—Hyundai designers called it the “orchid stroke”—and it arced like a javelin in flight, giving the car a look of tension and velocity. Some Hyundai lifers considered the Fluidic Sculpture Sonata the first car of Hyundai’s modern era.

In subsequent years, new models, such as Hyundai’s Veloster, adopted the stylish and sporty new design. Existing models, such as Elantra and Accent, were redesigned to the Fluidic Sculpture form. For the first time, Hyundai had a distinct family look, one that was directly contributing to sales and, more important in the auto industry, to “conquests”—winning new buyers from other auto brands. A big chunk of Hyundai’s staggering 20 percent 2011 sales increase in the U.S. was attributable to Fluidic Sculpture. It was an astounding concept: people were buying Hyundai cars for their
looks
.

The new design helped Hyundai’s sales, but so did risky management thinking. When other automakers radically cut back on new product development during the Great Recession of 2008–2009—and while two of America’s Big Three were in bankruptcy—cash-rich Hyundai stepped on the gas and raced ahead with new product development. That meant that when the financial gloom began to lift in late 2009 and 2010, Hyundai had one of the industry’s youngest lineups of cars—striking new models that made the competition look old and stodgy. And it didn’t hurt that a relatively weak Korean currency made car prices in the U.S. and other overseas markets competitive.

Shortly after I arrived in Korea in 2010,
Car and Driver
put
the Hyundai Sonata on its annual list of Ten Best Cars—the first time any Hyundai had cracked the
Car and Driver
list. And yet, in late 2010, just as the company appeared to outsiders to be settling in for a long and profitable run as a high-quality volume carmaker, finally the equal to its Japanese rivals, continuing to build new factories and someday challenging to be the world’s biggest automaker—maybe even become the new Toyota—internally, Hyundai was planning something altogether different and much, much riskier.

Hyundai had looked around the auto industry and noticed a few things. If you go to a motor show in Shanghai or Beijing or Guangzhou, you’ll see the Chinese brands: SAIC, BYD, Great Wall, Geely, and so on. The reason you don’t see them on the streets of North America or Europe is they’re not good enough. Not high enough quality, not safe enough, not enough features. Yet. But soon they will be. And, thanks to tight cooperation with the Chinese government, they will be sold at prices that automakers such as Hyundai cannot beat without taking a loss. Hyundai knew that lower-priced rivals would come in soon at the bottom of its lineup and that the company could not compete on price.

Second, Hyundai looked at its Japanese rivals’ attempts to create luxury brands: Toyota’s Lexus, Nissan’s Infiniti, and Honda’s Acura. They offer seriously mixed results. Only Lexus is a true success, and it took years for it to become profitable—setting up an entirely new “sales channel,” or dealerships and infrastructure, to support a new luxury brand is extraordinarily expensive. Furthermore, not one of those luxury brands added one ounce of prestige—or, in auto industry argot, “halo”—to its parent brand. No buyer thinks better of their Toyota because the same company also makes Lexus. In fact, the opposite may be true. Nissan, for instance, worried that its Infiniti premium brand was being harmed by the fact that customers know it is made by Nissan.

So Hyundai decided upon a radical and untested idea: it would not split its most expensive cars off into a separate Lexus-like brand, condemning its cheaper cars to a permanent ghetto under the Hyundai “H” logo. Instead, it would keep all of its cars, from its low-cost subcompact to its luxury sedans, under one Hyundai badge and it would attempt to haul the entire brand
upmarket
. This would give it some breathing room at the bottom of its lineup, allow it to extend the upper range of its lineup and gradually raise all prices over time. No other automaker had tried this.

As audacious and perhaps even foolhardy as this may have seemed at first glance—“You’re talking about
Hyundai
going upmarket? Really?”—in some ways, Hyundai may have been the only major automaker positioned to carry this off. Because Hyundai is so young, it is largely unburdened by history. Unlike Ford or Dodge or Mercedes or even Toyota, Hyundai doesn’t have to overcome one hundred years of brand perception. Hyundai has been in the consciousness of the U.S. and Europe for only a little more than twenty-five years. For the first fifteen or so, the brand was a joke. Then, for the past ten years, it was good. Going forward, there was no reason it couldn’t be anything it wanted. In markets where Hyundai has been for only ten or fifteen years, such as China, it is
already
considered a premium brand.