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A trader’s tale that will inspire businessmen.
[Traders #1 by Reporter Kim Heui-soo]
Hyundai Group Founder Chung Ju-yung
“How beautiful it must be to see, he who knows his time to go will come someday, just turn his back and walk away.”
This is a line from “Falling Leaves” authored by poet Lee Hyeong-gi. If you have ever lost a loved one, you may clearly understand what it means. However, business belongs to a different domain.
This story is about Cha Myung-geun (Michael Cha), executive director for Hyundai Corporation (HC). He constantly objected to decisions by the Guam Power Authority (GPA), which was lobbied by HC’s competitors, and finally won a heavy oil supply deal worth KRW 668.2 billion (then F/X rate). It has expanded to a mega project valued at KRW 1.7 trillion via contract extensions. Heavy oil refers to what is left after crude oil is distilled into gasoline, diesel, and kerosene.
■ f you think that it is unfair, let the game begin again from scratch
A scene from
In August 2012, a phone rang in a Hyundai Corporation office. A local Korean businessman requested HC to jointly bid on a project implemented by the GPA. Ultimately, the businessman established a consortium with another big company, but the phone call led HC to engage in an oil project in Guam.
The responsible petroleum team that was less than 2 years old consisted of only three members. However, all of HC’s competitors attending the project presentation were globally renowned major firms.
Executive Director Cha prepared for the bidding process, believing that the chance of winning the difficult challenge was objectively low at 1%, but with good preparation, the probability could increase to 51%.
HC’s team seemed to be desperate enough to work a miracle. In the end, HC provided the most competitive bidding price. In other words, it was on the verge of getting a contract.
However, at this time, the GPA tried to keep HC in check by focusing on conflicts regarding assurances offered by the project partners. HC failed to reach an agreement and was found to be ineligible. Instead, the runner-up was chosen as the priority negotiating partner. The winning company was later found to have successfully lobbied the authority.
HC found itself in conflict with a public agency on a small island in the Pacific and seemed to have no choice but to give up. However, HC was bold enough to risk a suit against the GPA. Many officials tried to dissuade HC’s team, but HC chairman Chung Mong-hyuck made an aggressive decision after having a face-to-face meeting with executive director Cha. Chairman Chung said, “Your eyes are shining enough to make me believe that this project will become a huge success. Please do it again.”
■ “The secret to changing the client’s mind…”
An AI-generated depiction of a beach in Guam, a small island in the Pacific
Finally, the GPA placed a tender notice again in April 2013. It was because HC rejected its offer to take half of the supply. According to executive director Cha, the GPA seemed to have recognized its problems.
HC could have filed a lawsuit against the GPA but considering costs and time, it decided to take part in the rebidding process. However, a new condition was added to the rebidding requirements, which seemed to have been designed to put HC in a rather difficult circumstance. It required HC’s business credit to be evaluated by Dun & Bradstreet (D&B), an unknown credit rating agency. According to D&B, HC’s credit rating was as low as B, the disqualification level.
HC asked D&B about the low credit rating. According to D&B, it was because HC’s previous rating was not renewed. Normally, the re-evaluation by its head office in London takes about three to four months but HC continuously requested D&B to shorten the reappraisal period. Such ceaseless efforts enabled HC’s credit rating to be upgraded to A within two weeks. Executive director Cha said, “D&B’s office in Seoul was very surprised at the speed. Once again, I would like to thank D&B’s office in Korea for its cooperation in the process.”
Overcoming a myriad of difficulties, HC finally prepared and submitted the necessary documents late in the afternoon, one day before the deadline. This success led HC to sign a deal to supply heavy oil valued at KRW 668.2 billion to the GPA in August 2013. HC signed a contract extension worth KRW 664.5 billion in 2015, rewinning the same project estimated at KRW 360 billion in 2020. HC’s dedication and efforts made it possible to conclude long-term oil supply agreements valued at a total of KRW 1.7 trillion.
HC has built close partnerships with the GPA and a bidding process for its new oil supply project, maturing in 2026, is underway. Also, HC signed a deal to supply hundreds of thousands of tons of aviation gasoline and marine fuel oil to the US Defense Logistics Agency that will be used for the US base in Guam. HC will continue to create new demand for civilian and military aviation gasoline and diesel.
In connection with secrets to changing the client’s decision, executive director Cha said, “Since joining HC, I have repeatedly read Hyundai Group founder Chung Ju-yung’s autobiography titled Trials May Not Fail. I was the most impressed by his words, ‘Hey, have you ever tried that?’ The secret to this success is to act bravely with self-conviction.”
This may be a simple solution, but a high level of motivation and drive are deemed to be the keys to success. I hope that if you think about giving up due to the fear of failure in the future, this story will encourage you.
■ Summary
1. Hyundai Corporation was found to be ineligible for the Guam oil project valued at KRW 700 billion.
2. HC notified the GPA of its plan to file a retrial in protest, possibly making the client feel uncomfortable. However, encouraged by Hyundai Group founder Chung Ju-yung’s words, “Hey, have you ever tried that?” HC succeeded in changing the client’s decision and winning the project.
3. The contract has continuously been renewed, with a total value currently at KRW 1.7 trillion. The bidding process for a new oil supply project is underway.
Jan 13, 2024
Maeil Business Newspaper