The University of Chicago Magazine August 1995
ON THE ROAD TO HIS SUCCESS, one of Chey's most important decisions came early: In 1954, he transferred from Seoul National University to the University of Wisconsin to escape political upheaval in Korea. Receiving his bachelor's degree in chemistry from Wisconsin in 1956, he enrolled at the University of Chicago in the fall.
"I'm actually a failed student," says Chey--"failed" because instead of continuing his studies for a Ph.D. in economics, he quit after receiving his master's. His mentor was professor emeritus D. Gale Johnson, under whom he wrote his master's thesis. Johnson was a demanding teacher, Chey recalls, but he learned a lot from Johnson and the two remain close. Indeed, when Chey came to Chicago for June's reunion, Johnson was host of a dinner held in honor of Chey and his wife.
Chey returned to Korea and began working for Sunkyong in 1962. "The country's condition was pretty bad then," he remembers--and Sunkyong's wasn't much better: It was a small textile factory, founded by his elder brother, with 300 looms and as many workers.
When his brother died in 1972, Chey was named chairman of the Sunkyong Group, a title he still holds. During the next quarter century, he would preside over the transformation of a minor-league textile firm into a huge, vertically integrated petrochemical manufacturer: Sunkyong pumps oil from the ground, refines it, and then uses it to make everything from gasoline to synthetic textiles. Most of Sunkyong's businesses, as it turns out, are related to oil; in that sense, says Kim of Samil Accounting, the company is more focused and better organized than many chaebol, with their sprawling agglomerations of unrelated businesses.
Chey is proud of his company's vertical integration, which saves money and makes operations more efficient. But his proudest achievement is the implementation of the Sunkyong Management System, or SKMS. "If you have vertical integration," he explains, "then you have to have the right management--otherwise it's a burden. Vertical integration is very good theoretically, but if you have mismanagement in just one area, it can cause everybody trouble."
Chey metaphorically describes SKMS as the "software" necessary to run the "hardware" of the company. A key component of the system is something called a "can" (for "can-do") meeting. At such meetings, which last anywhere from ten minutes to two days, no subject is off limits. Employees can criticize their peers, their competitors, and even their superiors.
It's a risky strategy: "Can" meetings may easily turn into trivial complaint sessions about the office coffee pool or meander into abstract discussions on life, liberty, and the pursuit of happiness. And in Korea's Confucianist culture, where respect for authority often inhibits communication, this kind of openness takes some getting used to.
At first, Chey admits, the gatherings might seem unproductive. "But after about three or four meetings," he says, "most of those small problems will be resolved." Chey credits "can" meetings, and the management system of which they are a part, for much of Sunkyong's success. "Talk creates mutual understanding," he says.
Chey also credits this style of communication with keeping Sunkyong free from significant labor strife for more than 30 years. Behind the open style is his conviction that, while labor must rely on management to keep the company prosperous and its jobs secure, management has an obligation to labor as well. "The company has to prove it is sharing its profits with the workers," he says. To build trust between the two, says Chey, "you need to talk and talk and talk and talk--lots of talk."
"Can" meetings have become integral to Sunkyong's culture, says Chung Hay Il, executive managing director of the chairman's office for management and planning. The meetings are off-the-record, and they often prove difficult for new employees--especially those in management. But "`can' meetings do have a specific goal," Chung says. "We have faith that problems will surface and solutions will be found."
Chey has carried this candor beyond company walls; he speaks with a directness that often surprises the local media and frequently unnerves his public-relations office. In February, for example, he made headlines when he criticized the government's interventionist economic policy. "In the era of globalization," he said, "the government is trying to regulate big business with a policy reminiscent of the era of Thomas Edison."
This criticism came in an interview Chey gave reporters after he was elected to a second two-year term as chairman of the Federation of Korean Industries. The federation, which serves as a kind of lobby for the chaebol, is one of Korea's most powerful groups. Chey made the comments even though Sunkyong is relatively single-minded, for a chaebol; some of the federation's more prominent members, such as Samsung and Hyundai, are more predatory, entering or acquiring businesses as diverse as auto manufacturing and moviemaking.
Chey later qualified his remarks, saying he did not intend to confront the government. But by then the government's Fair Trade Commission had already launched an investigation of Sunkyong, alleging its subsidiaries had engaged in unfair trading. Yukong, Sunkyong's oil-refining subsidiary, was later charged with several technical violations.
If the charges were meant to quiet Chey, they've had little effect. Chey is equally frank about other policy areas. Korea's education system, he says, is "pretty bad." The reason: "The government has too much control over it."
The Ministry of Education, he says, half-seriously, is the single biggest barrier to improving the system. Eliminate it, and "our education system would get much better" practically overnight.
While remarks such as these have earned Chey his reputation as Korea's most outspoken CEO, he characteristically tempers even his sharpest criticism of the system with praise for the people in it. Despite the mediocre education system, he notes that "the Korean people have a great zeal for learning." He was lucky to study abroad, he says, and he wants to give others that opportunity.
In 1974, Chey founded the Korea Foundation for Advanced Studies. Supported by the Chey family, each year it sends a dozen or so of Korea's brightest social scientists and humanists abroad to complete their doctorates. The Sunkyong Group funds several other projects, including a public library in Chey's hometown of Suwon, south of Seoul, and a yearly essay contest that awards $5,000 grants for undergraduate and graduate study. And, as founder of the University's Korean alumni club, Chey has guided scores of Korean students to the U of C and helped numerous Chicago grads find jobs in his country.
"His devotion to education," says Ralph W. Nicholas, AM'58, PhD'62, director of Chicago's international-studies center and president of International House, "is truly heartwarming, especially to those of us who labor in this territory all the time."
PART OF CHEY'S EMPHASIS ON EDUCATION is based on his belief that modern Korea is on the brink of a second major transition, and that its people need to be prepared to take full advantage of the change. The first transition, of course, came in the 1970s and '80s, when Korea astonishingly transformed itself into an economic power. The swiftness of this change has been breath-taking: In 1962, when Chey returned to Korea, the nation's per-capita gross domestic product was less than $100; in 1995, it will reach $10,000. In the late '50s and early '60s, Korea's economy was primarily agricultural. In the '70s, its base was low-skill manufacturing of such goods as textiles and footwear. Now its most successful industries are steel, semiconductors, and shipbuilding.
How did Korea do it? A combination of authoritarian politics, shrewd economic planning, and hard work, says Chey. To build Sunkyong in the 1960s, he says, "I just had to go along with the government's five-year plan."
This progress was not without cost, however. Politically, the atmosphere was brutal; Park Chung Hee, who took power in a military coup in 1961 and ruled until his assassination in 1979, mercilessly suppressed all opposition--as did Chun Doo Hwan, another military strongman, who ruled from 1980 to 1987. And yet, says Chey, "The first and second five-year plans were very successful. It was a big help to have the government and the banks" guaranteeing a company's loans, for example.
But now, he believes, the Korean economy has outgrown the need for such centralized planning. Nor does he see the Korean model of economic success as one that current developing countries should, or even can, emulate. "The Korean model," Chey says, "is very special, because the government's five-year plans were very strong under the Park regime, because the Korean sense of entrepreneurship is very strong, and because the education level is very high."
Instead, Chey recommends that developing countries allow the private sector to flourish or flounder on its own. "I don't have all the answers," he says. "I just know that it's better to be more free than less." Spoken like a true believer in the "Chicago school" of economic theory. Which, of course, he is.
Michael Newman is a freelance writer in Seoul.