Hankook & Company, Leadership Void 'Management Disruption'

As Cho Hyun-beom, Chairman of Hankook & Company Group (Hankook Tire), is legally detained, the company is facing a zero-visibility situation. Especially as external uncertainties such as the high tariff policies of the Donald Trump administration in the U.S. are increasing, the leadership void is raising a sense of crisis both inside and outside the company.

According to the industry on the 29th, Hankook & Company Group is struggling to come up with countermeasures as Chairman Cho is detained. The Seoul Central District Court sentenced Chairman Cho to a total of 3 years in prison and legally detained him for charges of embezzlement and breach of trust worth 20 billion won.

Initially, Hankook & Company Group expected to avoid legal detention but is unable to hide its embarrassment over Chairman Cho's detention. Previously, Chairman Cho was detained and indicted in March 2023 and was released on bail in November of the same year. After winning a management rights dispute with his siblings and private equity funds (PEF), he actively pursued significant mergers and acquisitions (M&A).

Hanon Systems, which Chairman Cho led the acquisition of, is a representative example. Chairman Cho completed the acquisition of Hanon Systems, the world's second-largest vehicle thermal management (HVAC) company, earlier this year. With Chairman Cho's decision to acquire Hanon Systems, Hankook & Company Group's ranking based on total assets jumped from 49th to 27th, and it was re-designated as a conglomerate subject to mutual investment restrictions, significantly expanding the group's size.

However, as Chairman Cho eventually enters a 'management from prison' system, Hankook & Company Group's goal of becoming a global mobility company beyond tires has hit a red light. Particularly, amid increasing uncertainties such as the Trump administration's 'tariff war', Hankook Tire attempted to respond by expanding its local plant in the U.S., but Chairman Cho's legal detention has made it difficult to respond swiftly to major issues of the group.

If the owner void delays the research and development (R&D) expenditures and investment decisions that Hankook & Company Group has been pursuing, not only Hankook Tire but also its partners may face increased difficulties. If this happens, it is inevitable that there will be negative impacts on the automotive industry and manufacturing sector as a whole.

Future strategy establishment is also expected to face disruptions. This month, Hankook & Company Group established 'Hankook & Company Ventures Co., Ltd.', a corporate venture capital (CVC), for the first time in 84 years since its founding. Hankook & Company Group planned to build an ecosystem collaborating with core affiliates by extensively supporting startups discovered by Hankook & Company Ventures, but this has also become difficult. A Hankook & Company Group official stated, "We are shocked by the unexpected result, and the entire group is in great shock," adding, "We are carefully discussing legal response measures, including an appeal, with the legal team."

Choi Jong-geun, Jeong Won-il, Choi Eun-sol reportersscottchoi15@fnnews.com Choi Eun-sol, Choi Jong-geun, Jeong Won-il reporters