Fiery Passion for Contributing to the Nation and Society through Business
- Chong-Hee Kim, Founder of Hanwha Group
This is a translated version of the original article titled "Pioneers of Creative Enterprise - Chong-Hee Kim, Founder of Hanwha Group” published by Chosun Weekly, a news magazine of Korea.
"There is no deception in explosives; they always explode. They must be placed faithfully, and be set off precisely. That is why the hands that make explosives, from those of top executives to managers, engineers and technicians must be honest and sincere. The leaders of an explosives business must also be armed with fiery passion and dedication to the human factor."
The introduction and domestic production of dynamite in Korea is credited to Chong-Hee Kim, an early pioneer and industrial leader often referred to as "Dynamite Kim" for his important contribution to the development of Korea's economy.
Kim constantly emphasized the "honesty of explosives." Both the man himself and the ideal entrepreneur he envisioned shared much in common with the nature of the material. A charismatic leader, Kim held trust, honesty and loyalty as the basic tenets of his life. A devout Anglican, Kim created a corporate culture that emphasized autonomy and responsibility. His "Jeong-do (Integrity)" Management philosophy expanded to include explosives, petrochemicals, machinery and energy in the 1960s and then into the service industry in the 1970s, building the foundation upon which the Group would be built.
A Fiery Passion
Kim was born on November 12, 1922 in Cheonan, Chungcheongnam-do, during the height of the Japanese occupation and exploitation of Korea. While studying at Seonghwan Public Elementary School and Jiksan Public General School, he constantly dreamed of a bigger world. His passion for learning led him to the prestigious Gyeonggi Public Commercial High School in Seoul in 1937, and his diligence for academics set him apart from his classmates. At the time, Gyeonggi Public Commercial High School was commonly known as "Dosang" for short.
In November 1940, when Kim was a senior at Dosang, he was returning home along a dark street in Hyoja-dong, Jongno-gu, after class, when he witnessed a group of students brawling in front of what is today Gyeongbok High School. He saw four Japanese students who were on the Dosang rugby team and three Korean students. Seeing his fellow Koreans outnumbered and being pummeled by the bigger Japanese students, Kim barreled his way into the melee without regard for himself, kicking and punching.
Colonial Japanese policemen soon arrived and took all eight students to the police station, eventually turning them over to their school that evening where they were then allowed to return home late at night. The mood in the principal's office the next morning was grim. Discussions were taking place over the punishment for the eight students involved in the fight. Kim's behavior was the culmination of the long oppression of Korean students by the colonial rulers. Korean students had had no choice but to subject themselves to the rules and policies of Japanese colonial rule, albeit while harboring resistance in their hearts.
Dosang espoused an official policy of "Single Japan and Joseon," with half of the student body composed of Japanese youth and the other half Koreans, but the majority of the faculty was Japanese whose goal was to coerce allegiance to the Japanese emperor. However, these attempts only strengthened the resolve for nationalism by the Korean students and their resistance against the Japanese. At Dosang, there had long been an association for Korean students from the Chungcheongnam-do region called "Chungnamhoe." Although the association was ostensibly created to promote fellowship among students from the same region, students would nevertheless talk about issues important to the Korean people whenever they met. Kim began to attend Chungnamhoe meetings during the first semester of his junior year.
"Is the provisional government in China still active? Are the bandit groups in Manchuria actually Korean independence fighters? Will Japanese oppression of the Korean people continue and is Korea destined to forever remain under the rule of Japanese colonialism?"
The fierce debates on these topics entranced Kim, and he experienced pride in his national identity whenever he took part in these meetings. Even if Kim had not been a member of Chungnamhoe, he would not have turned a blind eye to Korean students being attacked by Japanese students.
Only when Kim had been detained and sent to the police station did he discover the reason for the brawl. The Japanese students had been walking behind the group of Koreans and dropped a rugby ball they were carrying. The ball rolled toward the Korean students, one of whom absent-mindedly kicked the ball. The Japanese students demanded an apology, leading to the fight. Released to his school, Kim was asked by the head of school discipline:
"Chong-Hee Kim, did you hit them first?"
"The fight was already underway when I came upon them."
"Then, were you trying to stop the fight when you got involved?"
"No sir! I saw them fighting four to three, and I felt it was unfair and joined the fight."
"That only increases your guilt. You should have tried to stop your classmates from fighting. It is unforgiveable that you entered the fight, even if on the side of the outnumbered."
"It is only right to help the weak."
"What if there had been three Japanese students outnumbered by four Koreans? Would you still have taken the side of the three students then?"
Kim only bit his lips and held his tongue. The incident was no more than a fight between students, a common occurrence, but the fact that it was a mass fight involving Korean and Japanese students made it serious. The Japanese headmaster expelled all eight of the students involved in the brawl. The punishment was unexpected and overly harsh.
Kim was forced to leave the school he had attended for the past four years. Thanks to the efforts of his uncle, he was able to transfer as a senior to Wonsan Public Commercial High School, where he graduated in December of 1941. He then moved to Seoul, and the twenty-year-old Kim paid a visit to his uncle.
"I'm glad for your visit. I had been waiting for you since I heard that you finished school. I have already arranged a job."
"I would like to continue my studies rather than begin working."
"It is true that one's studies should never end, but you should also consider your circumstances."
"I have actually written to my brother about going to Japan."
"Japan? With the end of the war in sight and the world in the midst of chaos? Our people in Japan are struggling for a chance to return home, and you want to go there now? Korean students in Japan are being pressured more than ever to enlist in the Japanese army."
Kim could only remain silent.
"You can always study more after starting work, just like your brother did. Do what I tell you to do. Tomorrow, go to the Gyeonggi-do Police Department and find Superintendent Koike."
"He has always held you in high regard, saying you would grow up to be a great person. It was he who arranged this job for you."
Kim had mixed feelings. Koike Tsuruichi had arranged for Kim to stay in his home in Wonsan. Hearing that Koike had now found a job for him, Kim could not help thinking that his destiny had somehow been entwined with Koike. Besides, he had to pay a visit to the Japanese police inspector anyway, to express his thanks for the favors he had shown Kim. The next day, Kim went to the Division of Security of the Gyeonggi-do Police Deparment. Koike greeted Kim warmly.
"Congratulations on your graduation. A new chapter has begun in your life, and I look forward to watching you develop as an adult."
"I will try my best."
"As you may have heard, your job has already been determined. I will make the call today, so present yourself at your new company first thing tomorrow morning."
"I have only heard that it is a company dealing in explosives..."
"The Joseon Gunpowder Joint Market. The company was established only a month ago, but it has been created from Korea's four top explosives manufacturers and two explosives marketing companies. It is a large company with bright prospects."
"But superintendent, I know nothing about explosives."
"Technicians make the products, but the administrative staff supports them by purchasing chemical ingredients, controlling production and managing sales. You will work in the purchasing department of the company." Koike's show of favor, even having selected the specific department in which he would work, was both burdensome and unsettling for Kim. Indeed, Kim had been thinking about the best way to turn down Koike politely, even as he was on his way to see him. His worries were not alleviated by the meeting, and Kim left with a heavy heart.
“It is not as if working for the company will deprive me forever of the chance to go to Japan. I have plenty of time, and there's no need to upset my uncle or Mr. Koike by turning down their kind offers,” thought Kim.
Joseon Gunpowder Joint Market had been founded through a merger in 1941 of Korea's leading companies in the industry as part of the Japanese colonial government's wartime economy management initiatives, and it was a powerful new entity. As was the case with the Japanese Gunpowder Joint Market founded six months prior in Japan, the new company was charged with purchasing all of the products manufactured by gunpowder plants throughout Korea, setting prices and distributing the products to clients, even allotting production targets to each plant after purchasing and supplying the needed raw materials to the production plants.
Staffed by Japanese Managers
Three months had passed since Kim took his job at Joseon Gunpowder, but he still had little interest in explosives. His starting pay was 50 won. A friend who had graduated from Dosang the past December and taken a position at the Joseon Colonial Commercial Bank was paid 45 won per month. Explosives was a specialized field that required the handling of hazardous materials and thus offered higher pay and better benefits compared to other jobs.
The company was still in the midst of establishing its organizational structure. The company had a presiding director, two senior directors and three directors making up a six-member executive body, all of whom had belonged to different companies and had conflicting interests. Moreover, each director had brought over employees from their respective company to staff the new organization, which only added to the confusion.
The majority of the fifty or so managing staff were Japanese. Bong Su Kim, a graduate of Waseda University, was head of warehouses in the administrative department, and five more Korean employees including Yeong Man Kim, Seok Seong Kim and Kim himself served as junior employees. There were around 20 laborers, all Koreans. Among them, Kim was the only newcomer to the explosives industry. He had not been part of one of the previous firms that merged to form the new company, and he remained a loner. Sometimes, however, he was regarded as being from the Joseon Nitrous Company, since he had been specially hired by President Miyamoto of that company.
Miyamoto had, of course, taken in Kim as a favor to Koike. According to the "special directive on firearms and explosives" then in effect, every step of the manufacturing process, from raw material purchase to the sale of finished products, had to be reported to and supervised by the police department. Miyamoto could not very well refuse a request for a favor from a police officer whose agency had jurisdiction over his company.
Meanwhile, newspaper headlines continued to blare the string of victories by the Japanese imperial forces. Following the surprise attack on Pearl Harbor, the Japanese Empire continued its relentless offensive and by May, six months after the outbreak of the war, had expanded its control to the Philippines, Malaysia, Myanmar and Indonesia. Explosives companies began to receive significantly higher production quotas from June, forcing the executives to set aside their conflicts. Understanding that his fate had already been entwined in the explosives business, Kim continued to learn his trade and devoted himself to his work, making himself an integral part of his company in less than a year. He also began to develop a deeper understanding of the chemical explosives industry.
Korea was finally liberated on August 15, 1945, and Kim was appointed as Chair of the Chemical Company Autonomous Committee. He was ambivalent about the position, but accepted it as part of his duty. First, he made sure that strict controls were in place in the company's warehouses to prevent munitions, powder and explosives from being released without authorization during the turbulent days following independence. However, the Committee's authority only extended to the regions below the 38th parallel even at that time. North of the line, Soviet occupying forces had taken control of Pyeongyang before U.S. forces and had already established a military government there.
Koreans living abroad began to return to their homeland from mid-September, and Japanese nationals living in Korea began making preparations to leave. As Japanese employees of the company busily prepared for their move, Kim was summoned to the office of the president. He could feel the tension in the executive office. He entered to find all six senior executives sitting around a table, including the president of the company, Miyamoto, as well as Senior Vice-president Kimura, Vice-president of Sales Suzuki, Director of Operations Ueno, Director of Purchasing Masumuro and Director of Production Yoshida.
"Mr. Kim! Have a seat!" Miyamoto pointed to the head of the table.
"Thank you, but I will be fine sitting here."
Kim then attempted to sit at the far end of the table, the junior position.
"Today, this is where you sit. Please, come."
"Really, I am fine."
"We are here to perform the transfer of business of the Joseon Gunpowder Joint Market to you."
"Transfer of business?" Taken aback, Kim relented and sat in the chair shown to him by Miyamoto, and looked around the table at the faces of the gathered executives. He could read the tension in their expressions. Miyamoto pulled towards himself a thick pile of documents, and continued.
"As you are aware, we must all return to our own country. We have discussed the continuation of this company's business, and we have come to the agreement that the company's entire business affairs will be transferred to you, Mr. Kim."
"Once you step down, the company's operation will pass over to the Autonomous Committee anyway, will it not?"
"We have discussed the role of the Committee. However, the executive committee decided not to acknowledge the Autonomous Committee, which was created arbitrarily by the employees."
"Then, what do you mean by a transfer of the company's business to me?"
"You are being asked to take over the company's business not as Chair of the Autonomous Committee, but as an employee of this company."
"Whether in my capacity as Chairman or an employee, what does it matter?
I am still the same Chong-Hee Kim."
"That is not so. The Autonomous Committee is an ad-hoc organization with no legal standing. It could be disbanded at any time, at which point your position as Chairman would disappear. That is why the executive committee will appoint you, Mr. Kim, as Chief Manager of Joseon Gunpowder and transfer all business responsibilities to you."
The position of Chief Manager had not previously existed at the company. However, the appointment or removal of a chief manager related to conducting business was within the purview of the executive committee.
"Korea may be under U.S. Army military governorship now, but as long as the nation's laws are in place, the decisions made by the executive committee of this company are binding and legal. It is our wish that you respect and follow our decision."
'Someone will have to take over the company's operational duties eventually. There is no reason why I should refuse their plan for the legitimate transfer of business.'
Kim reviewed the list of key transfer documents and the minutes of the executive committee's meeting and signed the papers as presented by Miyamoto. The company's other Korean employees accepted without question the decision of the executive committee to transfer the company's operational responsibilities to Kim. The Japanese employees and the company's executives completed their departure by September 23, 1945, and on September 24 the company's management system was officially re-launched under the leadership of Chief Manager Chong-Hee Kim.
Meeting Captain Smith
After Korea's liberation, Joseon Gunpowder was placed under the oversight of the U.S. Army military government. As Chief Manager of the company, Kim took charge of operating Korea's sole explosives company as well as managing the 31 powder and explosives depots below the 38th parallel. As the leader of Joseon Gunpowder, Kim began to build new sales channels for the military government. In addition, he worked to maintain prices at pre-liberation levels in order to aid in the economic recovery of Korea following the end of the Second World War.
'Dynamite will be indispensable for the U.S. Army for building military roads and bases.'
Kim believed that he would be able to sell the explosives his company had in stock to the American military: 3.7 tons of dynamite, 0.4 tons of black powder and 49 kilometers of fuses. That amount of dynamite was not insignificant. The black powder could be sold later for use in mining, and just unloading the dynamite at the company's official prices to the U.S. Army could net a considerable profit. But there was no market yet.
'Should I go to the U.S. forces headquarters and talk to them? But I can't speak any English! There will be an interpreter, but what if they commandeer everything once I mention our supplies? Or, perhaps it could be for the best if our stock is transferred to an official body and we are relieved of the responsibility.'
After much contemplation, Kim decided to take the leap and went to the American military government headquarters in Yongsan. He marched up to the military policeman standing guard at the gate.
"Do you know dynamite?"
Kim summoned every scrap of English he had learned in school.
"I have dynamite!"
The MP clearly did not understand.
"You don't know dynamite? Bang! Pow!"
Only when Kim pantomimed explosions did the guard understand what he was trying to say.
"Oh, yes, I see. Dynamite."
"Yes! Dynamite, I have dynamite, many, many..."
"You mean, you have dynamite with you?"
The MP suddenly drew back, pulled out his sidearm and shouted at his partner in the guardhouse. The other MP came out with his pistol also drawn, and made as if to frisk Kim.
"Have no, have no..." Kim waved his hands and kept repeating in his halting English that he wasn't carrying dynamite on him. The MP, undeterred, gave Kim a thorough search and pointed his pistol at him, commanding him to walk. The MP led Kim to what turned out to be the MP headquarters. An officer who had been alerted by the guardhouse came up to Kim and began asking questions, but neither could make each other understand.
About half an hour later, an interpreter arrived. He was a second-generation Japanese man named George Yamada. Kim calmly explained to him about the company and the reason for his visit to the Army headquarters. An hour later, Kim was shown in to the office of the headquarters' quartermaster. The supply officer there immediately told Kim that he wanted to check the inventory of explosives and munitions in the company's warehouses.
Hongje-dong and Nokbeon-dong Depots
Kim said he was ready to show them his stock at any time. He did not expect, however, the military to be in such a hurry. The very next day, an American jeep braked to a stop in front of the company's offices.
Other employees could do nothing but watch dumbfounded as Kim shook the hands of the GIs stepping out of the jeep. The visitors included the supply officer from the day before, George Yamada and another officer. The third man introduced himself as Captain Smith, an officer of the Corps of Engineers. Kim gave them a brief overview of the company's business, and led them to the depots in Hongje-dong and nearby Nokbeon-dong. An expert engineer, Captain Smith personally checked the condition of the dynamite and fuses in storage, nodding his approval and repeating, "Good, very good!"
"When are you planning to visit the warehouses in the provinces?"
The conversation progressed as Kim would ask a question in Japanese, which Yamada would relay to the supply officer in English, whose answer would then be interpreted back into Japanese for Kim.
"Since the explosives in storage in the two depots we have visited are in favorable condition and the inventory corresponds exactly with the figures you have provided us, we can take your word for it regarding the other storage facilities."
Kim said, "People who work with explosives must be honest and precise. What would happen if explosives failed to explode when they should, or exploded when they should not? The person behind the explosives must always be honest and precise to ensure that everything involving explosives is done with faithfulness and careful precision."
When Yamada interpreted what Kim had said, the two American officers nodded their agreement.
"Please ask them when they will be able to purchase the dynamite."
"They say that they will contact you."
"We are having difficulty paying our employees right now."
"There will be good news soon, and they are asking you to make sure the explosives depots around the country are secure and well-managed."
As Kim and his staff awaited this good news, October of 1945 gave way to November. On November 2, the military government announced Ordinance 21, titled "Retention of Laws," which declared that all laws in place would remain in full force unless repealed by the military government. Both just and unjust laws had to remain on the books until they could be reformed in order to prevent chaos across society. The new ordinance ensured that Joseon Gunpowder Joint Market Inc. would receive the full protection of the law under the commercial code, and Kim was able to exercise his role as Chief Manager of the company with full legal rights.
Ration box filled with dollars for his employees
On November 5, a week after the American officers had taken a tour of the company's storage facilities, Captain Smith and George Yamada arrived at the office of Chief Manager Kim carrying a large C-ration box.
"Salary for the employees!" Yamada said, thrusting the box towards Kim.
"The decision has been made for the U.S. Army to pay the salaries of the employees first, and the issue of the explosives currently in storage will be determined later."
"Do you know what we pay our employees?"
"No. We brought 10,000 won, as a first installment." Even with the rampant inflation, 10,000 won was a considerable sum of money. The price for a half bushel of rice, which had been around 5 won immediately after liberation, had doubled within a couple of months; however, as the average monthly pay of the company's employees was around 40 won, the money in the box was still a small fortune.
Kim’s standing among his employees naturally skyrocketed. Kim settled all the back pay of the regional managers, and in November, he handed out a cost-of-living bonus amounting to 50% of regular pay to every employee. On December 6, the military government announced Ordinance 33 and seized all Japanese assets that had been frozen since September 25. The government further declared that any industrial facilities that had been Japanese property would continue to operate under the supervision of the Department of Industry until further arrangements could be made.
However, Joseon Gunpowder was placed under the direct supervision of the U.S. military government due to its status as an explosives and munitions agency. The company had already shipped dynamite from its Honge-dong depot in mid-November, followed by a partial shipment of the stock in its Nokbeon-dong facility in December. In the regional offices, small amounts of explosives needed by mines in the surrounding areas were being shipped out under the approval of the Americans.
Kim was nervous and anxious about the future of his enterprise. The company would be able to maintain its reputation as long as its warehouses could continue to supply powder and explosives, but once the inventories ran dry, the company would be nothing but an empty shell.
Kim felt that restarting production was necessary not only to secure a future for Joseon Gunpowder but for the Korean explosives industry as a whole. Accompanied only by Yeong Man Min, Chief of Production, Kim went to Incheon to inspect the Incheon Gunpowder Plant operated by Chosun Oil and Fat Company. Kim knew that at the plant, there were several Koreans who had been apprentices under Japanese technicians. Kim felt that since Korean workers were fast and able learners, producing gunpowder and explosives would not be difficult as long as sufficient materials could be secured.
Kim's expectations, however, were dashed as soon as he set foot inside the Incheon plant. Rubble from the detonator fabrication room that had exploded in an accident several days prior still lay scattered about. The explosion had killed every senior member of the plant's Autonomous Committee. The victims had been skilled workers who had worked as apprentices in major manufacturing processes such as nitroglycerin synthesis or dynamite composition, and their loss was a severe blow.
Kim returned from Incheon with a heavy heart. The Japanese had said in derision that Koreans would not be capable of producing explosives on their own and Kim was beginning to think there was some truth to it. Perhaps it was impossible to expect workers to be able to manufacture gunpowder and explosives when they could not follow even the simplest and most basic safety rules, such as watering down the floor before resuming work in the dynamite composition room that had remained dormant for three months.
However, Kim had faith. Handling and storing explosives was an exclusive activity. Licenses were required, and storage was only possible in depots that met the strict conditions and requirements set forth by the regulations and ordinances controlling explosive substances. Once the company's stock was depleted, the Americans would have to resort to shipping in explosives from home, which would still require the workforce and facilities owned by Joseon Gunpowder to process and handle. The company, with its network of 31 depots around the country, was indeed the only Korean business capable of dealing with explosives. Kim was thus able to supply the Korean industry with explosives at a cost considerably lower than that determined by the American military government, which controlled the market. A bar of yeot, a sweet confectionary, cost 50 jeon (1/2 won) at the time; a stick of dynamite that was thicker than a bar of yeot only cost 30 jeon.
The story of Chong-Hee Kim, Founder of Hanwha Group to be continued
in the Newsletter for June.