Samsung passes Hyundai as Korea's No. 1

Hyundai's fall comes shortly after the funeral of founder Chung Ju-yung

In this story: No. 3 LG Group just behind Strong performance by electronics unit "Business is business" RELATED STORIES, SITES

By Alex Frew McMillan
CNN senior writer

HONG KONG, China -- Samsung Group has displaced Hyundai as the largest corporate group in South Korea.

Hyundai had topped the ranking as the largest chaebol, or conglomerate, every year since the commission first compiled it eight years ago.

The Fair Trade Commission (FTC) on Sunday released its an annual ranking of the 30 largest conglomerates in South Korea.

All told, the 30 companies account for 85 percent of the country's gross domestic product. The ranking put their total assets at around $326 billion as of the end of last year.

Analysts had expected Hyundai to lose its top spot after it spun off Hyundai Motors last year. Its motors division ranked fifth on the FTC list.

Its toppling comes amid financial problems for the group and shortly after the death of its founder. Chung Ju-yung, 86, died of complications from pneumonia on March 21.

Hyundai has also been struggling to fend off bankruptcy for parts of its empire. Last Thursday, creditors offered the group's embattled Hyundai Engineering & Construction Co. subsidiary a $2.2 billion rescue package.

"Because our group is having difficulty, people are hoping we will put all effort to find our former position," said Hyundai spokeswoman Min Soo-jeong.

No. 3 LG Group just behind

The ranking puts Samsung Group first with assets of $52 billion, or 69.9 trillion won. Hyundai Group ranks second, with assets of $39 billion, or 53.6 trillion won.

LG Group, formerly Lucky Goldstar, came close to pipping Hyundai. It ranks No. 3 at $38.7 billion, or 52.0 trillion won.

The top five is rounded out by No. 4 SK Group, at $35.3 billion, and No. 5 Hyundai Motor, at $26.9 billion.

One analyst noted that the Hyundai Group would still have topped the list if its motor group's assets were included.

"The reason why Samsung has taken the first tier in chaebols in Korea is mainly because of the Hyundai Motors disaffiliation," said Shin Seung-yong, senior analyst for Daewoo Securities in Korea.

Strong performance by electronics unit

Samsung has benefited recently by strong performance from its Samsung Electronics subsidiary. A spokesman said the company didn't attach great significance to being the largest chaebol.

"The size of companies, the ranking, is not an important issue right now," said Choi Seung-jin, Samsung's manager of public relations. "The important thing is not the figures of the company, but the real possibility for [financial] stability. "

Korea's conglomerates are revamping themselves in the face of government pressure. In the aftermath of the Asian financial crisis, the Korean government has ordered them to sell off assets to pay down debt.

Hyundai Group has been spinning off its affiliates to concentrate on its core construction business. It spun off Hyundai Department Store in 1999.

"Business is business"

Shin at Daewoo said neither losing the top spot nor Chung's death would have a great effect on Hyundai. Chung had been in ill health for some time.

"Even if the founder has died, business is business," Shin said. But he added that Hyundai would need strong government support to achieve a turnaround.

The stakes are enormous. Hyundai Electronics Industries -- which is changing its name to Hynix Semiconductors -- alone accounts for 8 percent of South Korea's exports, Shin said.

According to the FTC ranking, Hyundai Group now has 26 subsidiaries, compared with 64 for Samsung. Samsung had cut its number of subsidiaries to 40 as of the end of last year. But the tally has risen thanks to Internet startups the company owns.

Shin said the chaebols were gaining ground in their power struggle with the Korean government. He said he expected them to make further power plays as President Kim Dae-jung faces the fallout of recent controversies.

Kim reshuffled his cabinet last week, replacing nine ministers.

Creditors rescue Hyundai unit
Hyundai founder Chung dies

Samsung
Hyundai
Korea Fair Trade Commission

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