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Obituaries

Former Daewoo Chairman Kim Woo-choong dies at 83

Founder of South Korea's No. 2 conglomerate saw its rapid collapse

Kim Woo-choong, founder of South Korea's Daewoo Group, died on Dec. 9 of natural causes at the age of 83.   © Yonhap/Kyodo

SEOUL -- Former Daewoo Chairman Kim Woo-choong, who founded one of South Korea's biggest conglomerates only to see it suddenly collapse, has died of natural causes at age 83.

Born in Daegu, Kim founded Daewoo as a textile company in 1967, when he was just 30 years old. From humble beginnings -- the company started with just 5 million won in capital -- the business grew into a sprawling empire that included automobile, shipbuilding and home appliances affiliates at its peak.

By 1993, Kim was promoting global expansion and investing in overseas markets such as Vietnam, Uzbekistan, Poland and India through mergers and acquisitions. This aggressive strategy helped Daewoo become the No. 2 conglomerate in South Korea in 1998, surpassing Samsung. It was ranked 18th by Fortune Global 500 in terms of revenue.

"Chairman Kim Woo-choong was a pioneer who led industrialization and globalization of Republic of Korea. He sowed seeds of global management in Eastern Europe right after the Cold War ended and advanced to Latin America, China, Vietnam and Africa for the first time," the Federation of Korean Industries said in a statement after his death.

But such glory did not last long.

An economic downturn in the late 1990s hit emerging markets where many of Daewoo's key businesses were based, sparking a liquidity crisis at the company. Soon after, the Asian financial broke out and Daewoo found itself unable to pay back billions of dollars of debt.

Even selling the Hilton Hotel in Seoul for $215 million in 1999 was not enough to cut its debt-to-equity ratio of more than 400%. Daewoo announced a restructuring plan to cut its affiliates to 10 from 41, but creditors put the company into a rehabilitation program that same year.

Later, creditors sold Daewoo Motors to General Motors, while trading company Daewoo International was acquired by local steelmaker Posco. Its shipbuilding unit has been under the management of state-run Korea Development Bank for the last two decades which recently agreed with Hyundai Heavy Industries to merge them.

Kim faced a similarly unhappy fate. After his company collapsed, he fled overseas to avoid a criminal investigation into his corporate activities.

Kim returned to South Korea in 2005 and the next year received an eight-and-half year prison sentence and 18 trillion won fine for accounting fraud and using fake financial statements to take out 10 trillion won worth of loans. He was pardoned in 2008 by then-President Roh Moo-hyun.

After he was freed, Kim ran an education program for young entrepreneurs in Vietnam. In a 2014 book written by National University of Singapore professor Shin Jang-sup, Kim blamed economic bureaucrats for letting Daewoo collapse.

Analysts say Kim embodied both the success and failure of South Korea's economic development. Kim was close to former president Park Chung-hee who led the country's economic growth during his 18-year authoritarian reign.

"Chairman Kim had two sides in his life. He built up a conglomerate during the industrialization period, but was also closely connected to politics to make it happen," said Park Ju-keun, head of CEO Score, a corporate analysis firm. "He lived a life that illustrated a scene of Korea's modern history."

Kim is survived by his wife Chung Hee-ja and three children. His death on Monday evening was announced by the Daewoo Sky Institute on Tuesday.

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