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[News Focus] Hanwha Chemical-Q Cells merger draws eyes to heir, solar biz

Merger seen as Hanwha Group speeding up leadership succession to third generation

Aug. 1, 2019 - 16:48 By Cho Chung-un
A decision to have Hanwha Chemical Corp. absorb its wholly owned subsidiary Hanwha Q Cells & Advanced Materials drew market interest this week not just because of the move aimed to boost solar power business, but also the indication that the group may be laying the groundwork for a leadership transfer to the chairman’s son.

Hanwha Q Cells & Advanced Materials is a global manufacturer of solar power modules and automotive lightweight materials.

It has been led by Executive Vice President Kim Dong-kwan, Hanwha Group Chairman Kim Seung-youn’s eldest son. 

Kim Dong-kwan (Hanwha Group)


The structural change of having Q Cells join the group’s major chemical business hints at the group moving to crown Kim Dong-kwan as successor of the group, according to market observers.

The 36-year-old Harvard graduate built his career mostly with Hanwha’s solar power business. A year after Kim joined the group in 2010, he moved his post to the group’s solar business unit. In 2012, Hanwha acquired German company Q Cells to secure its solar power sales network in Europe, Australia and the US.

Currently, Hanwha Q Cells is world’s leading photovoltaic system company, with a strong presence in the US, Japan and Germany. The company has been seeking to shift from its position as a leading module maker to that of a total energy solution provider.

The merger process is set to be completed by the end of this year. Before the merger, Hanwha Q Cells will be split into two entities, the company said.

According to the firm, the merger is to promote the company’s competitiveness in the petrochemicals and energy sectors. Having Q Cells on board, Hanwha Chemical will have petrochemicals, materials and solar power businesses under one roof.

Hanwha Chemical saw 9 trillion won ($7.6 billion) in sales last year, with 41 percent of its income generated from petrochemicals.

Despite Hanwha’s ambition to become the world’s No. 1 photovoltaic system company by investing 9 trillion won by 2022, its performance has been far below market expectations. It ran 10.7 billion won in deficit last year and 14.3 billion won the year before. The company has shifted the blame to low oil prices and a growing number of Chinese competitors manufacturing solar cells at lower prices.

While the leadership succession may be in the books by tradition, Kim Dong-kwan is tasked with the challenge of turning the solar power business profitable.

The succession scenario of crowning Kim has been circulating in the market in recent years.

Kim holds the second-largest stake, 4.4 percent, in Hanwha Corp. after the chairman. His two younger brothers Dong-won and Dong-sun each have identical 1.7 percent stakes.

The eldest son’s stake in Hanwha S&C, a company widely viewed as being part of the succession process, is 50 percent, double than that of his brothers. He is reportedly planning to marry in the fall. Hanwha is South Korea’s seventh-largest conglomerate by assets.

By Cho Chung-un (christory@heraldcorp.com)