A dash of California in Seoul

Chief executives do not normally enjoy finding an unreported $1bn black hole in a company they have just inherited. But Ted Chung bounds from his chair with glee when he recalls the day he discovered how bad things really were at Hyundai Card in January 2003.

"I like scary things . . . I got really charged," he says, energetically pacing his boardroom in central Seoul as if on a sugar high. "My wife was surprised at the smile on my face. I told her: isn't it exciting that such a small part of the company can be losing so much money?"

Hyundai, the South Korean conglomerate famous for its cars, had appointed Mr Chung to solve what it thought was a minor niggle in its ignored financial unit, which was then the country's smallest credit card company. Seoul's credit bubble was bursting and Hyundai suspected - correctly - that the unit was being over-optimistic in its bookkeeping.

When Mr Chung unearthed the true scale of the impending defaults, his masters at Hyundai Motor, the main part of the conglomerate, bellowed at him in disbelief.

They were going to get even more upset.

Hyundai, a company run by hard-nosed industrialists, would discover that Mr Chung had worryingly unorthodox ideas about spending lavishly on style, art, fashion and branding. These were not Hyundai values but would win Hyundai Card an unexpected reputation as one of Korea's hippest and most creative companies.

The company is now profitable and has become the country's second biggest card provider, with market share of 16 per cent, rising from only 2 per cent in 2003.

Mr Chung is not quite the outsider he makes out, being the son-in-law of Chung Mong-koo, chairman of Hyundai Motor.

He jokes about his initiation into the Hyundai clan, when the bigwigs grumbled that this young upstart with his passion for oil painting and French literature was driving a Toyota, the ultimate heresy.

"They disciplined the wild cow," he says with one of the mischievous laughs that pepper his conversation.

Although he married into the dynasty in 1987 while studying at the Massachusetts Institute of Technology, he initially refused to join the business. Curiosity only won through when Chung Ju-yung, the founder of Hyundai and one of the builders of modern Korea, repeatedly pressed him. Despite this powerful mentor, Mr Chung insists he got no favours during a painful immersion.

"I was shocked at the rude attitude, the F-words and the way they made decisions and treated people, and the way they ate and drank," he says. "When I pissed off the group planning head, they warned me not to sit too close or he would beat me. They despised me and ignored me. They saw me as underqualified, and I was. My best strategy was just not to make a mistake."

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But he would not have been entrusted with rescuing Hyundai Card if he had not already forged his reputation saving another business at the grimy, unglamorous heart of old Hyundai. Fittingly for a man who likes "scary things", he made his name in the violent Mexican city of Tijuana, building shipping containers and haulage trailers in the 1990s. He jokes Hyundai saw him as "expendable".

"One day on the radio, I heard Ted Chung had been kidnapped. They must have been planning to kidnap me but announced it prematurely," he says. The Tijuana operation had been bleeding money for 10 years and Mr Chung turned it round in two, tackling bad relations with local workers and inefficient production lines. He sent home Korean managers who did not gel. He declined the mayor's offer of 10 bodyguards with AK-47s.

Despite a decade working with shipping containers, Mr Chung was unsentimental about killing the business, arguing Hyundai could not compete with China. In a successful overhaul, he pushed his unit to refocus on auto parts, renaming it Mobis.

But if Hyundai's top executives thought he would take a similarly muscular approach to rescuing a credit card company, they were soon disappointed. He started conventionally enough. He got a $500m lifeline from his father-in-law and arranged a partnership with GE, which injected Won1.5tn. He cut off half the defaulting cardholders.

But then an unexpectedly trendy Mr Chung took centre stage, doing things other card companies and banks did not. His cards came in garish blues, yellows and pinks, decorated with pictures of sweets, Christmas trees and hobby horses. In 2003 Hyundai was so lacking in design acumen, Mr Chung painted the first templates himself. He tailored credit cards for people according to interests and tastes. Some offer credit points for McDonald's, others for classical concerts. "If you create identity and character, people go crazy about you," he says. This was a minor revolution for Korean business, which often treated consumers as a herd.

But Mr Chung's approach meant spending $50m on designing new card issues rather than $50,000, as it had formerly. Dumbfounded Hyundai high-brass thought he was mad, but his boutique specialisation on cards gave him an advantage over lumbering Korean banks.

Mr Chung branded Hyundai as almost unattainably luxurious in glossy advertising. To build up the "premium" brand, he burnt money on hosting art showings by Christie's at exclusive dinners washed down with Romanee-Conti. "Once you have achieved the luxury status, it is easier to come down," he explains, as he now promotes cheaper cards for socially competitive youngsters.

But had this world of opulent branding and art installations come too far from the parsimonious Hyundai of Chung Ju-yung? The founder, who died in 2001, never even bought new shoes. "He would not love the style, but it was in his nature to win and he would appreciate anything that succeeds," Mr Chung says with unusual care. "I would like to show him what we have done."

Graduates flock to Hyundai Card saying the company sounds "fun" to work for. But Mr Chung admits creative businesses have their limits. "If you are all about 'free spirit, bring your dog' then eventually you'll have a crisis," he says.

In the company bar, rolling screens of customer complaints prevent employees relaxing too much. After all, this is still Hyundai.

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