I’m currently managing director of Content and Business Planning at The Korea Times. Before I took the current position in early 2024, I served as managing editor in charge of both paper and online for over three and a half years. In 2015-2018, I worked as Singapore correspondent covering ASEAN nations.
Mirae gives clue to financial globalization
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By Kim Jae-kyoung
“It is very important to have two sets of eyes. With one pair to observe what is going on. With the other, foresee the future. To be an entrepreneur, you have to foresee the future.” ― Park Hyeon-joo, chairman and founder of Mirae Asset from a Harvard Business School case study this year.
On April 22, an East Asian CEO appeared at Harvard Business School in Boston to give a lecture. It was not a regular class but a guest lecture designed to provide MBA students with some insight on “international entrepreneurship.” The one who stood at the podium of the prestigious center of higher education to share his experience with future business CEOs was Park Hyeon-joo, chairman and founder of Mirae Asset Financial Group, South Korea’s biggest and most successful asset manager. From April this year, the school used the history of the firm as a case study in the class titled “International Entrepreneurship,” with topics concerning the firm’s globalization strategy and the entrepreneurship of the nation’s mutual fund tycoon. The fact that Mirae was selected by Harvard signifies that Mirae’s strategy led by Park’s entrepreneurship has been recognized globally. Mirae’s journey to becoming a global leader has yet to be completed but its footsteps so far lead in the right direction and leave valuable clues for those seeking to start an international business. ― ED.
By Kim Jae-kyoung
“Genghis Khan”
This is the most condensed and effective quote that illustrates the entrepreneurship of Mirae Asset Financial Group Chairman Park Hyeon-joo and his globalization strategy and business philosophy.
Park repeatedly said that his role model is Genghis Khan, the 13th-century Mongolian warrior who conquered much of Asia and laid the groundwork for an empire that would span most of Asia and Central Europe. He won many battles with his foresight.
Park lives in a totally different world from Genghis Khan but they have one thing in common. Both have the spirit of challenge and a future-oriented mind-set. Park said that he draws inspiration from the warrior who built one of the world’s biggest empires by overcoming numerous challenges.
“Throughout my life, I have made countless efforts to overcome challenges to achieve the desired results. I have loved all the challenges I have encountered, and have discovered that innovation with a forward looking perspective is common sense,” Park said during his lecture in April at Harvard.
“Innovation is not a unique result that can only be derived from mathematics and research. Instead, I believe that it comes from breaking down complex ideas to simple ones, and making the right decisions based on common sense,” he added.
Know your home market first
Mirae Asset has been regarded as a role model for local financial services companies in globalization due to its fast forays into overseas markets and extensive networks.
People, even those familiar with the financial industry, often make a mistake in figuring how the asset manager has become a global emerging market expert. Many of them believe that it was because Mirae has a unique globalization strategy and rich pool of global talents.
It could be a good analysis of Mirae’ successful overseas expansion but they failed to pinpoint the underlying reason for it. The key success factor was that it first created a successful entrepreneurship model in Korea.
Park did not make the decision to go abroad before he had firmly established its business model here for two key reasons. First, he believes that unless Mirae is highly competitive and generates enough cash for global expansion, success cannot be guaranteed abroad. Secondly, he wanted to see how his business model took root here to apply the same model and spirit abroad.
However, when choosing an overseas market, Mirae has strictly limited its expansion to where it fully understands, which has helped the firm avoid mistakes other Korean players have made during the course of globalization.
“What set Mirae apart from other Korean financial companies is its approach toward globalization. Unlike other players, they have the ability to find a market where they can win,” KB Financial Group Chairman Euh Yoon-dae said in a recent interview with The Korea Times.
“Since they study and understand a market before they invest, they can foresee what’s coming in the market. In other words, they have the ability to pick a market where they can excel,” he added. “Localization is very important in globalization. But what is more important is to pick a market where you can apply your localization strategy.”
See the future
Mirae’s fast transition toward becoming a global player from a local one was based on its first mover strategy, and what made this ploy successful was Chairman Park’s vision and his ability to see what’s coming next.
“Mirae’s key success factors that made the company grow fast both at home and abroad are a visionary CEO, right timing and a few good people,” Steven Chia, co-head of The Boston Consulting Group Seoul office, told The Korea Times.
“As a founder, Park has a strong influence over firm direction. Also, Mirae had no “baggage,” meaning that as a new company, there was no need to worry about the impact on existing business and customers,” he added.
Park was not born with the ability to see the future. He gained it by studying the history of the Korean economy and the financial services industry in Japan while in college.
He took two important lessons from the study. First, the Korean financial market would follow in the footsteps of Japan’s, which was the key trigger for Park to become a pioneer in the asset management market in Korea.
Second, when going global, he thought that most emerging markets would follow a similar development path of Korea, which made it possible for Mirae to enter, and invest in, developing nations ahead of other players.
Mirae’s focus on equity fund markets was a good example. According to a Harvard case study this year, Park believed that no Korean asset manager was truly independent of the government or powerful business groups. He foresaw the need for an asset manager that could conduct business in a transparent and financially responsible manner.
He also decided to become a global asset manager with expertise in emerging markets as he forecast that there would be a long-term reallocation of capital from development markets to emerging ones.
Differentiation
If you want to be an entrepreneur, there is one important element that you must acquire. You have to take a different approach from what your peers and predecessors have done. In this regard, Park’s approach provides a couple of important messages to would-be-entrepreneurs.
When he started his business in 1997, Park focused on equities rather than bonds. At the time, few people thought equities would gain popularity as not much demand existed for asset management.
Another good example was his localization strategy. When Mirae began expanding abroad, many Korean banks and other financial firms had overseas operations. But most of their duties were just to serve ethnic Koreans and finance Korean companies operating there, which many believe was the key reason why there had been no global Korean financial firm.
Park did not follow his predecessors because he did not want to make the same mistakes. Instead he insisted on a localization strategy to ensure that business at overseas affiliates was mainly carried out by local employees. According to the Harvard case study, Park insisted that his people remember that “this is not a Korean company.”
Turning crisis into opportunity
When it comes to being an entrepreneur, one of the most conventional wisdoms is that you have to find opportunity in a crisis because that is what sets an entrepreneur apart from an ordinary businessman.
When taking a close look at Mirae’s development path since its establishment, its growth has always been spurred by finding opportunities amid a crisis.
When the country was hit by the Asian currency crisis in 1997-1998, most investors and companies scaled back their investment. Park set up Mirae Asset in 1997 amid the turmoil in the belief that global funds would flow into the Korean equity market as it was highly undervalued due to the collapse of KOSPI index following the crisis.
One more case is that following the global financial crisis in 2008, Park was criticized for the group’s aggressive investment in emerging markets, which were hit hard by the unprecedented turmoil. But he did not pull back and continued investing in emerging markets while most other players balked at investing abroad.
The strategic efforts are now paying off. The Mirae Asset India Opportunity Fund received a first ranking from the Credit Rating and Information Services of India (CRISIL), India’s best credit rating firm as well as the world’s fourth largest.
Its equity funds in Brazil also boast high rates of return. In late August, the list of the top 10 equity funds higher than 100 billion won included five from Mirae Asset.
Looking ahead
Mirae Asset is now about to take a big step in achieving its vision to become a leading global asset manager. In September 2009, the firm agreed to set up an asset management joint venture with Hauchen Trust to make a foray into the Chinese market. It is now awaiting approval from the Chinese regulator.
The move is seen as a huge strategy change as it implies that Mirae will pursue even mergers and acquisitions to speed up its globalization. So far the company has sought only organic growth.
Market experts said that given the growth in its size and global economic territory, now is the time for Mirae to revamp its strategy. In particular, they stressed that in order to become a truly global player, the group should overhaul its governance structure and decision-making process to keep up with its rapid growth and the extension of its overseas networks.
“Mirae is likely to hit a “wall” soon, when the business and organization reaches a certain size for which the current centralized governance is no longer optimal,” said Chai, who is currently leading BCG’s financial services practice in Asia Pacific,
“Mirae will then need a more capable, loyal and trustworthy cadre of people. In these rapidly changing environments, even Park may not be able to make all the right calls on the company's future,” he added. “In that regard, it should begin to put in place a structure which allows more voices to be incorporated in direction setting.”
For Mukti Khaire, assistant professor of business administration at Harvard Business School the key factor for choosing the Korean asset manager and its chairman Park Hyeon-joo for a case study was Mirae’s first mover strategy. “We decided to write a case on Mirae Asset because my research focuses on early entrepreneurs in a new industry and Mirae was the first to offer equity funds in Korea,” she said in an email interview with The Korea Times. Khaire, who interviewed Chairman Park at Harvard in November 2009 and prepared the Mirae case, indicated that Park had set himself apart from other Korean financial CEOs by successfully overcoming newly-emerging challenges. “Entrepreneurs whose ideas and companies start an industry, (such as Mirae), not only face all the problems of traditional entrepreneurs, but also have to deal with some additional challenges,” she said. “Such entrepreneurs have to engage in stakeholder education and information-dissemination.” Additional challenges her mentioned are 1) the lack of understanding of the product among stakeholders and especially customers; 2) absence of an industry ecosystem; 3) high uncertainty about whether the new product will even be accepted by customers and regulatory agencies; and 4) the challenge of creating a market.