Yi Whan-woo is a Korea Times journalist primarily covering finance. He writes in-depth articles on macroeconomy and financial markets and previously covered sports, politics, diplomacy and inter-Korean affairs, among others. Feel free to contact him at yistory@koreatimes.co.kr.
CJ speeds up globalization strategy to overcome business stagnation
CJ Group Chairman Lee Jay-hyun announces the conglomerate's medium-term vision in a pre-recorded video message released on Nov. 3. Courtesy of CJ Group
By Yi Whan-woo
This is the second and last in a two-part article series on CJ Group Chairman Lee Jay-hyun and the visibility of his recently announced corporate initiative for sustainable growth associated with culture, platform, wellness and sustainability. _ ED.
By Yi Whan-woo
CJ Group is ramping up its globalization strategy to explore untapped markets amid tense competition, the pandemic and other factors that have slowed down growth here, as well as to better capitalize on the growing worldwide popularity of hallyu, or the Korean wave.
The strategy centers on the themes of culture, platform, wellness and sustainability, which CJ Group Chairman Lee Jay-hyun identified as the conglomerate's four next growth engines in his Nov. 3 announcement on the group's medium-term vision. The announcement was pre-recorded and was released online to the entire group.
It was the first time in more than 10 years that Lee shared the business plan vision to all employees, showing the sense of urgency that he feels in running the country's 13th-largest conglomerate.
“We were hesitant in making bold decisions to explore new growth engines,” he said. “We also failed to establish an organizational culture that nurtures talent and takes on new challenges."
According to CJ Group, the stagnation was extreme in the past three to four years.
The conglomerate partly attributed the trait to big tech companies using their platforms to muscle into businesses that have been the domain of CJ, and accordingly, blurring industry boundaries and intensifying competition.
The COVID-19 crisis has resulted in diverging fortunes for the firm's three pillars ― food, logistics and entertainment ― with the social distancing campaign benefiting the first two but dealing a blow to the third.
The conglomerate's 2020 sales inched up by 0.3 percent year-on-year to 24.3 trillion won ($20.3 billion). But its operating profit fell by 24.1 percent to 803.8 billion won and net income retreated 65.7 percent to 118.4 billion won over the same time period.
Under the circumstances, CJ Group will spend more than 10 trillion won by 2023 to spur businesses related to culture, platform, wellness and sustainability.
For its flagship affiliate and food manufacturing arm CJ CheilJedang, globalization centers on bibigo, its Korean cuisine brand that has been gaining recognition among consumers worldwide through growing interest kimchi, dumplings, fried chicken and other foods popular in Korea.
As a marketing campaign, the bibigo brand and its food products are being promoted at CJ Cup, a PGA tour sponsored by the conglomerate's shipping service unit CJ Logistics, as well as at KCON and MAMA, two culture and music festivals organized by entertainment unit CJ ENM.
The marketing campaign in the United States is noted for targeting ethnic Koreans, as seen in a five-year deal signed with the Los Angeles Lakers to emblazon bibigo on the basketball team's jerseys.
Under the deal, the Korean firm and the NBA team will collaborate on content creation and unique opportunities for fans.
Also engaged in the biotech business, CJ CheilJedang announced last week its plans to buy a 75.8 percent stake in Batavia Biosciences B.V., a Dutch biotech company.
The acquisition of this stake is aimed at expanding its “red bio” business, a reference to bio businesses in the medical and pharmaceutical fields.
The Korean side seeks to tap into the biologics contract development and manufacturing organization (CDMO) market, which is related to global cell and gene therapy and has the potential for an annual average growth rate of 25 percent to 27 percent by 2030.
CJ Logistics announced plans to invest 2.5 trillion won to strengthen platform-related businesses and accordingly upgrade e-commerce and delivery operations.
The company will expand its fulfillment infrastructure eightfold by 2023.
To do so, it seeks to automate its operations with autonomous robots, artificial intelligence and a big data-based forecast system, while doubling the size of its tech research and increasing its number of specialists.
To better capitalize on the success of Korean films, dramas and pop music, CJ ENM plans to launch genre-specific “multi studios” to create content aimed at global audiences.
The firm's streaming service Tving plans on attracting 8 million subscribers by 2023, teaming up with its partners including web portal Naver and TV network JTBC to strengthen its original programming.