Park Jae-hyuk is a seasoned journalist who has provided comprehensive coverage of South Korea's corporate dynamics, economic policies, industry challenges and the global positioning of Korean companies. Based on the articles he has written since joining The Korea Times in 2016, his investigative approach has helped readers understand corporate governance, economic trends and business strategies shaping South Korea’s economy.
Manufacturers expand beyond conventional businesses
LG Electronics CEO Cho Joo-wan announces the company's new vision during a press conference at LG Science Park in Seoul, July 12. Courtesy of LG Electronics
By Park Jae-hyuk
By Park Jae-hyuk
LG Electronics' recent declaration of its transition to a “Smart Life Solution Company” vision is focused on non-hardware sectors and business-to-business services, reflecting a growing need for fresh sources of revenue amid the rapidly changing global business environment.
LG Electronics CEO Cho Joo-wan and other top executives attended a press conference on July 12 for the declaration where the company expressed a strong will to reduce its reliance on home appliance sales, which have been sluggish recently due to global inflation and high interest rates.
“If we continue to do our business as we did before, it will be difficult for us to be a sustainable company,” Cho said at the event, indicating that his company is struggling to pursue innovation.
“We are not going to settle for the best home appliance maker, but will make a leap forward to become a smart life solution company, which connects and extends consumers' spaces and experiences,” he added.
POSCO Group Chairman Choi Jeong-woo, sixth from left, cuts cake with participants of a ceremony to celebrate the 50th anniversary of the construction of the company's first steel mill in Pohang, North Gyeongsang Province, July 3. Courtesy of POSCO Holdings
His remarks were similar to what POSCO Group Chairman Choi Jeong-woo said during a ceremony on July 3 to celebrate the 50th anniversary of the construction of the company's first steel mill in Pohang, North Gyeongsang Province.
Choi said at that time that the group will make a sustainable future with its eco-friendly and futuristic materials, as it has supported Korea's economic growth through its steelmaking business.
On July 11, the group's holding firm announced the group will funnel 46 percent of its total capital spending over the next three years into the secondary battery materials sector.
“POSCO Group's secondary battery materials business is sustainable as it can create environmental and social values, in addition to economic values,” POSCO Holdings Chief Strategy Officer Jeong Ki-seop told institutional investors and analysts.
POSCO Group's investment plan is part of its efforts to cope with the changing business environment.
The company said its planned investment is intended to maintain its competitiveness, as relevant industries are facing a “structural inflection point” amid their reorganization to pursue environmentally friendly businesses.
Other major manufacturers also seek transformation, due to a slowdown in their conventional businesses and growing demand for eco-friendly products.
LG Chem shifted its focus to batteries, sustainable materials and novel drugs, from its conventional petrochemical business which has been less profitable in the aftermath of the global economic recession and slow demand.
HD Hyundai President Chung Ki-sun introduces the company's “Ocean Transformation” vision during the Consumer Electronics Show at Mandalay Bay Hotel in Las Vegas in this Jan. 4 file photo. Courtesy of HD Hyundai
Rebranding for new identities
Some companies even adopted new names that can embrace their new businesses.
HD Hyundai changed its name from Hyundai Heavy Industries Group last year to avoid the company being regarded as a shipbuilding group.
“We must find new frontiers of our own, new domains for the continued growth of humanity,” HD Hyundai President Chung Ki-sun said during the Consumer Electronics Show in Las Vegas in January, unveiling his company's “Ocean Transformation” vision, based on new businesses such as robotics, artificial intelligence and fuel cell.
In the food industry, Samyang Foods Group was renamed as Samyang Roundsquare earlier this month to show the group's business purposes include real estate development and tourism, beyond the production of instant noodles and snacks.
Remaining risks
However, there remain concerns over the possibility of domestic manufacturers suffering huge damage while they push ahead with new businesses.
Oil refiners in Korea are facing the risk of losing money over their large-scale investments in petrochemical business, due to the lingering slump in the industry.
Lotte Group faced a setback in its healthcare business which represents the group's “New Lotte” vision declared in 2017, on the occasion of its 50th anniversary.
As Lotte Healthcare faced public criticism earlier this year over an allegation that it had pirated Algocare's technology for nutrient dispensers, the Lotte affiliate eventually withdrew from the dispenser market after reconciliation with the local startup.