By Cho Jin-seo
Staff Reporter
The billionaire boxer George Foreman made most of his fortune not from his epic bout against Muhammad Ali, but by endorsing a meat cooker that sold more than 80 million worldwide. Like the George Foreman Grill, a Korean entrepreneur attests that even minor kitchen utensils can be lucrative business items, especially in times of economic uncertainty such as now.
Kim Joon-il, the founder of food container maker Lock&Lock, became South Korea's 20th richest person in terms of value of shareholdings in listed firms, after the company's stocks were floated on the stock market a week ago.
With 650 billion won worth of shares, the 57-year-old now closely trails Lee Jae-yong, son of Samsung Group chairman Lee Kun-hee, in the stock-billionaire list by a margin of only 2 billion won.
It is wrong to assume that Kim is actually as wealthy as Samsung crown prince Lee, because the list only reflects the value of listed stocks while Lee has substantial assets in unlisted stocks and real estate as well. But Kim looks outstanding because he is also one of only two entrepreneurs in the top 20 list along with Kim Taek-jin of NCsoft, while all others were from chaebol families who inherited stocks from their fathers ― sometimes in dubious ways.
Kim has a 54.5-percent share in Lock&Lock. The shares were issued at 15,700 won each, more than 32 times their face value. In the first five trading days in the KOSPI market from Jan. 29 at , the share price soared by 60 percent and ended at 24,700 won on Friday.
What has propelled its stock price is investors' trust in its brand power as a leading kitchenware brand. The company sells plastic transparent food containers with a hinged lid. Its brand has such enormous power in the domestic market that many people say ``Lock&Lock'' when they refer to sealed food boxes.
``Lock&Lock is categorized as a manufacturing company, but in reality it is a distribution business based on strong brand power,'' said a report from KB Investment & Securities. Furthermore, the company's shares are probably highly rated in the current stock market conditions because the kitchenware industry is notably resilient in times of recession, when people favor eating at home instead of dining out.
Kim, 57, started his business in 1978 called Kukjin Distribution, as an importer of Japanese containers. Manufacturing of its own products began in 1985. The breakthrough was the development of the Lock&Lock brand in 1998.
It is probably the nature of Korean cuisine that made Lock&Lock watertight. Koreans like to store soups, kimchi and other wet food in the fridge for days or even for months, so how to keep them tightly sealed has always been a major concern for housewives.
The Lock&Lock container has four plastic hinged wings on its elastic lid, which tightly seals the box. It was an instant hit on TV shopping channels and the company rapidly expanded into foreign markets as well. Last year's sales are estimated to be around 150 billion won, with net profit of some 50 billion won.
According to Korea Investment & Securities, the underwriter of Lock&Lock shares, the company now holds 7.2 percent of the 4-trillion-won global market for sealing food containers, after Rubbermaid and Tupperware of the United States. Domestic market share is 31.9 percent, with expected sales of 68 billion won in 2009.
Many stock analysts forecast an even brighter future for the company, which will further boost Kim's wealth. Nomura, a Japanese trading firm, expects the stock price to rise to 40,000 won in the future. But not every aspect of the business is as rosy as such projections.
For one thing, its public disclosure shows the company spent only 0.5 percent of its sales in research and development last year, with only 12 researchers. Making food containers does not require rocket scientists, so Lock&Lock's technological advantage can be easily copied or even excelled by others.
In Korea, minor brands such as Glass Lock have been posing threats to Lock&Lock in recent years. In China, the largest and fastest growing market, a local competitor called Le Yi Duo has launched similar lock-type products in 2004.
It seems that Kim believes his company can cope with such challenges by using the economy of scale. He plans to spend most of the 154 billion won raised from the stock floating in expanding and improving its global distribution and sales network. And he may have to be reminded that even mighty kitchenware brands such as the George Foreman Grill could not grow forever without innovations. Salton, the producer of the grill, went into restructuring only a few years after the grill's success.