The Korea Herald is publishing a series of articles titled Global Brand as part of the first installment of Power Korea. Korea’s success story is a 60-year-old tale written by not one, but many who worked to build one of the world’s most powerful nations from the ashes of war. This Global Brand series is designed to honor those who made this Korean Dream come true. This is the 15th part of the Global Brand series. ― Ed.
Hyosung Group, the nation’s 26th-largest conglomerate by assets in 2012, has become a case study for those researching South Korean conglomerates that turned a crisis into an opportunity in pursuit of growth.
The family-controlled industrial group was founded in 1966 by group founder Cho Hong-jai as a textile company under the name Tongyang Nylon. It enjoyed rapid growth in the 1970s and 1980s in line with the nation’s economic miracle, while pushing for business diversification. It entered such diversified markets as chemicals, heavy industry, construction and computer engineering beyond the textile sector.
In the 1990s, Hyosung turned to the global market as the domestic market was entering maturity. For globalization, the group increased R&D investment to develop its own technology for the advancement of product quality.
In the late 1990s, however, the group faced a bumpy road along with other chaebol, due to the Asian currency crisis.
But Hyosung Group chairman S.R. Cho, the oldest son of the founder, considered the crisis an opportunity for future growth, and launched a research project with a global management consulting firm on how to restructure the group and make management more innovative.
At the end of 1997, top management of the group brought change to its octopus-style affiliate structure. They rearranged affiliates into 26 performance units under seven performance groups ― textile, industrial materials, chemicals, power and industrial systems, construction, trading, and information and communication.
In 1998, the group launched Hyosung Corp as the group’s de facto holding company, and drove sell-offs of noncore businesses.
“It was rare to find chaebol which conducted a fast and bold restructuring during the financial crisis. The group’s proactive approach to a crisis laid the foundation for a second leap in the 2000s,” a company official said.
Chairman S.R. Cho. (Illustration by Park Gee-young)
Global excellence for global customers
Entering the 2000s, Hyosung renewed the group’s mission: to enhance and enrich the quality of people’s lives with its leading technology and management capability.
“Under the corporate mission, Hyosung has made efforts for the past decade to transform from a textile-focused conglomerate into a global industrial giant, supplying world-class products to help make people’s lives more convenient and comfortable,” the company official said.
In a bid to add more world-class products to its product portfolio, Hyosung conducted a couple of outbound M&A deals, including the acquisition of four plants from U.S.-based Goodyear in 2006 for better tire cord products and the takeover of Germany-based Global Safety Textiles to become a world-leading airbag fabric supplier.
By 2011, the firm’s world-class product lineup had expanded to include tire cords, spandex, seat belt yarns, and airbag fabrics.
The company is building its reputation in both the local and international markets for its high-quality nylon, polyester, carpets, motors, pumps, polyester bottles and ATM products.
The industrial group has stepped up to build a global business network for the past decade. It has more than 70 production and sales centers on almost all continents including Asia, the Americas and Europe, which enables the group to provide international customers with the best technology, value and services.
For future growth, the group continues to make strategic investments in developing advanced technology in such areas as renewable energy and electronic materials, and advanced materials like carbon fiber.
In particular, the firm has capitalized on the commercialization of its carbon fiber brand Tansome since the establishment of a production line in Jeonju, North Jeolla Province, in 2013.
Industry watchers estimated sales of Hyosung could be affected by the economic downturn this year. Sales of the group reached 12.6 trillion won ($11 billion) in 2012, according to FnGuide, a local financial information provider.
By Seo Jee-yeon (firstname.lastname@example.org