Chairman Choi Shin-won, cousin of SK Group Chairman Chey Tae-won, has returned to SK Networks emphasizing that the company “needs to undergo changes and innovations as if it were to be re-founded.”

The company was established in 1953 by Choi’s late father, Choi Jong-kun, who was also the founder of SK Group (formerly Sunkyung Group). Choi, who had a deep affection for SK Networks, had to leave the company to resolve management problems at an affiliate company, SKC.

Last month, he returned to SK Networks after 17 years. His return was followed by a series of reforms including mergers and acquisitions and clearing out of inactive businesses to transform SK Networks into a comprehensive rental company.

In particular, its loss-making fashion business was sold to Hyundai Department Store Group’s fashion company Handsome for 300 billion won ($265 million). Despite having been rivals over the takeover of Tongyang Magic at the end of last year, Choi and Hyundai Department Store Chairman Chung Ji-sun were able to reach a deal.

Chung, who has worked on strengthening Handsome as Hyundai Department Store Group’s core business, plans to expand his influence in the domestic fashion industry. The takeover will allow him to control six global brands such as Tommy Hilfiger, DKNY, CK, Club Monaco, Canali and American Eagle, as well as domestic brands like Obzee, O’2nd, 2ndfloor, rouge&lounge, SJYP, and SteveJ&YoniP, that SK Networks had owned.

SK Networks has also decided to exit the liquefied petroleum gas business by handing it over to SK Gas, currently managed by Choi’s younger brother Choi Chang-won, for 310 billion won. The company has also withdrawn from the duty-free business as it failed to win an operating license at the end of last year.

The finances earned through such adjustments are used to strengthen the household appliance rental business, including Car-life and SK Magic (formerly Tongyang Magic). Such reorganization of businesses is in line with the business philosophy of SK Group Chairman Chey Tae-won, who prioritizes “deep change,” focusing on what the company is the best at while refraining from unnecessary activities.

SK Networks acquired a 100 percent stake in Tongyang Magic, a home appliance rental business, last November for 610 billion won and changed its name. The company is to combine the acquired company’s rental market experience with SK’s brand name and marketing capabilities.

The company’s car rental business has also increased its market share. The business that began with 3,800 cars in 2009 has grown 50 percent annually. It owned up to 75,000 cars as of March, becoming No. 2 in the industry by surpassing AJ Rent-a-car.

Reforms are also being made on the Walkerhill Hotel that is under SK Networks’ management.

The Walkerhill Hotel was a part of the Sheraton brand for 40 years since it was established in 1977. However, it chose not to extend its license with hotel chain Starwood company last year, and began to manage itself independently under its own Walkerhill brand name from January. The former Sheraton Grand Walkerhill Hotel renamed itself as Grande Walkerhill Hotel and W Hotel as Vista Walkerhilll Hotel. Such changes were made to make use of Walkerhill’s high brand recognition.

Like his father, Choi has been aiming to develop Walkerhill into one of the top tourist attractions in Korea, coming up with ideas like the newly constructed Kids’ Club and Kids’ Pool. 

Having an undergraduate degree from Kyung Hee University and a master’s degree in finance from Korea University, he started working in Sunkyung Fibres (now SK Capital) and served as the director of Sunkyung Group’s Planning and Evaluation office. He was the executive director and vice-president of Sunkyung and moved to SK Distribution as vice chairman later on.

It has been said that Choi has always had a deep interest in overseas business. SK Distribution later combined with SK Trading company in 1999, and renamed itself as SK Global. SK Global later became the current SK Networks with 20 overseas companies in China, India, and the US, while expanding its business to diverse sectors, including automobiles, fashion, steel, and chemical.

After his return, Choi purchased a considerable amount of the company’s shares to push forward responsible management. He owned 0.45 percent of SK Networks’ shares in February, but this has been expanded to 0.63 percent most recently.

By The Superich Team

Min Sang-seek
Lee Se-jin
Yim Ji-min  (jiminy@heraldcorp.com)