Showbox Mediaplex, the film-making arm of Orion Group, the nation’s second-biggest snack-maker, made headlines on March 25 when the company announced its expansion to China by signing an exclusive partnership with China’s leading entertainment giant Huayi Brothers.

The news once again brought the limelight to the business group’s chairman Tam Chul-kon as the Chinese-Korean is apparently hoping to recreate his “rags-to-riches legend” once again and take the faltering conglomerate back to its glory days.

Son-in-law chairman

Tam is a very rare case of a conglomerate chief who was not born with a silver spoon.

Born to a practitioner of traditional medicine and having graduated from George Washington University, Tam had a life-changing experience when he married Lee Hwa-kyung, daughter of the late Tongyang Group founder Lee Yang-gu. The two reportedly met after Tam joined Tongyang Cement, a subsidiary of Tongyang Group that gave rise to Orion Group. This marriage is seen to have paved the way for Tam to climb the social ladder and join the upper echelons of Korean society.

Tam was appointed chairman of the group in 2003.


Despite his heady rise, his time at the helm of the group has seen some less-than-stellar performance.

The conglomerate has run into some hard times on his watch.

Orion Group’s five construction-related subsidiaries have been in trouble for some time, having posted losses for three consecutive years since 2012. The group is allegedly considering selling them off rather than making potentially risky investments.

In addition, his focus on China may have been shortsighted.

Orion’s confectionery business in China, which Tam hoped would lay the foundation for future growth, is also faltering.

In fiscal 2014, Orion Food in China posted a net loss of nearly 6.14 billion won ($5.54 million) for three consecutive quarters.

Orion’s largest Chinese subsidiary, is also showing slowing growth.

The company’s sales for the third quarter of last year came in at 857.9 billion won, up only 3.4 percent from a year ago. In comparison, the company’s sales had grown by 13.2 percent in 2013 from the previous year.

However, the performance is better than developments at Orion’s other Chinese operations.

In its Shanghai units, Orion Food Shanghai saw its third-quarter sales drop by 2.2 percent in 2013, while Orion Snack saw a drop of 3.6 percent.

The lackluster performance in China is taking its toll on the group as a whole. With the conglomerate having grown to rely heavily on the Chinese market, the setbacks have led to the group’s overall sales for the first three quarters of 2014 to drop by 1.1 percent on-year.

About 57.5 percent of the conglomerate’s sales are generated in China, while its reliance on the market for operating profits stands even higher at 65 percent.

Family disgrace

As with many Korean conglomerates, the Orion family has also been involved in scandals.

In 2013, Tam was convicted of embezzling some 30 billion won from the company, and given a suspended prison term of five years.

His children have also been involved in some shady dealings.

In 2013, his 23-year old son Suh-won Tam was accused of acquiring illegally transferred wealth from Tam. He is suspected of having established a ghost company named Stella Way, which then purchased the packaging firm Langfang Ipak Packing from the Orion chief. Lanfang packages exports of Orion confectioneries, and its performance has improved with the rising popularity of Orion products. Above all, the deal was sealed during junior Tam’s mandatory military service, which bans people from conducting business transactions during the period.


Ticket to former glory

Against this backdrop, Tam is hoping to recreate his “legend” once again in China’s fast-growing entertainment market.

Showbox has a number of megahits under its belt ― such as “The Thieves” and “Taegukgi: Brotherhood Of War” ― while Huayi Brothers is a leading Chinese entertainment firm with a 7 trillion won market cap.

The Chinese firm’s second-largest shareholder is Alibaba Group executive chairman Jack Ma with a stake of 8.08 percent.

Under the deal, the two companies will produce more than six films over three years, in an attempt to tap the 1.3 billion-strong market.

The move is aimed at offsetting a number of recent difficulties Orion has been facing.

Unlike the sectors Orion’s other businesses are in, China’s film market is undergoing rapid expansion, having grown more than 30 percent every year for the past decade.

The rapid growth of the film market has even caught Hollywood’s attention with many production firms devoting a a chunk of their budgets to attract the increasing number of wealthy Chinese middle-class movie afficionados.

The box-office revenue in China exceeded $4.76 billion for 2014, up around 36 percent from a year earlier, according to data from the State Administration of Press, Publication, Radio, Film and Television. Of this, local films took an impressive 54.51 percent share.

By Suk Gee-hyun (monicasuk@heraldcorp.com)