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Tag: Korea

  • Shinsegae plans ‘Korean Amazon’

    Shinsegae plans ‘Korean Amazon’

    Shinsegae has secured investment worth 1 trillion won ($877.8 million) to build a separate company dedicated to its online business, finally giving wings to Vice Chairman Chung Yong-jin’s ambitious plan to create a “Korean version of Amazon.”

    Shinsegae said Wednesday that it succeeded in attracting funds worth 1 trillion won from two global private equity firms, BlueRun Ventures and Affinity Equity Partners, to launch a separate company that will comprehensively handle the retail giant’s online business.

    The investment plan was revealed in January, but the detailed conditions have been finalized after nine months of negotiation.

    “Shinsegae Department Store and Emart have led growth within the group until now,” said Chung. “But from now on, the new entity dedicated to online business will lead growth. All capacity within the group will be concentrated on the online business.”

    The retailer will spin off the online business from Shinsegae and Emart and merge them into a separate entity. Shinsegae is mainly in charge of its department store business while Emart is in charge of the eponymous discount chain and warehouse-style mart Traders, among others.

    Of the 1 trillion won investment, 700 billion won will be used to establish the new company, which is scheduled to launch in the first quarter of 2019. The name of the new entity hasn’t been decided. The remaining 300 billion won investment will follow at a later date.

    “Shinsegae’s new online business-dedicated entity is expected to help it grow into a core company in Korea’s e-commerce industry,” the company said in a statement.

    Shinsegae has been running an integrated online platform called SSG.com, which encompasses several online malls such as Shinsegae Mall, Shinsegae Department Store, Emart Mall and Traders, all either run by Shinsegae or its discount chain affiliate Emart.

    The soon-to-launch company will operate these online malls.

    “A complete integration of the online platform will enable comprehensive investment, simplified decision making and enhanced proficiency,” the company said.

    Shinsegae plans to concentrate investment in the online mall’s logistics service and infrastructure to begin with. It said it plans to invest 1.7 trillion won in logistics centers and related technology and achieve revenue of 10 trillion won for the online business by 2023.

    Shinsegae currently runs two logistics centers dedicated to online malls in Bojeong and Gimpo in Gyeonggi. The retailer is building a third one in Gimpo, which is scheduled to start operating by the latter half of next year.

    SSG.com launched as an integrated site in 2014 and has been recording an average 20 to 30 percent growth each year. It reached 2 trillion won in revenue last year and turned to profit making in the first half of this year

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  • Amorepacific profits slump

    Amorepacific profits slump

    Amorepacific Group announced lower-than-expected results for the third quarter on Monday with operating profits dropping 36 percent year on year. The fall comes as a stark contrast to rival LG Household & Health Care, which saw operating profits in its beauty business soar 30 percent during the same period.

    Amorepacific Group’s operating profit between July and September was 84.7 billion won ($74.2 million), down 36 percent compared to the same period last year. Its revenue rose 3.1 percent year on year to 1.46 trillion won. This was lower than the three-month analyst consensus of 1.56 trillion won in quarterly revenue and 166.9 billion won in operating profits, compiled by stock information provider FnGuide.

    The company explained in a statement that the main reason for the low profitability was the increase of costs in human resources and marketing expenditure.

    “Despite growing competition in the beauty market in and outside the country, Amorepacific continued investments to enforce brand competence and secure future growth engines,” the company said in a statement.

    The group’s main affiliate, also called Amorepacific, saw sales increase 6 percent year on year to 1.28 trillion won in the third quarter. Amorepacific’s sales success was thanks to the popularity of its brands, including Sulwhasoo, Hera, Iope and Laneige, with tourists and duty-free shoppers. However, the sales increase was nullified by a rise in costs, resulting in a sharp 24 percent fall in operating profit to 76.5 billion won.

    The results were grim for the smaller single-brand stores under the group as well: Etude House remained in the red while revenue dropped 23 percent year on year. Innisfree sales slightly increased by 3 percent, but operating profit steeply dropped 29 percent year on year. Espoir saw operating losses once again while revenue slightly rose by 1 percent.

    The good news for Amorepacific was the 36 percent year-on-year rise in revenue in the United States, thanks to strong performances from Laneige and Innisfree. Although its foothold there is still small compared to Asia, the company has been making efforts to diversify its global business, which used to heavily rely on China.

    LG Household & Health Care, on the other hand, recorded its highest-ever profit for the 54th quarter in a row. Between July and September, revenue generated from its three business sectors – beauty, daily necessities and beverages – was 1.73 trillion won, up 10.6 percent from the same period last year, while operating profit was up 9.8 percent to 277.5 billion won.

    The year-on-year jump was even higher in its beauty business: operating profit soared 30.6 percent to 184 billion won while revenue increased 23.5 percent to 954.2 billion won in the year’s third quarter. Its high-priced luxury brands, which were relatively unaffected by the Thaad row, were once again huge contributors.

    “With its high brand loyalty, The History of Whoo hit a quarterly sales record once again,” the company said.

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  • Beccos plans expansion in India with 50 new stores

    Beccos plans expansion in India with 50 new stores

    Chinese-owned ‘South Korean designer brand’ Beccos says it plans to launch 50 stores in India. Scheduled to be opened by the middle of next year, the stores will require an investment of ₹100 crore (US$13.67 million) and are expected to return a revenue of around ₹200-250 crore ($27.35–34.18 million) in the next financial year based on the potential of the market.

    Like rival chain Mumuso, the store is positioned as Korean and using Korean design influence in its products, but is actually Chinese.

    The Hong Kong-based firm will also be investigating the potential of online sales in the region next year.

    Beccos global CEO Dabin Wang said: “We see tremendous potential in the Indian market… The company would have stores on company-owned-company-operated and franchise patterns. We would have a mix of both franchised and company-operated stores.”

    Beccos has started the expansion by opening its first few stores in Kamala Nagar.

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  • GM chairman might visit Korean facility

    GM chairman might visit Korean facility

    General Motors Chairman and CEO Mary Barra hinted at visiting Korea soon amid conflict over the spinning off of the Korean unit’s R&D division. If the trip happens, it would be Barra’s first visit to the Korean operations since she became chairman in 2016.

    GM Korea head Kaher Kazem reiterated the company’s commitment to the market during a government audit held Monday. “I would like to visit our Korea operations at some point soon,” Barra wrote in a letter sent to labor union head Lim Han-taek on Oct. 24.

    Lim had requested a meeting with Barra over GM’s decision to spin off the R&D division.

    Since July, GM has been pushing to build a separate R&D center tentatively named GM Korea Technical Center. Management says it will raise work efficiency and competitiveness.

    The labor union has opposed the idea, claiming a separate R&D center will eventually result in the ending of production in Korea, resulting in massive layoffs. On Oct. 19, the automaker approved the plan in a board meeting despite the opposition.

    In the letter, Barra emphasized GM’s dedication to its Korean operations.

    “The specialized unit will benefit from focused management, increased transparency on cost and improved operational efficiency,” Barra wrote in the letter.

    “We think the demerger is an important step to allow both the engineering services company and the manufacturing unit to stand on their own as profitable, viable businesses.”

    During a government audit held Monday at the National Assembly, GM Korea CEO Kazem said the company “has no plan to withdraw from Korea.” His comments assured lawmakers the spinoff is part of GM’s plan to stay in Korea longer than the initially promised 10 years.

    “In fact, we are establishing a long-term commitment to GM Korea. [Building a separate R&D center enables] us to not only upgrade but also introduce new models. We are committed to building a very long-term future for GM Korea,” Kazem said. “The framework agreement says 10 years, but we are looking at longer than that.”

    Kazem added that the company is engaging a number of parties on the possible redevelopment of the currently shut-down Gunsan factory, but he didn’t reveal details. He said he would “review” whether the plan for the Gunsan factory site could be included in the initial framework agreement.

    GM abruptly shut down the Gunsan factory in May. GM Korea has since been beset by speculation of completely shutting down in the country.

    The company and the Korean government have decided to jointly invest 7.7 trillion won ($6.7 billion) to save the ailing unit. GM also promised to stay in the country for the next 10 years.

    A GM Korea official said that Barra’s visit to the country is not yet confirmed.

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  • Equity gains see SK Telecom record good quarterly results

    Equity gains see SK Telecom record good quarterly results

    SK Telecom, Korea’s top mobile carrier, said Tuesday that its third quarter net profit rose 32.4 percent from a year earlier.

    Net income reached a record high of 1.04 trillion won ($910.4 million) in the July-September period, compared with a profit of 793 billion won for the same period the previous year, the company said in a regulatory filing.

    SK Telecom said shareholding gains from SK Hynix. gave a boost to its quarterly bottom line. SK Telecom holds a controlling 20.1 percent stake in the world’s second-biggest chipmaker by sales.

    SK Hynix’s third quarter net profit surged 53.6 percent on-year to 4.69 trillion won on record sales of 11.4 trillion won.

    Still, SK Telecom said its operating profit fell 22.5 percent on-year to 304.1 billion won in the third quarter, while sales dropped 5.77 percent to 4.18 trillion won over the cited period.

    Shares in SK Telecom fell 2.54 percent to 269,000 won.

  • Kia swings to profit in third quarter after 2017 one-off

    Kia swings to profit in third quarter after 2017 one-off

    Kia Motors Friday reported a swing to profit in the third quarter from a loss a year earlier. For the three months ending Sept. 30, Kia posted a net profit of 297.74 billion won ($262 million) from a net loss of 291.77 billion won a year ago, the company said in a statement.

    “In the third quarter of 2017, a one-off cost of 864.1 billion won was reflected in the bottom line when a local court ordered the company to retroactively make an overdue payment to employees,” a company spokesman said.

    According to the court ruling issued in August last year, regular bonuses are to be included in the “ordinary wage” used as the basis for calculating overtime, severance and other payments.

    The won’s strength against the dollar and currencies in emerging markets also weighed on the quarterly net results, the company said.

    Kia reported an operating profit of 117.28 billion won in the third quarter from an operating loss of 427.02 billion won a year earlier. Sales fell 0.24 percent to 14.074 trillion won from 14.108 trillion won over the same period, it said.

  • Xiaomi’s Pocophone F1 to go on sale next month in Korea

    Xiaomi’s Pocophone F1 to go on sale next month in Korea

    Xiaomi’s affordable smartphone Pocophone F1 is arriving in Korea next month. The Pocophone F1, the first smartphone from Xiaomi’s sub-brand Poco Global, was first unveiled in early August. The F1 will cost 429,000 won ($376) here, around one-third of the price of an Apple iPhone XS and half the price of Samsung Electronics’ Galaxy Note 9.

    The phone has already proved to be a success in other markets, especially in India, where it raised 30 billion won in sales within the first five minutes.

    The F1 comes with six gigabytes of RAM and three storage options: 64, 128 or 256 gigabytes. In Korea, only the 64 gigabytes will be available for purchase. SK Telecom, KT and LG U+ will start receiving preorders from Nov. 12.

    Jay Mani, the head of product for Poco Global, said the core motivation for developing the Pocophone F1 was the market trend where fierce competition drives manufacturers to add all kinds of new functions and features that aren’t relevant to everybody.

    “So the phones you have today – they have all these new functions but many do not appreciate them, nor are they excited about them, and yet the prices have come up to the current level,” he said in a press conference held in southern Seoul on Monday. “We wanted to buck this trend.”

    The Pocophone F1 focuses on performance. Inside its plastic body, the F1 uses the same processor chip as the Galaxy Note9 and LG Electronics’ latest V40: the Qualcomm Snapdragon 845. Its battery storage is 4,000-milliampere hour, larger than most phones released this year and equivalent to the Note9. To ensure its high speed, the F1 has a cooling system that keeps the phone’s temperature down. The hotter a device, the slower it gets, said Mani.

    However, it also adds some of the core features used in competitors’ top phones today. For example, the artificial intelligence-embedded camera can add 25 filters while taking a photo by automatically perceiving what the object is, while a camera on the front of the device allows for face recognition.

    “Reaching out to loyalists, that’s something that takes time, but there are also a lot of people who we can make think: ‘Does [my phone and its price] make sense?’” said Mani.

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  • Hyundai to set up $100 million hydrogen fund in China

    Hyundai to set up $100 million hydrogen fund in China

    Hyundai Motor has partnered with a Chinese institute to set up a $100 million fund for local investments in hydrogen technologies and related industrial infrastructure, the company said Monday. Hyundai Motor and the Beijing-Tsinghua Industrial R&D Institute have kicked off the Hydrogen Energy Fund, with venture capitalists from Asia, Europe and the United States expected to join as investors, Korea’s largest carmaker said in a statement.

    “The fund, once fully set up, will be used in the infrastructure needed for the hydrogen industry and venture startups with core hydrogen technologies,” the statement said.

    Yield Capital, an investment organization under the Chinese institute, will be responsible for raising funds and managing them, it said.

    Hyundai has expanded investments in hydrogen fuel-cell electric vehicles, such as Nexo, while expanding partnerships with global companies to gain a share in the next-generation car markets.

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  • Starbucks Coffee Korea boosts cashless store ranks

    Starbucks Coffee Korea boosts cashless store ranks

    Starbucks Coffee Korea is adding 300 more ‘cashless shops’ in addition to the 103 stores currently in operation, starting on Monday. Cashless stores require customers use a means of payment other than cash. The company noted that adding 300 more cashless stores would amount to one-third of the 1200 Starbucks shops in South Korea.

    “Instead of cash, customers will be asked to use credit cards, Starbucks cards, mobile transactions and other means of payment,” a company representative added.

    Over the past three months, Starbucks reduced the ratio of cash transactions at its stores from 3.4 per cent to 0.2 per cent on average. The average number of cash transactions per store dropped from 19 to 1.1 per day.

    “Cashless stores can better focus on customer satisfaction since employees don’t have to spend time going to the bank to balance cash,” Starbucks Coffee Korea said.

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  • LG Electronics starts venture to make in-cabin electronics

    LG Electronics starts venture to make in-cabin electronics

    LG Electronics said Thursday it will establish a joint venture with Germany’s Lufthansa Technik, which will be devoted to developing in-cabin electronics systems. The new venture, whose name has not yet been decided, will focus on developing in-cabin solutions utilizing LG Electronics’ technologies, including its OLED displays.

    Lufthansa Technik is a subsidiary of Deutsche Lufthansa AG, Germany’s largest air carrier.

    The new company will kick off in the first half of 2019, and will be based in Hamburg, Germany. LG did not reveal detailed conditions of the agreement, including the size of the deal.

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  • Hyundai Motor net profit plummets 67%

    Hyundai Motor net profit plummets 67%

    Hyundai Motor’s operating profit plummeted 76 percent on-year in the third quarter as a recall in the U.S. and sluggish growth in major markets hurt the automaker’s bottom line. Korea’s No. 1 carmaker by sales announced Thursday that it posted 289 billion won in operating profit in the July-Sept. period.

    Its net profit was 306 billion won, down 67.4 percent on-year.

    “To fortify quality control, Hyundai Motor rolled out a recall related to airbags and engines which resulted in a 500 billion won one-time cost realized in the Q3 report,” said a Hyundai Motor official.

    Operating costs totaled 3.4 trillion won in the third quarter, according to the carmaker, which is 8.6 percent more than during the same period last year.

    Despite good sales in Europe and emerging markets like Brazil and Russia, low demand in the U.S. and China dragged down overall sales. It sold 1.12 million units globally in the third quarter, 0.5 percent less than during the same period last year.

    The domestic market got a bost from the new Santa Fe SUV, but a decreased number of operating days at dealerships resulted in Hyundai Motor selling just 171,443 units, a 1.4 percent drop compared to last year. Chinese sales dropped by 3.7 percent on-year, selling 181,000 units. Sales in the U.S. dropped by 4.1 percent on-year to 302,000 units.

    Hyundai Motor expects profitability to improve in the fourth quarter and going into next year with the launch of new SUV models and a reduction in costs.

    “In the fourth quarter, the new Santa Fe SUV and an upgraded Tucson SUV will launch in the U.S.,” said a Hyundai Motor official.

    “The implementation of a new platform starting next year will help reduce costs and raise efficiency as well.”

    Hyundai Motor shares fell by 5.98 percent to 110,000 won on Thursday as of press time.

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  • The Face Shop loses trademark battle with Louis Vuitton

    The Face Shop loses trademark battle with Louis Vuitton

    Korean cosmetics firm The Face Shop has lost a trademark infringement case filed against it by French luxury brand Louis Vuitton. The infringement case relates to Face Shop’s collaboration with American brand My Other Bag, known for its parodies of luxury products. LV has unsuccessfully pursued My Other Bag for damages in American courts.

    Seoul’s Central District Court has ruled The Face Shop to cease trading in products featuring Louis Vuitton designs and pay KRW50 million (US$44,080) in fines.

    The Face Shop failed in its defense that their products were a parody due to the low market profile of My Other Bag in Korea and the difference in how The Face Shop used LV designs compared with My Other Bag’s parody products.

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  • Asia-Pacific telcos to face slower revenue growth: Moody’s

    Asia-Pacific telcos to face slower revenue growth: Moody’s

    Moody’s Investors Service expects stronger competition for the Asia Pacific (APAC) telecommunications sector and stronger commoditisation, and slower revenue growth for companies across 11 markets in the region, including Malaysia. The other markets are Hong Kong, India, Indonesia, Japan, Korea, the Philippines and Singapore.

    The rating agency’s report entitled “Telecommunications – APAC: 2019 Outlook” noted that while slower overall revenue growth will be evident in all 11 markets, the emerging market is expected to see a more pronounced slowdown with revenue growth to fall to 3-3.5% in 2019 versus the 3.9% in 2017.

    “Comparing overall revenue growth across APAC with GDP (gross domestic product) growth, Moody’s says that companies as a whole will show modest revenue growth of 2-2.2%, with such growth lagging average GDP growth of about 4.6% for the region,” said Moody’s vice-president and senior analyst Nidhi Dhruv.

    Meanwhile, new entrants are expected to intensify competition in Singapore, Japan and Australia.

    High shareholder returns and capital expenditure levels will continue to temper free cash flow generation, which will consequently make companies to look into diversifying revenue as traditional telecommunications revenues contract. This will eventually lead to more cross-industry partnerships.

    Additionally, while 4G will remain the dominant technology used by telecommunications companies in APAC, 5G will gain some traction in 2019-20.

    Japan, Korea and Australia are expected to lead the region in rolling out 5G services in 2019.

    Nevertheless, Moody has given a stable outlook for the sector in APAC 2019, with companies in the region likely to show relatively stable leverage and debt levels over the next 12-18 months.
    Moreover, while liquidity is weakening, it remains supported by the companies’ access to the banks and bond market at current levels.

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  • Fair to screen startup hosted by LG

    Fair to screen startup hosted by LG

    Technology-related subsidiaries of LG hosted a fair on Monday in which 20 local start-ups presented their cutting-edge developments in areas such as autopilot technologies, artificial intelligence and big data. The small firms are seeking partnerships with and support from the fourth-largest conglomerate in Korea.

    LG picked the start-ups jointly with the Korea International Trade Association (KITA), hoping to revitalize local start-up ecosystem.

    The conglomerate is providing a venue for the fledgling firms to mingle with their larger counterparts and find new business opportunities.

    LG subsidiaries participating in the event include LG Electronics, LG Display, LG Innotek, LG Chem, LG U+ and LG CNS.

    Executives and researchers from those companies as well as KITA CEO Kim Young-ju paid a visit to the start-up fair, which took place at the LG Science Park in Magok, western Seoul, and had a closer look at technologies and services featured.

    Funnel, for instance, has developed a voice-recognition system that automatically collects information from television broadcasts. The resulting database can be used for artificial-intelligence smart speakers and voice-command chat bots.

    Venta VR owns a technology that is able to tape high-resolution 3D videos and calibrate the video images afterwards in a way that enhances the level of immersion and minimizes visual fatigue.

    LG will offer some of the participating start-ups office and research space inside the LG Science Park as well as technology-related consulting and funds.

    Companies under the LG umbrella have been increasing support for start-ups.

    LG Electronics is backing four start-ups that are in the web operating system business, whereas LG CNS and LG Display have been running their own programs.

    LG-led tech fairs aimed at locating and supporting promising local start-ups have been held in the United States, Germany, Israel and Russia.

    With a German start-up discovered during a tech fair in Europe, LG developed a linear compressor technology for refrigerators.

    LG says it will apply the cooperation system it developed overseas to Korean start-ups and smaller companies.

    “Future cooperation with start-ups will propel their global outreach,” said an executive at the LG Science Park.

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  • SK Group continues to focus on social value

    SK Group continues to focus on social value

    SK Group is reevaluating its business models in a bid to ensure that all of its affiliates create social value along with economic value. SK Chairman Chey Tae-won and the heads of all SK affiliates discussed ways to renew their business models so that doing business leads to increasing benefits for the public as well as SK shareholders and employees during a three-day meeting on Jeju Island that ended Friday.

    “Creating social value is a way to earn strong trust from our customers and society,” Chey said. “By social value, I mean increasing the benefits of all stakeholders in our business including our customers, shareholders and employees.”

    Chey then ordered the chief executives to think over whether there was any part of their business that they are tricked into believing is sustainable.

    “Rethinking business models that you believe are sustainable is the beginning of a deep change that we are trying to accomplish,” the chairman added.

    SK has been making small steps into realizing Chey’s vision from earlier this year. The group’s oil refining arm SK Energy opened up the idle space at its gas stations so a logistics start-up can move in and use the space as storage.

    However, many other SK affiliates still need to come up with ideas to create social value.

    To renew business models, the CEOs agreed that sharing data and resources between SK affiliates is crucial. The heads also said that all members of SK should be a part of the movement for the vision to materialize.

    The chief executives first decided to improve human resources management policies and the research and development system. Details of the discussion weren’t revealed, but Chey ordered the chief executives to rethink the work environment for employees and to bolster R&D capabilities.

    As SK has businesses in a range of industries, the group is also thinking about business convergence among affiliates.