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CHAEBOL RESEARCH

KOREAN CONGLOMERATES

OFFICIAL PROGRAM

CHAEBOL RESEARCH HOW TO APPROACH KOREAN CONGLOMERATES Language: English Number of pages: 155 Author: Jin Kim, JK Research & Marketing Other architectural Reports: Are you interested in other architectural Reports for other sectors and countries? Please find more Reports here: www.s-ge.com/reports

Contents 1. EXECUTIVE SUMMARY _______________________ 5 2. ELECTRONICS INDUSTRY ____________________ 6 2-1. Samsung Electronics _______________________ 6 2-2. LG Electronics ___________________________ 11 2-3. LG Display _____________________________ 15 2-4. SK Hynix ______________________________ 19

3. TELECOMMUNICATION INDUSTRY ____________ 23 3-1. KT Corporation __________________________ 23 3-2. SK Telecom ____________________________ 27 3-3. LG Uplus ______________________________ 31

4. AUTOMOBILE INDUSTRY ____________________ 34 4-1. Hyundai Motors _________________________ 34 4-2. Hyundai MOBIS _________________________ 38 4-3. Mando Corporation _______________________ 41

5. ENGINEERING & CONSTRUCTION INDUSTRY ___ 44 5-1. Hyundai Engineering & Construction ___________ 44 5-2. Samsung C&T ___________________________ 51 5-3. GS Engineering & Construction Corp. ___________ 53

6. SHIPBUILDING INDUSTRY ___________________ 56 6-1. Hyundai Heavy Industries __________________ 56 6-2. Samsung Heavy Industries __________________ 63 6-3. Daewoo Shipbuilding & Marine Engineering ______ 68

7. JONGHAP SANGSA (TRADING) INDUSTRY _____ 73 7-1. SK Networks ____________________________ 73 7-2. Daewoo International Corporation _____________ 77 7-3. Samsung C&T Corporation __________________ 82 7-4. Hyundai Corporation ______________________ 88

8. MACHINERY INDUSTRY _____________________ 91 8-1. Hyundai-Wia ___________________________ 91 8-2. Doosan Infracore ________________________ 99

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9. RETAIL INDUSTRY _________________________ 102 9-1. Hyundai Department Store _________________ 102 9-2. Shinsegae Department Store _________________105 9-3. E-Mart Co., Ltd. _________________________ 110 9-4. Lotte Mart (Lotte Shopping Co., Ltd.) ___________ 113 9-5. GS Home Shopping _______________________ 117 9-6. CJ O Shopping Co., Ltd. ____________________ 121

10. PROCESSED FOOD INDUSTRY _____________ 125 10-1. CJ Cheiljedang Corporation _________________ 125 10-2. Lotte Chilsung Beverage ___________________128 10-3. Lotte Confectionery _____________________ 130 1.1.

10-4. Nongshim ______________________ 133

1.2.

10-5. Ottogi _________________________ 135

2.

11. MEDICAL DEVICE INDUSTRY ________ 137

2.1.

11-1. Daewoong Pharmaceutical Co. & CG Bio __ 137

11-2. Green Cross Corp. & Green Cross Medical Science __ 139 11-3. JW Pharmaceutical & JW Medical ____________142

12. CONCLUSIONS / FURTHER STEPS __________ 144 13. DISCLAIMER _____________________________ 144 14. APPENDIX: AFFILIATION STRUCTURE OF CHAEBOL GROUPS

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1. Executive Summary Over the past 50 years, the economy of Korea has developed dramatically in a rate that has never been seen in any other country. Korea’s GDP per capita, which was one of the lowest in the world in the 70’s, has recorded USD 22,708 in 2012, ranking 12th in the world’s economy. Korea has become a member of G-20 countries, leading many industries such as ship building, LCD/LED displays, smart devices, memory chips and automobiles. Korea holds FTAs with 8 economic groups including the US, EU and EFTA. If the currently negotiating Korea-China FTA were to be signed, Korea becomes the only nation who holds FTAs which cover 80% of the global economic region.

A strong force behind this rapid economic growth were/are so called Korean Chaebol groups. Chaebol stands for a large corporate group that consists of multiple subsidiaries operating in various industries with complex interrelationships but sharing a common name. They are also unique in the way that they are usually owned and governed by founding families (even after a 3rd generation) despite its volume of business and public listings.

Over the past few decades, the Chaebol groups have grown into global conglomerates. They came to a position where they can impose an enormous influence not only on the Korean economy, but over entire global markets in various industries.

In fact, most Chaebol groups generate two thirds of their sales outside of Korea. Concurrently, their demand and purchasing power for goods and services in many different countries, has swung upward rapidly.

In order to help Swiss SMEs capturing sales & collaboration opportunities, this report provides condensed information on selected 35 Chaebol companies from 10 key industries, especially focusing on their organizational structure and general procurement process. It gives a brief overview of each industry along with the 35 companies’ business overview, recent financial data as well as the new supplier registration procedure and relevant point of contacts. Principal contact in procurement decision making as well as the process of purchasing differs by each company and industry. For example, in companies operating within R&D driven industries such as electronics and/or telecommunication, the relevant engineers are deeply involved in the supplier selection process, backed up by procurement divisions which support negotiations, evaluations and documentations. On the other hand, companies in retail business put every purchasing authority to buyers.

Despite some differences, Chaebol groups usually share a common ground in designating suppliers and having a local point of contact is much appreciated. This is due to the Korean business culture where building a relationship is highly important. Companies prefer to have discussions face-to-face, in Korean language if possible, and in the same time zone.

All abstracted information provided in this report can be utilized as a keystone for Swiss SMEs. Afterwards they may decide how to initiate first steps from an initial dialogue to final contract conclusions with Korean conglomerates.

All financial data in this report is converted to CHF either from KRW and/or USD in an exchange rate of CHF1=KRW 1,200, and CHF1=KRW 0.9143 respectively.

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