Growth is a pos­i­tive sign for fu­ture

JoongAng Daily - - CEO Interview - Kjy@joongang.co.kr

Driven by growth in the mar­ket for non­wo­ven fab­ric, which is the raw ma­te­rial used to make syn­thetic leather, Dong Kwang Chem­i­cal has seen an av­er­age an­nual growth of 26 per­cent in the past five years.

Last year, it had a rev­enue of 71.4 bil­lion won ($67.1 mil­lion) and posted 4.8 bil­lion won in op­er­at­ing profit. It has added pro­duc­tion lines of non­wo­ven fab­ric and syn­thetic leather ma­te­ri­als to its re­tail business sup­ply­ing raw ma­te­ri­als for syn­thetic leather.

With the pro­duc­tion lines and ma­te­ri­als to make syn­thetic leather, Dong Kwang Chem­i­cal is ex­pected to con­tinue grow­ing and see its sales ex­pand.

The key to Dong Kwang Chem­i­cal’s suc­cess is the company’s ex­clu­sive sales con­tract with Tai­wan-based San Fang, the world’s No. 1 pro­ducer of syn­thetic leather for shoes.

In ad­di­tion to the sta­ble rev­enue from sup­ply­ing ma­te­ri­als to San Fang, Dong Kwang Chem­i­cal has other ma­jor global clients and is man­ag­ing business risks by con­tin­u­ously di­ver­si­fy­ing its client port­fo­lio.

Fur­ther­more, the company has com­pleted ver­ti­cal in­te­gra­tion of its value chain for syn­thetic leather by ac­quir­ing pro­duc­tion plants for its ma­te­ri­als and non­wo­ven fab­rics and in­cor­po­rat­ing them into its ex­ist­ing re­tail business.

After it es­tab­lished a non­wo­ven fab­ric pro­duc­tion plant in Viet­nam, Dong Kwang Chem­i­cal is now able to re­spond more ac­tively to in­creas­ing de­mand in the non­wo­ven fab­ric mar­ket. Also, by pro­duc­ing its own ar­ti­fi­cial leather, the company can cre­ate syn­ergy be­tween its sup­ply and re­tail busi­nesses.

Through this ex­pan­sion of its ar­eas of business, it is ex­pected that Dong Kwang will ex­pand its cus­tomer base fur­ther and se­cure more global clients.

Dong Kwang Chem­i­cal is also ex­pected to grow by de­vel­op­ing new prod­ucts in line with cus­tomers’ de­mands and in re­sponse to the mar­ket.

The sta­ble growth of the ar­ti­fi­cial leather in­dus­try will also work in the company’s fa­vor.

The in­dus­try is rapidly ex­pand­ing along with the de­mand for IT de­vices, au­to­mo­tive in­te­rior up­hol­stery, fur­ni­ture fab­rics and tra­di­tional ar­eas for syn­thetic leather, such as shoes and gar­ments.

Dong Kwang Chem­i­cal will es­tab­lish a con­crete sales port­fo­lio as it aims to sup­ply more ma­te­ri­als to Hyundai Mo­tor, Sam­sung Elec­tron­ics, Hewlett-Packard and IT de­vice con­sumers.

Its strat­egy is to se­cure a fu­ture growth driver by de­vel­op­ing high­value, eco-friendly ma­te­ri­als.

To this end, the company is boost­ing its R&D ca­pac­ity by con­struct­ing a new re­search lab­o­ra­tory, en­ter­ing new mar­kets such as Ja­pan and Europe and se­cur­ing new sales.

In ad­di­tion, Dong Kwang Chem­i­cal is ac­tively pur­su­ing in­ter­nal changes, such as set­ting up a hu­man re­source man­age­ment sys­tem to help mo­ti­vate em­ploy­ees.

It is pre­par­ing for an ini­tial pub­lic of­fer­ing in 2017, based on its per­for­mance over the next two to three years.

Its ul­ti­mate goal is to be­come a glob­ally com­pet­i­tive syn­thetic leather maker.

Although it is fac­ing some chal­lenges, Dong Kwang Chem­i­cal’s fu­ture looks bright.

KIM MIN-SUNG, IBK PRIN­CI­PAL CON­SUL­TANT

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