The faces inside KOREA’S CONGLOMERATES: Dongwon

‘The take-over of StarKist will provide synergy among the Dongwon affiliates related to the tuna business.’

June 29, 2009

• Kim Jae-chul (75)
• Dongwon Group Chairman
• Bachelor’s degree in fisheries science at National Fisheries University of Busan

When StarKist, a U.S. tuna producer, was sold in full by parent company Del Monte to Dongwon last October, Americans might have wondered who this Korean company and its mother entity, Dongwon Group, were.

But Dongwon Group, known for its canned tuna, has long been an established name in the local business world. It now hopes to repeat its performance on the global stage. Dongwon means “far from the East” in Chinese characters.

Founded in 1969, Dongwon has a total of 11 affiliates. The total sales and operating profit at the group last year amounted to around 3 trillion won and 200 billion won, respectively. The company targets 3.3 trillion won ($2.3 billion) in sales and 300 billion won operating profit for this year.

As is often the case with big companies, Dongwon’s success was built from scratch. One unique aspect of Dongwon, though, is that the empire was built “on the sea.”

Kim Jae-chul, the founder and chairman, was a captain on a deep-sea (pelagic) fishing boat when he discovered a way to enrich Korea, which at the time was mired in poverty.

He founded Dongwon Industries, and quickly grew the company into a deep-sea fishing powerhouse. Many locals associate Dongwon with canned tuna, a fixture on local tables.

But it was not known for that in the beginning. It began to produce canned tuna in 1982. Before that, Dongwon made its money from selling the tuna it caught to local fishery merchants and companies.

Since 2000, Dongwon Industries has been focused on fishing while Dongwon F&B, its spinoff, has been in charge of making and selling tuna and other fishery products.

Food is Dongwon’s main game.

Most of the affiliates Kim and his colleagues founded specialize in what we eat. They include Dongwon Home Food, a catering service, Dongwon Dairy Food, which handles milk and other dairy products, and Dongwon WinePlus, a wine importer and distributor. But the group also operates construction and telecommunication businesses through Dongwon Systems. Dongwon HRD and Dongyeong Cold Plaza are among the smaller affiliates.

Dongwon Group once expanded into the finance industry by taking over a brokerage in 1982. Formerly called Dongwon Securities, Korea Investment and Securities has grown into a top-five brokerage in Korea since then. The brokerage and other Dongwon financial affiliates broke away from the group in 2004 and have operated under the name Korea Investment Holdings. The two companies maintain informal ties.

Current law limits the ownership of a financial holding company by a conglomerate. Chairman Kim’s oldest son, Nam-gu, heads Korea Investment Holdings.

In April, the group, celebrating its 40th anniversary, held a group-wide event where the Vision 2020 was announced. According to the company’s mid-term goal, Dongwon will attain 20 trillion won in sales and a 20 percent return on equity by 2020.

To that end, Dongwon said it hopes to strengthen its distribution business and overseas businesses.

Some analysts say it is highly probable that the company will reach the goal.

“The StarKist takeover will create synergy among the Dongwon affiliates related to the tuna business,” said Kwon Dae-jung, chief analyst with the Korea Investors Service, a local credit rating agency.

Insiders also say the goal is not that ambitious, given the talent of the people who have led the group.

According to local analysts, Chairman Kim proved his world-class leadership last year when as head of the organizing committee, he spearheaded Korea’s successful effort to host the 2011 Yeosu Expo.

Park In-gu, vice chairman, is Kim’s right arm. Park was a high-ranking government official at the Ministry of Commerce before joining Dongwon. According to the group, Dongwon Precision turned from a headache into a cash cow under Park’s management. Park also fostered Dongwon F&B into a leading food company in less than a decade, the group said.

Kang Byung-won, another vice chairman, has assumed many leadership roles, from Dongwon Precision to Dongwon Industries to Dongwon Systems. Joining Dongwon in 1988, he has a reputation as well-connected leader who gets things done.

Kim Sang-kuk, vice chairman at Dongwon Industries, was once called a Dongwon Tuna missionary. He earned the nickname as the group’s passionate lead marketer. He introduced various new marketing gimmicks, and according to the company, also played a crucial role in raising the public recognition of Loex, the brand name for the group’s logistics service.

Like the chairman, Dongwon Industries President Park Boo-in was formerly a sea captain. A 15-year veteran on the bridge of deep-sea fishing vessels, he became head of Dongwon Industries in 2006.

Kim Hae-kwan, president at Dongwon F&B, was a well-known expert on the marketing of consumer goods at CJ Group before moving to Dongwon in 2006. Noticing a trend toward rising public awareness of health, he has tried to renew the image of Dongwon’s tuna cans into a healthy food, and so far has received a good response from consumers, the group said.

Source: Joongandaily

One Response to “Former sea captain steers food giant”

1. Francis Meyrick says:

   I served on a Dongwon purse seiner. I was impressed with the company. My employer had them as a customer, and they were very honorable and straightforward to do business with. With some of the strange and bizarre things that happened before with Starkist, I am glad to see Dongwon take over. These are good businessmen. They are not short term thinkers. They will want to see a long term future for the Tuna, of that I am sure.
   I think you will see them partake vigorously in conservation and sustainability studies. One thing I have experienced: when a Korean (or a Taiwanese) company give you a commitment, they stand by it.
   It will be most interesting to watch what happens! I for one am hopeful for a fishing policy which will prove to be sensitive to Mother Nature.