Regrouping of Samsung Family Business
Cheil Industries’ apparel business, headed by Executive Vice President Lee Seo-hyun, the second daughter of Samsung Group Chairman Lee Kun-hee, will be transferred to Samsung Everland led by Lee Boo-jin, the eldest daughter and president of Hotel Shilla and Samsung Everland.
It is expected that this move will serve as an opportunity for Samsung Everland to become a company that manages clothing, food, and shelter-related industries. For Cheil, this deal will be a chance to transform itself into a company that specializes in the cutting-edge materials business.
Currently, the main businesses of Everland consist of engineering and assets (construction, energy, landscaping, real estate service), food culture (food service, food ingredient distribution, concessions), and resorts (theme parks, golf clubs). Thus, the addition of the fashion business will make the company a large enterprise that owns clothing, food, and shelter-related businesses.
Everland hopes that its businesses will grow qualitatively by integrating Cheil’s global design capabilities into existing businesses. In particular, the successful combination of Everland’s expertise in the management of theme parks and golf clubs with Cheil’s capabilities is expected to create new synergy in fields with high growth potential such as sports, outdoors, and fast fashion.
Yoon Joo-hwa, president of Cheil Industries’ fashion business, said, “Soft competitiveness is important in the fashion business,” adding, “We anticipate that greater synergy effects will be created, since Samsung Everland with soft competitiveness through resorts and the leisure businesses will take over the apparel business.”
With the acquisition of the fashion business, Everland will become an enterprise with annual sales worth 5 trillion won (US$4.65 billion) from the current 3.5 trillion won (US$3.26 billion).
Cheil Industries, on the other hand, recently expanded its materials business by acquiring majority shares in Novaled AG, a German-based organic light-emitting diode (OLED) company. Through the handover of its fashion business, the company reaffirmed its goal to become a top materials company in the global market.
In fact, it has been a long time since Cheil shifted its focus from the apparel business. It expanded its chemical business in the 1990s and electronic material business in the 2000s. Since then, it has concentrated on the materials industry rather than the fashion business. Thanks to 20 years of heavy investment in the cutting-edge materials industry, Cheil’s chemicals and electronic materials business accounted for over 70% of its total sales last year. In contrast, the fashion business, once important in the 1980s, made up less than 30% of its entire sales in 2012.
Therefore, Cheil’s decision to transfer its apparel business to Everland seems to be appropriate.
A Cheil official commented, “The management made a decision to generate more than 2 trillion won [US$1.86 billion] by giving up its fashion business and concentrating its capabilities on one business instead.”