Keys to Survival

 

As telecommunications companies recently agreed to postpone the repayment of accounts receivables from Pantech, and creditors of Pantech decided to restart the workout (corporate financial structure improvement) on July 31, Pantech has pulled back from the edge of a precipice.

Pantech was on the verge of being under legal management (corporate rehabilitation proceeding), but now can wait for an opportunity to revive through the workout of creditors for a while.

The best thing happening to Pantech, thanks to the continuing workout, is that it can maintain its technologically-capable employees.

Although Pantech has temporarily overcome a big crisis, it will take very long to regain any former glory.

First of all, Pantech will have to be able to constantly manufacture technologically-proven products, and create profitable structures based on price competitiveness and marketing strategies.

Furthermore, Pantech will have to be equipped with brand competitiveness so that its smartphones are approved in overseas markets, beyond the already saturated domestic market.

Without these preceding conditions met, sustainable corporate management will not be possible even, if Pantech survives temporarily for now. It could be a life-prolonging treatment company.

Pantech is quite confident about its survival if it can successfully manage the workout and proceed with management stabilization measures.

Lee Jun-woo, CEO of Pantech, said at a press conference on July 10, “We have management stabilization plans such as five year plans based on due diligence. In fact, exports during the second quarter reached 500,000 devices, more than double domestic sales.”

Pantech could not perform well in Korea due to business suspension, but their business is working abroad, as they changed their management strategy.

If sales continue to rise, and credible products continue to be produced, Pantech might be able to survive inside this virtuous circle.

For this, telecommunication service providers must purchase new products from Pantech immediately. Although Pantech is demanding for telecommunication service providing companies to take additional products, those companies deny the requests due to high inventory.

Pantech could pay for components to their subcontracts upon the receipt of the sales payments from telecommunication service providers. If any of the subcontracting companies goes bankrupt, Pantech will suffer as well, due to the supply disruption of components. The workout has started again, but this is far from a complete escape from crisis.

One reason for slight optimism is that Pantech is strong in this crisis and highly advanced in technology.

Pantech changed the corporate constitution from a feature phones (ordinary mobile phone) maker to a smartphone producer during the first workout. In the meantime, Pantech scored profits for 20 consecutive quarters.

For the last two years, Pantech showed off its advanced technologies by introducing fingerprint verification smartphones and all-connected edge design smartphones.
Pantech already finished developing broadband long-term evolution advanced (LTE-A) smartphones, three times faster than LTE.

Since last year, Pantech is also concentrating on after-services, which used to be pointed out as a weakness, and trying to improve its image and enhance awareness in Korea.

However, Pantech’s survival will be very difficult, as the global smartphone market has matured and Chinese competitors like Xiaomi are aggressively challenging everyone.

Another industry professional said, “As strong corporations like Samsung Electronics recorded the worst performances of an earnings shock, the future of the Korean ICT industry is not that bright. In this situation, the government’s determination to boost the creative economy and ICT industry will influence the market.”

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