Large Korean Companies Investing In New Growth Industries

Recently, the CEOs of large Korean companies are stressing the need to take the lead in new business areas over the next 10 years. This is epitomized as active investment in new growth areas while competitors experience hard times due to the global financial crisis.

The main theme for the next 10 years is green business, which includes photovoltaic energy, secondary cells, LED, environment-friendly automobiles, and next-generation memory devices. Investment in health care applying biotechnology is also actively taking place. Samsung, LG, SK, Hyudai-Kia Motors, POSCO, and Doosan Group are already experiencing fierce competition in the market.

Samsung’s investment will total 23 trillion won, while LG will invest 20 trillion won in new growth areas. The two companies are likely to enter fierce competition in the areas of photovoltaic cells, LED, and cells for automobiles.

Samsung Group will invest 23 trillion won in 5 areas; photovoltaic cells, automobile cells, LED, bio medicine, and medical appliances. This investment was decided after CEO Lee Kun-hee, came to the management fore after 2 years and is already active. Samsung Electronics started to operate production lines for photovoltaic cells, while Samsung LED will expand its areas in LED lighting and automobile components. In addition, Samsung Electronics has announced its goal to become the world’s leading IT company, by achieving 400 billion won in sales by 2020.

Samsung’s photovoltaic cell business, starting from the system of crystallization, will promote a thin film system in order to achieve 10 trillion won in accumulated investment, 10 trillion won in sales, and the recruitment of 10,000 people by 2020. As for automobile cells, the company is planning to achieve 5.4 trillion won in accumulated investment, 10.2 trillion won in sales, and the recruitment of 7,600 people by 2020. For LED, it will expand its business from backlight to the lighting engine and electric fields. S-LED is likely to achieve 8.6 trillion won in accumulated investment, 17.8 trillion won in sales, and the recruitment of 17,000 people by 2020.

Samsung will promote cooperation with Samsung Medical Center based on Bio-similar whose patent will be achieved in a few years, achieving 1.8 trillion won in sales through investing 2.1 trillion won by 2020. As for medical appliances, the company will enter the xenodiagnosis area, including blood testers, and plans to achieve 1.2 trillion won in accumulated investment, 10 trillion won in sales, and the recruitment of 9,500 people by 2020. Lee Kun-hee said, “Recently, various governments have been investing in the green industry in an attempt to protect the environment and solve issues of energy depletion. The improvement of health and life quality is also the responsibility of business.” Lee went on to add, “We must preoccupy opportunities through active investment when other global companies are slow, and thus contribute to the national economy. We will recruit many more young and talented people in order to solve the problem of unemployment.”

LG Group announced that this year would be the starting point of its Green Management. The company released its Green 2020 Strategies of investing 20 trillion won by 2020 and achieving 10% of total sales from green areas. Their main focus includes photovoltaic cells, next-generation lighting, total engineering, and next-generation cells.

The company is also promoting the health care industry. LG Electronics will focus on photovoltaic cells, next-generation lighting and an intelligent power network (smart grid), etc. LG Chemicals is concentrating on photovoltaic cells, LED materials and electric automobile cells.

LG Electronics has supplied photovoltaic modules in Europe since January 2010, and in April 2010, entered a contract on 120 MW to be produced by the end of year. In February 2010, the company was designated an official photovoltaic cell module tester by UL (Underwriters Laboratories), the best safety standards certifier in the USA.

Hyundai-Kia Motors, which has become the world’s sixth largest automobile manufacturer, is pushing forward with its attempts to expand its global business. The company is currently running local plants in the USA, China, India, Turkey, the Czech Republic, and Slovakia.

Hyundai Motor’s plant in Russia will be constructed this year and the company is planning to start constructing a third plant in Beijing, China this year. At the same time, the company has presented its goal of becoming one of the four largest green car suppliers in the world. The company will invest in the development of environment-friendly automobiles (2.2 trillion won), highly efficient engine transmitters, and light materials (1.4 trillion won) by 2013 in an attempt to lead the green car market.

SK Group has seven major areas in green technology R&D and commercialization; non-contaminating coal energy, marine bio fuels, photovoltaic cells, carbon dioxide resources, green cars, hydrogen fuel cells and advanced green cities by 2015. At the same time, the company is actively expanding its global business. Over the next 10 years, the Group will invest 17.5 trillion won in new business including new energy.

SK Group held a growth strategy meeting with the CEOs of major affiliates and Choi Tae-won, the Group CEO on June 30, 2010, and selected three major areas (3E); securing new energy resources (Energy), the construction of a smart environment (Environment), and the development of industrially innovative technologies (Enabler) as well as announced 17.5 trillion won of investment by 2020.

In order to secure new energy resources, the company will invest 4.5 trillion won in photovoltaic cells, bio fuels, secondary cells and low carbon future energy as well as provide 11,000 new job opportunities.

In addition, the company will focus on resources development by securing 1 billion barrels of crude oil and gas by 2015, 30 million tons of iron ore by 2020, and 24,000 tons of raw rubber per year by 2020. In addition, it will invest 4.2 trillion won in Smart City, Smart Grid (intelligent power network), and development of environment-friendly materials by 2020 and provide 9,000 new job opportunities.

POSCO announced an investment of 300 billion won in the fuel cells and resources industries as well as 17 trillion billion won in the green growth industry by 2018, its 50th anniversary. The company will lay out a blueprint for green growth, including low-carbon steel technology and new and renewable energy. Meanwhile, the company was selected as the top negotiator for the takeover of Daewoo International. The company plans to achieve 20 trillion won in sales by 2018 by strengthening and expanding the areas of trading, resource development and new business development.

Doosan Group has a long-term plan to become one of the world’s 200 largest companies by 2020. The Group plans to conduct global business based on its core area, ISB (Infrastructure Support Business). In particular, Doosan Heavy Industries will develop new technologies such as wind power and fuel cells.

More conservative areas such as distribution and food are seeking new business more aggressively. Among these, Lotte and Shinsegae are pushing forward with their global business expansion, promoting entry into newly developing countries such as China, India, and Vietnam and which have been relatively less damaged by the global financial crisis compared to other nations.

The total investment planned by major companies in areas such as photovoltaic cells, automobile cells, health care, and overseas business amounts to 80 trillion won.