New Business Failures
The SK Group is giving up on a series of new businesses it started for diversification. It withdrew from the photovoltaic power generation industry earlier this year, and canceled its plan for manufacturing electric vehicle (EV) batteries with Continental last month.
SK Innovation and Continental established SK Continental E-motion in January last year at a share ratio of 51:49. It was planning to invest 270 million euros (US$332 dollars) for five years and catch up with LG Chem and Samsung SDI, but failed to put the business on track. In July 2013, SK Innovation also set up a joint venture with the Beijing Automotive Group to produce EV batteries.
The company halted its solar power generation business in March, too. In 2011, it invested US$76 million to acquire Heliovolt, which supplies CIGS thin-film solar cells. At that time, the growth of the market was led by crystalline solar cells, which are more expensive yet more efficient. First Solar was the only thin-film solar cell manufacturer on the global top 10 photovoltaic cell company list. Industry experts questioned SK Innovation’s unusual takeover in the solar cell market losing steam for the global economic recession.
More recently, it stopped its fuel cell business in September this year in less than two years due to the low profitability, high technical barriers and high burden on large-scale investments. It halted its plans to invest 17.5 trillion won (US$15.7 billion) in the business.
SK Group Vice Chairman Koo Ja-young has been in pursuit of diversification from oil refining and chemicals for four years since taking office. This is because the company has relied too much on the segments to the point of the two accounting for 75 percent and 19 percent of its total sales, respectively.