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Forbes Korea, Cover Story Father and daughter

Forbes Korea   01-06-2011

   Date: 2011.06.01 Forbes Korea / June

Cover Story / Father and Daughter


Chairperson Sung-Joo Kim, ‘Like Father, Like Daughter’


Inherited the ‘Entrepreneur’s DNA’ which is more precious than money


Even though she was born as a daughter into a chaebol family, she chose her own way without depending on her family’s wealth. She did not receive any inheritance or even school expenses from her father. However, she did receive one thing. It was the ‘Entrepreneur’s DNA’ which would prove more precious than any kind of inheritance.


- Written by Reporter Sohn Yongseok / soncine@joongang.co.kr / Photographed by Reporter Jeong Chiho


I am at Heathrow Airport in Britain now, because I had a meeting with the president of Harrods department store yesterday. Until the mid-1990s, MCM was more popular than Louis Vuitton at Harrods. However, as the main office faced difficult situations, the store was closed. Since MCM has obtained popularity again since we acquired it, I had a positive meeting with the president of Harrods regarding the reopening of the store.”


On the evening of May 18th, Chairperson Sung-Joo Kim (55) of Sungjoo Group got a phone call at Heathrow Airport in London. She was on her way to Germany after finishing her business trip in Britain. With laughter, she said, “I travel by air more than 80 times a year. I think that I need to hire a CEO for doing this, since I feel exhausted.”


Chairperson Kim strengthened the basis of her business in 1990s by introducing famous foreign fashion brands to Korea. In 2005, she purchased the German brand MCM, gaining a lot of attention. Currently, MCM has about 100 direct management stores in about 30 countries. She said that MCM recorded the second highest sales following Louis Vuitton in the Korean market for luxury items last year, except at duty-free stores. Such an achievement is quite significant, since we have defeated such other popular brands such as Gucci, Prada and even Chanel.”


Chairperson Kim is the youngest daughter of the late Honorary Chairman Su-geun Kim who founded Daesung Group. As a daughter in a chaebol family, she could have a stable life. However, she left her home to seek her own way of life. As a result, she did not receive any support from her father and had to start her business from scratch. She could blame her father for not providing her with any support. However, she said that she had received a much more valuable inheritance than money from her father.


Like Father, Like Daughter 1 / Born with the ‘Entrepreneur’s DNA’.


After graduating from the College of Theology at Yonsei University at the end of the 1970s, Chairperson Sung-Joo Kim applied for entrance to the prestigious school of Amherst College in the US and passed the entrance exam with a competition rate of 10:1. However, her father did not approve of her studying abroad since she was a ‘woman’. She tried to persuade her father by inviting her father’s acquaintances who had graduated from Amherst College. At last, she was able to leave for the US and graduated from Amherst College in 1981. After studying at the London School of Economics and Political Science (LSE) in Britain, she finished the course of business management at Harvard Business School in the US.


At Harvard, she fell in love with a British-Canadian and got married. At that time, such a marriage was not acceptable in conservative Korean society, especially in a chaebol family with a strong Confucius belief.


Her father treated her as a ‘stranger’, since he was planning her marriage with a spouse from a good family through a strategic purpose. School and living expenses were no longer provided. She gave up her schoolwork and started to look for a job. Through the help of her acquaintance, she got her first job in the US at Bloomingdale’s department store located in Manhattan, New York. It was referred as a ’representative fashion academy’ leading the fashion trend in the US.


At that time, Chairperson Kim got her first job at the planning department which was directly under the supervision of Chairperson Marvin Traub, who was a legendary entrepreneur in the fashion industry. Recalling her memories, she said, “I was able to learn about everything regarding the fashion industry.”


After spending about five years without any contact with her parents, she became aware of a US company which was planning to establish a joint venture with a Korean company by chance. At that time, there was a subsidiary company producing car components under her father’s Daesung Group. She could not call her father directly, so she delivered such a proposal through one of the executives at the company.


At that time, Hyundai Motor Company had just started to export cars to the US market, so every domestic company producing car components was desperately looking for the introduction of foreign technologies to overcome the barrier of the US market.


In order to discuss the establishment of a joint venture, her father came to Detroit in the US with about 10 executives. He called his daughter whom he had not seen for five years and made her carry out interpretation works. There was an uncomfortable mood between her father and her, but that mood was soon forgotten through fierce business negotiations. Since both sides at the negotiation table had totally different ideas, they were faced with the risk of having a breakdown after three days of negotiations. She told her father to provide her with a chance to make the negotiations successful if there was no other way to avoid a breakdown.


As an arbitrator, she provided each side with one proposal in which they had to compromise for the common good between them. She said that her proposal would provide both sides with win-win results. Due to her objective arbitration, both sides entered into an agreement within three hours. As a result, a joint venture with a size of 200 million dollars was established.


When an evening party was held after the negotiations were done, one of the executives from the US Company suggested to her father that one of the directors at the joint venture be taken by her. Her father laughed, but it was not easy for him to turn down such a proposal. At last, she took the position of a director of the joint venture at that time and returned home in glory.


Chairperson Kim said, “By looking at my father when I was young, I could not help thinking that some people are born with entrepreneur’s talents. I knew that I had inherited just such talents of his.”


Like Father, Like Daughter 2 / Let’s do one thing properly.


When the joint venture was launched successfully, Honorary Chairperson Kim invited his daughter to his office. For the first time in her life, his daughter entered his office. Chairperson Kim said, “At that time, there were no female employees at Daesung Group, except for the secretary who made tea or coffee. I was very surprised with such an invitation from my father, since even my mother was not allowed to go to anywhere near the company.”


Her father told her that he would make one of her wishes come true since she made a contribution to the company. She told him that she wanted to borrow some capital to start her own fashion business. After receiving an unexpected proposal from his daughter, he became somewhat curious about it and gave her 300 million won. Also, he gave her a dusty office which had been used as a storage room in the company building. There was only one desk and one computer in the room. With such conditions, Sungjoo International was finally founded. Chairperson Kim said, “I had always admired my father’s self-made success, so I wanted to have my own business.”


By seeing his daughter starting her own business, he provided her with three pieces of advice. He said that it was necessary to manage businesses with credibility, make a long-term investment and avoid politics and real-estate speculation. Chairperson Kim said, “At that time, I hoped that I could hear enormous secrets regarding business management from him, so I was disappointed with his philosophical advice. However, in the 20 years since that time, I have used those three pieces of advice as the most important principles for my business management.”


Honorary Chairperson Su-geun Kim, who passed away in 2001, was a pioneer in the Korean energy industry. He had started his business from the briquette industry and expanded his business line to include oil and gas. He focused only on one field, the energy industry. Right after liberation, Honorary Chairperson Kim established Daesung Industrial Co., Ltd. in Chilseong-dong, Daegu in 1947 and actively started his business in the briquette industry. Later on, he expanded his business line to include coal, oil and gas, making his company to become the first combined energy company in Korea.


Honorary Chairperson Su-geun Kim had a principle that it was necessary to invest as much as he earned by focusing on just one field. He always emphasized that it was important to do at least one job properly. He thought that it would be foolish to follow other people’s paths without being fully prepared. In the book <There is always a way> which introduces the management philosophy of Honorary Chairperson Kim, such ideas of his are clearly described. When he was young, he decided to make a contribution to his country and society regarding the energy-related issues in Korea which he believed would become more important later on by promising to focus on such issues throughout his entire life.


Honorary Chairperson Kim was also famous for his emphasis on transparent business management. Whenever he went on a business trip, he always kept every receipt. If he had any expenses left from his business trip, he returned it to the company. Also, he even brought disposable soap which he used at the hotel where he stayed to use it for shaving. He kept clear of political pressure. He once received a tax investigation after turning down a request for political donations from Financial Director Kim Seonggon of the Republican Party, who was his friend.


Chairperson Sung-Joo Kim is just like her father. She started her fashion business actively by entering into a dealer’s agreement for such famous brands for luxurious items as Gucci, Yves Saint Laurent, Sonia Rykiel and MCM through Sungjoo International. She said, “It seems that my father wanted me to work for him at his company, but I knew and liked the fashion business the most. In particular, I wanted to apply my knowledge from Bloomingdale’s department store to the Korean market.”


Since Chairperson Kim insisted on carrying out transparent management, she had to experience many difficulties in the initial stage of her business. She said, “I had a hard time even for meeting a buyer, since I did not provide any bribe or entertainment. In particular, I often received disrespect from others, because I was a woman.”


Because of Chairperson Kim’s business management was based on her extraordinary insight and principles, she started to gain confidence from customers. As a result, the company grew larger. Sungjoo International was soon able to achieve the sales of 40 billion won in 1995, just four years after establishment. Chairperson Kim was chosen as a leader for the next generation by the World Economic Forum (WEF) in 1997.


Transparent business management brought some achievements during the period of the financial crisis. During this period in 1998, Sungjoo International experienced decreasing sales with an increasing amount of interest which led to a total deficit of 30 billion won, since the company focused mainly on imports. Chairperson Kim was faced with the risk of bankruptcy. However, she successfully raised 27 billion won by handing over the rights for Gucci to the main office.


She said, “At that time, Gucci did not trust the list of tangible assets in our book, so they even carried out an on-site investigation. At last, they found that there was no difference from the figure which we suggested and the one in the book, so they paid a proper price. We have never kept a second set of books or used any expedients.”


Just like her father, Chairperson Kim never depends on others without providing any effort of her own. She said, “When I was an elementary-school student, I earned my allowances by polishing my father’s shoes or organizing my belongings. Every year, I successfully raised my allowances by ‘negotiating’ with my father for my payment. After borrowing 300 million won from my father as the capital for my business, I paid it back to him with interest.”


She can be so proud of her achievements, since she did not inherit any money or business from her father. She said that she was the only child who could disagree to his father’s opinion. As a result, she could have more truthful conversations with her father later on. She said, “My father called me before he passed away. Showing regrets, he told me that I reflected his characteristics the most even if I was a woman. I told him that he did not have to regret anything by promising that I would become a bigger person.”


Like Father, Like Daughter 3 / There is always a way.


Beyond the domestic market, Chairperson Kim is showing her active efforts to enter more foreign markets. Among various markets, she is currently targeting the Chinese market. In April, she opened a direct management store in Shin Kong Place, the most luxurious department store in Beijing. As a result, MCM will have a total of nine stores in the Chinese region, including the direct management stores in Beijing, Shanghai, Hong Kong and Macao and at duty-free stores at various airports.


With confidence, she said, “We will open up to 30 stores this year. Also, we will increase the number to 100 by 2015, dominating the Chinese market for luxurious items. We are going to increase the proportion of our foreign sales by up to 50.”


As MCM has kept on rolling, the level of interest for investment has also increased greatly. Chairperson Kim proudly said, “All the directors of world-class investment banks want to meet me desperately. Also, there are so many companies which try to sell their brands to us.”


However, she tends to focus only on MCM for the time being. She said, “We will expand our business line after three to four years by registering our company on the stock market. Until that time comes, we will place all our efforts to dominate the Chinese market with our MCM brand instead of recklessly diversifying our business.”


In the case of foreign expansion, Honorary Chairperson Kim used to be a pioneer. In 1970, Daesung Industrial Co., Ltd. invested in a mining project in Drayton, Australia, which was the first investment project for foreign resources. At that time, through a company newsletter, he announced that Daesung would enter such foreign markets as Australia, Canada and the US in order to focus on the development and importation of foreign resources.


However, since Honorary Chairperson Kim always believed that it would be important to prepare for every possible situation before actually carrying out a project, he executed thorough on-site investigations and reviews before carefully planning to enter foreign markets. In 1980, after four years from the time of the announcement for an active plan to enter the Australian market, he founded a local corporation in Sydney and started to develop coal mines. As part of the oilfield-developing projects, he participated in the development of mines in Libya in 1990. Also, he joined a gas development project in Vietnam in 1992.


There is a particular reason for Chairperson Kim’s effort to enter foreign markets. She said, “I feel sad to see female CEOs from chaebol families focusing only on the importation of foreign brands. I want to provide all young women in Korea with a dream of defeating the competition with global brands.” Also, she revealed her strong ambition for changing the global market for luxury items by defeating Louis Vuitton after 10 years.


She is famous as an entrepreneur who complements her noblesse by constantly donating a certain portion of profits to those in need. She always says to her only daughter that she will not leave anything behind for her as an inheritance. She said, “I want to make a contribution to my country like my father through businesses. I am planning to donate all of my assets to North Korea.”


‘Self-control’, the inheritance from her mother


Chairperson Sung-Joo Kim spent her childhood at ‘Donamjang’ which was located in Dongsomun-dong, Seoul. It was a historic mansion where the former president Rhee Syngman had stayed for two years right after liberation. Recalling her memories from that time, she said, “We had more than 10 employees who helped all the housework.”


Even if she had wealthy childhood and is currently running a company selling luxurious items as a CEO, she always regards self-control as a virtue. She likes to wear sneakers and T-shirts, while driving an SUV from a domestic car manufacturer. She works in an office with the size of 3 to 7m2. She said, “I was greatly influenced by the activities of ‘Korea Christianity Female Self-control Association’, which were carried out by my mother (the late Ms. Yeo Gwiok) when she was still alive.” This association is a group of female members carrying out various types of self-control campaigns that go beyond religions.


After liberation, the association carried out campaigns for the use of domestic products and the avoidance of useless formalities and vanity in Korea. It is currently executing campaigns to help people stop smoking and assisting pregnant women and teenagers to avoid drinking. As a smile appears across her face, Chairperson Kim said, “When I started the current business for the first time and told my mother that I would import Gucci products, she asked me what Gucci products were. She often expressed her objection against the importation of luxury items.”


In particular, her mother made every one of her children strive to be brilliant students without providing them with private lessons. Emphasizing her point of view regarding private lessons, Chairperson Kim said, “All the parents who make their children receive tens of private lessons could make their children act like robots. It is more important to provide children with an environment where they can do what they would like to do.”

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