Chairman Im Jin-yong said, “Korean conglomerates have grown through a fast follower strategy, quickly catching up to new products and technologies. And for about a decade now, China has been rapidly chasing developed countries in the same way.”
The problem is that they’ve gone too far and are notorious as copycats. Chinese automakers blatantly copied the designs and technologies of famous luxury cars, and IT companies also copied NPL and Seosung Electronics.
Patents are supposed to prevent that, but Chinese companies didn’t even bat an eye. Even when companies whose patents were infringed protested, the Chinese government sided with its domestic companies.
The reason China can act this way is because it’s backed by a huge domestic market.
They disregard patents to save on R&D costs and use low prices as a weapon to dominate their domestic market. Then, they grow in size and target foreign markets – it’s a pattern. (By this time, based on their past experience, they’ve already secured enough patents.)
“They might be able to imitate the hardware to some extent, but they won’t be able to imitate the quality. Even if they copy it exactly, wouldn’t they struggle to match the cost?”
The reason NPL orders parts from its competitor, Seosung Electronics, is that Seosung Electronics is the only company that can make products of that quality at that price.
“The story would be different if the Chinese government stepped in to support them.”
The Chinese government has declared its ambition to become a car manufacturing powerhouse and is sparing no investment in electric and autonomous vehicles.
To nurture domestic companies, they force foreign companies to establish joint ventures with local companies when entering the market. They also only provide subsidies for batteries made by domestic companies, excluding Korean companies’ batteries from the subsidy program, resorting to various underhanded tactics.
Still, because China’s domestic market is so vast, companies have no choice but to reluctantly comply with government policies.
I chuckled. “Ultimately, the core is data, isn’t it?”
Hundreds of millions of people around the world search on Gooble every day, and that data becomes Gooble’s asset. The same goes for MS in the PC OS market, AMZ in the online shopping market, and Facenote in the social media market.
Once you achieve a monopolistic position, you can keep widening the gap, making it impossible for competitors to catch up.
While other companies are collecting data with a few hundred test vehicles, CarOS can collect data with hundreds of thousands of cars sold to the public. And this acts as a kind of moat that is difficult for other companies to overcome.
While visible technology can be copied at any time, data can only be acquired through experience.
Anyway, just like the saying “imitation is the mother of invention,” if they keep diligently copying, they will eventually reach where we are.
“We’ll have to keep running hard to avoid being caught up.”
Chairman Im Jin-yong nodded. “My father used to say that companies need to constantly innovate and grow to survive, and I think I understand what that means now. We used to say that if you sleep, you’ll fall behind, but now it’s, if you doze off, it’s over.”
That’s how much faster the flow of industry has become compared to the past.
I said with a smile, “The Red Queen said the same thing.”
As expected, he understood immediately. “In Through the Looking-Glass.”
Lewis Carroll’s main profession was a mathematics professor and mathematician. (He was also a famous photographer.) Perhaps because of this, his books often contain stories about mathematics and logic.
Among them, the most famous is the Red Queen effect (Red Queen’s Hypothesis).
The Red Queen has to run with all her might just to stay in the same place. This is because everything around her is moving together.
Therefore, to get ahead of others, you have to run like crazy.
In management, it means that if a company doesn’t develop, it regresses, and innovation is necessary to move forward.
In reality, there are more than a few companies that have unknowingly fallen behind and disappeared into oblivion.
“Are there any issues with parts production?”
“We are working hard at our Suwon factory to meet CarOS’s demand.”
Timing is crucial in business. No matter how well something sells, it’s all for naught if production volume can’t keep up. In the meantime, other competitors might swoop in.
Fortunately, both CarOS and Seosung Electronics made timely investments. Otherwise, we’d be in a frenzy now, building factories and expanding facilities.
“Are you enjoying the cars we gifted you?”
“Of course. We both love them very much.”
Ellie cherishes the Ferrari so much that she even washes it by hand.
Hyun-joo usually rides in the S-Class Maybach driven by her secretary, but sometimes she enjoys driving the Aventador after work.
Seeing this, it seems like good cars make people happy. We should make cars like that too.
A little later, a person came up to the chairman’s office.
Chairman Im Jin-yong introduced him to me. “This is President Lee Myung-ho, who is now in charge of the electronics components division.”
He was in his early 50s. His small build and cleanly shaven head were striking. In contrast, the hair on the sides of his head was relatively thick.
“I’m Lee Myung-ho. I look forward to working with you, CEO Kang Jin-hoo.”
“The pleasure is all mine.”
We shook hands.
Since the electronics components division directly collaborates with CarOS, we’ll be seeing each other often.
“Shall we go eat? How about the company cafeteria?”
“Sounds good.”
I wanted to check it out anyway.
Seosung Group’s cafeteria is famous for being as good as any professional restaurant. Companies paying attention to their cafeterias is a trend these days. It’s about employee welfare and encouraging them to eat well and work hard.
In fact, there are research findings that show companies with good cafeterias have higher productivity.
We headed to the cafeteria together.
Seosung Town consists of four buildings, connected by an underground level. Approximately 25,000 employees from the electronics and other affiliates work here. It happened to be lunchtime, so the cafeteria was already bustling with employees.
Employees were surprised when we appeared.
After all, how often do ordinary employees get to see the chairman? Especially in the company cafeteria.
Of course, they recognized my face too. Since it was just employees, no one took out their phones to take pictures. Though there were probably some secretly snapping away.
The menu was diverse, including Korean, Japanese, Western, and Chinese food.
“How much does it cost?”
“It’s free for employees. Employees of partner companies visiting for work pay 5,000 won. We don’t accept outsiders to avoid harming nearby businesses.”
“…….”
So, do I have to pay 5,000 won?
Chairman Im Jin-yong pulled out his wallet and said, “Since you’ve come all this way, I’ll treat you to lunch.”
We grabbed trays and lined up. Even a busy chairman has to follow the order for getting food.
Chairman Im Jin-yong naturally greeted the employees in front and behind us in line. “Are there any difficulties in your company life?”
The employees replied in unison, “No, sir.”
“It’s very enjoyable.”
“Our superiors are all very good to us.”
It suddenly reminded me of when the division commander visited our battalion during my military service and asked me, a private, if I had any difficulties with military life.
I gave the same answer back then. (Although I wanted to say, “Right now is the hardest time.”)
I’ve noticed before, but Chairman Im Jin-yong seems to enjoy these surprise appearances.
Taek-gyu said he has a bit of an attention-seeking personality… is it true?
We filled our trays with the food we wanted and moved to find an empty table.
“Is this seat taken?”
“No, please sit… Huh!”
The employee who had nodded while eating his rice without thinking much suddenly almost spit out the rice in his mouth upon seeing Chairman Im Jin-yong.
We sat down and ate.
The employees around us all looked like they were experiencing indigestion. But leaving without finishing would be even stranger.
Still, the atmosphere wasn’t too bad.
Everyone kept glancing at us curiously.
I observed the employees as I ate. Most were young employees in their 20s to 40s, and I even saw some new recruits who looked to be my age.
While the men would just be starting to knock on the doors of employment due to military service, many of my female classmates had already found jobs.
“What’s wrong?”
“I was just thinking that if it weren’t for Taek-gyu, I would be employed somewhere too.”
Chairman Im Jin-yong smiled. “But now you’re the CEO of a giant corporation.”
Looking at the employees filling the cafeteria, I was reminded of how many jobs a company creates.
Industry has a greater job creation effect than finance.
OTK Company has only a few dozen full-time employees, but it employs tens of thousands of people through its subsidiaries.
Thinking that the livelihoods of people I’ve never even met depend on me made me feel a bit like I had indigestion too.
***
We rented the Royal Suite at the Grand Dayton Hotel and held a small party.
Just the overnight stay costs a whopping 15 million won. Still, I got a 30 percent discount since I booked it through Golden Gate.
People applauded as I uncorked an Armand de Brignac. We filled our champagne glasses and toasted.
Simple snacks ordered from the hotel were prepared on one side, and Taek-gyu ordered pizza and chicken separately.
Hyun-joo asked while smoking a cigarette, “People here and there seem to be expecting an IPO. No thoughts on that?”
Most startups dream of going public. NPL, Gooble, and Facenote, which were once small startups, transformed into giant corporations by going public.
The reasons for going public are to have the company’s value properly assessed and to raise capital more easily compared to being a private company.
It’s not all advantages. Once a company goes public, it has to transparently disclose financial statements, quarterly earnings, investment plans, etc., to protect investors.
“Is there really a need for that?”
Thanks to the success of the new car, cash flow is smooth, and development costs are sufficient. If we need more money, we can issue bonds; there’s no need to choose to go public.
“How much could we get if CarOS went public on the NASDAQ?”
Hyun-joo responded to my question, “In the current climate, we could get $200 billion.”
A company bought for $88 million became worth $200 billion in just a few years. Of course, we poured tens of billions of dollars into it during that time.
I asked again, “What if the OTK Research Institute succeeds in commercializing the next-generation battery?”
Hyun-joo tapped her forehead with her finger. “That’s something to think about. But we could definitely get over $300 billion.”
The fact that Nikola, which can’t even sell 100,000 cars a year, surpassed the market cap of GM, which sells millions, is due to the expectation that it will dominate the future electric vehicle market.
That’s how much potential the electric vehicle market has.
Currently, electric vehicle sales are less than one-tenth of internal combustion engine vehicle sales.
However, the demise of internal combustion engine cars, which led the last century, is now only a matter of time. And that time is approaching faster than anyone expected.
The competition is not just one or two companies. Until now, they might not have paid much attention to CarOS, but from now on, the checks and balances will intensify.
I said, sipping my champagne, “The battle for who will be the winner is just beginning.”
***
Amidst the busyness, some welcome faces visited OTK Company headquarters.
It was Facenote CEO Toby Strong and COO Gerard Bacon.
“Welcome.”
We greeted each other warmly after not seeing each other for a long time.
Toby said with a sly grin, “I saw while walking here, there are a lot of beautiful women in Korea. It’s amazing.”
This was the first time the two of them had visited headquarters.
They were briefly stopping by on their way back from a business trip to Japan. The reason for the trip was meetings with Japanese AV companies.
They said they met with J1, SOB, ECC, Modys, and others to discuss content supply.
Facenote has emerged as the leader in the pornography market not only in the US but worldwide. Perhaps that’s why they were thrown a grand party to welcome them there.
It wasn’t just any party; it was a pool party where they rented out the entire pool and played various games with dozens of bikini-clad AV actresses.
They both look very happy, is that the reason?
When this fact became known, they once again rose to the status of idols among the Yangdeok (Western Otaku).
They say the ultimate Otaku is a Western Otaku…
I asked them, “How is CarInfotainment coming along?”
Autonomous driving frees people from driving. Drivers need entertainment during their travel time, and that’s what CarInfotainment is.
Currently, Facenote is preparing to enter the CarInfotainment sector using the know-how they’ve accumulated in the pornography industry.
Toby nodded. “We’re proceeding step by step, consulting with content providers. More importantly, we’d like to receive funding.”
“For what?”
Facenote’s revenue and profits continue to increase. However, the money earned has been reinvested in producing their own porn and VR porn, so their retained earnings are not that high.
“We’re trying to acquire Dancing Rabbit.”
“What kind of company is that?”
Toby and Gerard were taken aback by my question.
“You two don’t know that famous company?”
“Haven’t you even tried their products? They have good products.”
“So, what kind of company is it?”
Toby said, “It’s the second-largest adult toy company in the US.”
“Ah…….”
They’re acquiring an adult toy company?
