After World War II, the world was divided into two camps. And with the collapse of the Soviet Union, the hegemony of the world was taken over by the United States.
The world economy revolved around the United States and the US currency, the dollar, and the United States was in an unshakeable position, militarily and economically, that no other country could match.
The only country that had even chased up to its knees was Japan. But they followed too closely, and as a result, they were forced to sign the Plaza Agreement, and afterwards, they were crushed by the real estate bubble burst.
In the 1990s, China, which had embarked on reform and opening-up, began to emerge rapidly. Politically, it still maintained a socialist system, but economically, it abandoned communism and embraced capitalism.
China grew at a tremendous pace based on its vast continent and resources, and a domestic market of over 1.5 billion people. A few years ago, it surpassed Japan to become the world’s second-largest GDP, proudly rising to G2 status.
As a latecomer, China adopted a typical fast follower strategy to catch up with developed countries.
To this end, when foreign companies entered China, they were forced to establish joint ventures with domestic companies.
The first purpose was to have domestic companies share the profits earned by foreign companies. They would not allow them to just come in and take the money.
And the second purpose (in fact, this is the most important) was to acquire technology through joint ventures.
Technology is not just a few patents, but a totality of culture that a company has built up over a long period of time. From the perspective of local companies, they can directly learn the know-how of global companies by operating factories and distributing products together.
Taek-gyu, having listened to the explanation, asked.
“Isn’t it copying rather than learning?”
“Well, yeah, kind of.”
“Knowing that, why are you still entering China?”
“Because the domestic market is that big.”
No company can afford to give up a market of 1.5 billion people.
That’s why global companies set up joint ventures knowing there are risks. It’s good because they can make money in the short term, but the problem arises later.
For example, in the case of Danone, a French food company famous for Evian bottled water, when it entered China, it established a joint venture with a local food company, Wahaha. But Wahaha, having acquired Danone’s technology, created another corporation and sold its own products, leading to disputes and even lawsuits.
Chinese courts naturally side with domestic companies. Danone, judging that there was no chance of winning even if they fought, eventually sold all of its shares to Wahaha and withdrew.
Seen in a good light, they realized capital gains and left, but seen in a bad light, they were sucked dry and kicked out.
Similar incidents are not few and far between. Local Chinese companies, having grown in size, are now acquiring shares of foreign companies or driving them out of the Chinese market. (Even domestic conglomerates that had ambitiously entered the market are gradually pulling out.)
Only 10 years ago, Chinese products were a laughingstock. Otherwise, wouldn’t there have been a joke that everything explodes except bombs?
But that’s all in the past. Chinese companies that have grown into large corporations are now challenging even the high-tech fields dominated by the United States.
One of them is future cars, represented by autonomous driving and electric vehicles.
Chairman Im Jin-yong said.
“Pressure is constantly coming in to build a battery factory in China. They say they will provide huge subsidies if we just produce OTK batteries in China.”
“They’re telling us to set up a joint venture with a Chinese company, right?”
“Of course.”
If we set up a joint venture in China, they will try to steal our technology by any means possible. This would be a more certain method than just poaching one or two people.
Autonomous vehicles, followed by batteries. I don’t know why they are so interested in us.
“What if we say no?”
“China has excluded Korean companies from the domestic market by not providing subsidies for NCM batteries produced by Korean companies. If we don’t set up a joint venture in China, it is highly likely that even getting certification for OTK batteries will become difficult.”
This means that OTK batteries cannot be installed not only in electric vehicles but also in other electronic devices within China.
OTK batteries have already begun commercialization starting with small batteries. I heard that they are making modules and testing them, so battery packs for automobiles will be made soon.
The price is currently higher than existing batteries, but the capacity is double and the charging speed is four times faster. Once the production line is set up and mass production begins, the price will also decrease further.
“Then what should we do?”
“There are two options. Either enter the Chinese market quickly by negotiating the best possible conditions, or dominate other markets excluding China and widen the technology gap further.”
Of course, whichever option we choose, China won’t just stand by and watch.
The story that started with fake Lego is getting more and more complicated. Dealing with a country that ignores patents is this difficult.
“I’ll have to think about that problem.”
Chairman Im Jin-yong nodded.
“It would be better to rush the release and production of electric vehicles. Battery production is slowly being prepared.”
“I have the same thought, but…”
The problem is that development is progressing slowly. At this rate, it’s going to go past this year.
Chairman Im Jin-yong said in passing.
“How about cooperating with Eunsung Motors? I heard their situation isn’t good these days.”
“Eunsung Motors?”
“CarOS alone will have a hard time meeting the demand in the North American and European markets. Wouldn’t it be worth considering them as a partner for the Asian market?”
Seosung Group has marked future cars as the next generation growth engine. That’s why they have been continuously pouring the money they earned from semiconductors into electronics and batteries.
No matter who makes them, if the number of autonomous vehicles and electric vehicles increases, profits will increase. With the demand for semiconductors also increasing together, it’s like killing two birds with one stone for Seosung Group.
Taek-gyu shook his head firmly.
“What are you talking about? He hates Eunsung Motors. Right?”
“Well….”
At that moment, something flashed in my mind.
Han Chan-young held a meeting at the Eunsung Motors Group headquarters. Presidents and executives of each affiliate took their seats in the conference room.
Everyone’s expression was dark.
First, the management report began.
“Sales are continuing to decline in North America and Europe. The deficit is also widening.”
After Big One, the global economy suffered a major shock and automobile sales hit rock bottom, but now they are gradually showing signs of recovery.
Come to think of it, the earthquake only affected some areas of California. In the United States, rather, there was a sense of confidence that they had successfully overcome the great disaster and expectations for a future boom.
However, unlike other automakers whose sales are increasing, Eunsung Motors’ sales continued to decline.
The reason is, of course, the airbag recall crisis.
The problem has been resolved to some extent now, but the brand image has been severely damaged.
The decline in sales is a problem, but an even bigger problem is the continuous decline in operating profit margin. When Eunsung Motors was at its peak, its operating profit margin exceeded 10 percent. Even until two years ago, it barely maintained 7 percent, but last year, with the airbag recall crisis overlapping, it dropped to 3 percent. And in the first quarter, it recorded a large-scale deficit due to the airbag recall and shipment delays.
From Han Chan-young’s perspective, he took over the group in the worst crisis situation. Han Min-goo’s retirement was faster than expected, but fortunately, he had been preparing for the succession of management rights from before. Han Chan-young quickly put the group’s internal affairs in order and implemented personnel innovation.
Some presidents and executives who followed the former chairman stepped down from their positions, and their positions were filled by new people.
Toyota suffered a sudden acceleration incident but survived and succeeded in making a rebound. Come to think of it, airbag defects are nothing compared to sudden acceleration.
Eunsung Motors is still one of the top five largest automobile groups in the world, and has enough potential to overcome the crisis.
Han Chan-young advanced the new car launch plan and released two small car models and one mid-size car model.
Although the cost has increased significantly by incorporating various new technologies and safety devices, they were released at the same price, even accepting a drop in profit margin.
The plan is to rebuild consumer trust step by step, starting with small and medium-sized cars, rather than making profits right away.
Fortunately, market reaction was good. Word-of-mouth spread that they were cost-effective cars, and positive reviews continued overseas. As they also escaped the airbag recall issue, sales were gradually increasing. For some models, supply was so short that customers had to wait for several months.
But…….
Vice Chairman Kwon Hwan-yong opened his mouth.
“Currently, the labor union at the Pyeongtaek, Jeonju, and Ulsan 1st and 2nd factories are staging partial strikes.”
Han Chan-young muttered as if he had a headache.
“Strikes again…….”
It’s something that happens every year anyway, so it wasn’t particularly new.
The Eunsung Motors union has an unprecedented record of striking for 12 consecutive years. And if you exclude the one year they took a break in the middle, strikes have been continuing for 7 consecutive years again.
However, this year the situation was serious. With confidence in the company already at rock bottom, consumers would not understand if contracted orders were not shipped on time.
Even though GM closed one of its domestic factories last year, the Eunsung Motors union didn’t seem to feel any sense of crisis. That’s because Eunsung Motors, unlike GM, has a structure where it is difficult to close Korean factories.
You might think that it would be fine to just produce at overseas factories and bring them in without insisting on domestic production, but according to the labor-management agreement, in order to bring overseas production volume into Korea, you must obtain the consent of the labor union.
Naturally, there is no way the union would agree. In the end, if a full-scale strike breaks out, domestic sales will naturally come to a complete stop.
Han Chan-young asked Vice Chairman Kwon Hwan-yong.
“How is the wage and collective bargaining agreement progressing?”
“It seems that we can somehow find a compromise on the wage increase part, but other conditions are the problem. They are presenting conditions that the company absolutely cannot accept. We are still talking with union leaders, but their attitude is even more rigid this year than last year. They say that if all of their demands are not met by the next negotiation, all factories will go on a full-scale strike.”
Strikes are a legitimate right of workers. But this is a last resort that can be used when negotiations break down, not the best resort.
However, the Eunsung Motors union wields strikes like a panacea. If their demands are not met, they first go on strike, and then start negotiations.
President Yoon Su-hwan asked.
“Have you tried telling them that the company’s situation is difficult?”
“I’ve told them, but the union side is protesting, saying, ‘Why are you passing on the responsibility for management failure to the workers?’”
Everyone in the room was speechless.
When management performance is good, they argue that workers should share it too, but when management performance gets bad, why do they suddenly change their tune?
The Eunsung Motors union argued that all of this stemmed from the owner family’s mismanagement, and demanded Han Chan-young’s resignation and the introduction of a professional CEO.
Now they’re even threatening to replace the CEO if they don’t like him.
At this point, I don’t know if they are a labor union or shareholders.
Domestic factories cannot be closed, and volume cannot be brought in from overseas. And yet, they cannot leave the domestic market, which is already in a difficult situation, to have problems as well.
It’s truly a dilemma.
Vice President Bae Min-sung said.
“But are they really going to go on a full-scale strike? The union also knows that the company is in a crisis situation, right?”
Vice Chairman Kwon Hwan-yong said decisively.
“On the contrary.”
“On the contrary?”
“Rather, because the company is in crisis, they will push ahead with the strike and pressure us to accept their demands.”
He joined the company as a sales representative, went through labor management support and Pyeongtaek factory manager, and is currently in charge of labor management and domestic production at Eunsung Motors Group.
As such, he had a high understanding of the labor union and knew their nature accurately. The current situation is that the labor union is holding the company’s lifeline. They will definitely not let go easily.
There are many reasons why Eunsung Motors is in this situation. And those reasons ultimately connect to one person.
Is all this also because of Kang Jin-hoo?
Currently, CarOS’s sales volume doesn’t even rank in the top 20, let alone the top 10. Nevertheless, its corporate value has already far surpassed Eunsung Motors.
That’s because it is at the forefront of the future car competition.
Han Chan-young pondered deeply.
‘Should I look for a solution where the cause lies?’
