At the time of his return, father’s title was the president of DHK Engineering.
It may sound convincing, but in reality, it was a small business with about 10 employees manufacturing metal parts.
Due to running the business diligently for a long time, they had many clients and were a trusted small to medium-sized enterprise.
However, as Chinese companies started pushing in with lower prices, the business began facing difficulties. In the long run, it was clear that competing on price alone wouldn’t guarantee success.
Father decided to overcome the crisis through technological development.
After years of research, he successfully developed an integrated suspension system with excellent durability and performance. It was then that a call came from Eunsung Motors.
They wanted to use DHK Engineering’s product in their new model and had some additional requirements.
They asked for a few improvements to be made to suit their specifications and requested equipment expansion to meet the delivery deadline.
Securing a supply contract with a large company was a huge opportunity. Not only did it mean substantial profits, but also recognition for quality, allowing for significant business expansion.
Father signed the supply contract and started working on the product improvements as requested.
However, as they diligently fulfilled the contract terms, a sudden blow came.
Eunsung Motors unilaterally notified the cancellation of the supply contract, citing the discovery of flaws in their internal quality tests.
What followed was even more absurd.
Eunsung Motors filed a lawsuit declaring the patent invalid. It turned out they had independently developed a similar product and had filed for a separate patent just before. Essentially, they had slightly modified the design of the product developed by father.
Moreover, they were already producing it through a subcontractor run by relatives, even before conducting the quality tests that supposedly found flaws. Eunsung Motors never intended to receive supplies from DHK Engineering. They were merely gathering samples under the guise of the supply contract, wanting to monitor the production processes and facilities regularly.
From the perspective of a large corporation, this might seem like common practice, but for the small business being targeted, it was a matter of survival.
With the cancellation of the supply contract, the company faced difficulties. The expanded equipment remained as a debt, and the patent developed at a cost of hundreds of millions became invalidated.
Father tried everything to save the company by personally seeking new clients. However, no one was willing to do business with a company in dispute with Eunsung Motors.
The Eunsung Group is a giant manufacturing kingdom. Even solid small and medium-sized enterprises, which are essentially subcontractors of conglomerates, have no choice but to be cautious.
Even a well-established small and medium-sized enterprise would find it difficult to survive if their funds do not circulate for just a few months.
As a result, DHK Engineering went bankrupt, and my father collapsed.
I said calmly, “That’s how my father passed away, and our family fell apart.”
Unlike Taek-gyu and Hyun-joo, who knew the situation, Ellie must have heard this story for the first time.
She looked sympathetic. “When did this happen?”
“About 2 years ago.”
For some reason, it felt like a very long time ago. Had so much happened in between that it felt that way?
If someone asked me if I blamed Eunsung, I would say yes. But resenting a conglomerate is almost futile.
I despise Eunsung, yet their ads are on TV, and Eunsung vehicles dominate the streets. Even if you hate Eunsung, you can’t avoid their products. Taxis are Eunsung, buses are Eunsung Commercial, subways and KTX are Eunsung RT-made.
But could I afford to walk instead? (At that time, I couldn’t even afford a car.)
Ellie seemed puzzled and asked, “If you suffered losses due to unilateral contract termination and technology theft, can’t you seek compensation through a lawsuit?”
Hyun-joo chuckled bitterly and said, “Judging by what you’re saying, you must be a foreign lawyer.”
“Eh? What do you mean?”
“It means you know the law well but are clueless about Korea as a foreigner.”
What are the chances for a small and medium-sized enterprise to win against a conglomerate in a legal battle? Even if they win through all the court levels, how much compensation could they receive? Or would the small and medium-sized enterprise even survive until then?
It is not a new thing for large companies to imitate or take away technologies developed by small and medium-sized enterprises with difficulty. However, cases of small and medium-sized enterprises winning against large companies in patent disputes are extremely rare.
“Although Korea is a country where bullying by large companies is common, Eunsung is particularly severe.”
The reason is that Eunsung holds 70 percent of the domestic automobile market. Even if you combine the sales of other domestic companies and imported cars, it does not even reach half of Eunsung’s market share.
Looking at the entire domestic manufacturing industry, where can you find a sector where a single company holds 70 percent of the market?
In practice, Eunsung, which has established a de facto monopoly in the domestic market, has bullied its partner companies in every possible way. Technology theft, pushing down prices, prohibiting supply to competing companies, unilateral contract changes or cancellations, and so on. Yet, the partner companies could not say anything because they had no other options.
The government, which should play a fair arbitration role, either turned a blind eye or made biased judgments.
The automotive industry is a crucial sector of the domestic manufacturing industry. In terms of job creation and exports, it is incomparable to other industries. The government took Eunsung’s side with the mindset that if Eunsung fails, it would be a national loss.
Taek-gyu said, “Isn’t that all? They are known for discriminating against domestic sales and treating consumers like fools.”
It is strange that cars made by Korean companies are cheap abroad but expensive domestically. Cars sold abroad have basic safety features while in Korea, they are optional. Warranties are for 10 years abroad but only 5 years in Korea. Abroad, if an issue arises, they immediately recall the product, but in Korea, proper repairs are not carried out.
The reason for this is simple – it sells that way in foreign markets and still sells in Korea.
Hyun-joo asked us, “Can I smoke a cigarette?”
Although it was her room, as she was the only smoker among us non-smokers, she was seeking our consent. We nodded, and she lit a cigarette.
As it was a smoking room, an ashtray was prepared on the table. Taek-gyu, who dislikes cigarette smoke, slightly opened the window for ventilation.
And I cleared the air in a different way.
“Let’s put aside personal matters and talk only about business for now. What do you think, Noona?”
Smoking her cigarette, Hyun-joo said, “Setting aside emotional issues, I am against it. It’s a company that even Amazon, the largest online retailer in the U.S., gave up on, and Eunsung, the largest domestic car company, is also considering giving up. They have had no earnings so far, and they can’t even release a product immediately. There’s no need to spend $100 million to acquire such a company.”
“Is $100 million an appropriate amount?”
“Compared to the money Eunsung Car has spent, it’s a cheap deal.
Eunsung Car has poured $250 million into Caros through several stake purchases. But it’s being offered at a price that’s not even half of that.
“But compared to the money Eunsung Car can receive, it’s expensive.”
The amount that could be obtained by selling patents and core technology is not even $50 million. However, Eunsung Car is demanding twice that amount.
“How much is left in the investment fund?”
“$120 million.”
Taekgyu asked with astonishment, “That’s all that’s left?”
Seems like they’ve spent recklessly on startup shopping. The amount is cutting it close.
Though not a shareholder, Ellie was asked for her opinion.
She expressed her thoughts, “To be honest, I don’t understand why Jinhoo chose that company. The investment amount seems too large, and the risks are high. There seems to be no vision at the moment. Given Jessica’s words, following Itachi, Amazon, and Eunsung Car’s intentions to give up and sell must have valid reasons.”
I have chosen companies with foresight, and Caros is one of them. It’s natural for Hyunjoo and Ellie, who are unaware of this fact, to think this way.
However, Taekgyu, who knows the truth, shared a similar opinion, “I’m totally against it. Investing there is just doing favors for Eunsung Car. Besides, it’ll be hard to invest in other companies.”
“That makes sense.”
Let’s summarize.
If we don’t invest, Eunsung Car will sell patents and technology to recover the investment, and Caros will essentially dissolve.
If we invest, Eunsung Car will recover the investment and let go.
What should we do?
Thinking logically, it’s advisable to avoid investing in such a company. However, foresight says otherwise.”
When reality clashes with foresight, what should be done?
If there were overflowing investment funds, there would be fewer worries, but currently, the investment funds are at a critical level. There are many good alternatives besides Caros, as Taek-gyu mentioned.
I asked Hyun-joo noona.
“Isn’t it better not to go through with this deal?”
In response, she calmly replied, “If you are asking for my opinion. However, my role is to consider the possibilities and advise you. It is your role, Jinhoo, to make the decision after hearing that advice. You are the CEO of OTK Company. No one can make decisions for you.”
She was right.
Making decisions is the CEO’s responsibility.
Is it right for me to push through with an investment that everyone else opposes? Will it be worth it?
After thinking, I said, “I should meet the CEO on that side.”
***
Upon expressing his intention to meet the CEO in person, Ryan and Sergei showed concern.
Hyun-joo noona firmly stated, “It’s a business worth 100 million dollars. I don’t think asking to meet the CEO is an unreasonable request.”
Ryan immediately called the CEO, and Hyun-joo noona had a brief conversation with him.
Eventually, the CEO agreed to fly over, and Ryan and Sergei decided to leave first.
***
The next day.
We were able to meet Caros’ CEO in the meeting room.
He was a white man in his late thirties with half-shaved hair and glasses. He was casually dressed in jeans and a T-shirt.
Normally, Hyun-joo noona would have taken the lead, but this time, I stepped forward first.
“Nice to meet you in Korea, I’m Jinhoo Kang.”
I reached out my hand to him.
He firmly grasped my hand.
“Pleasure to meet you, I’m Daryl Segan.”
It was that moment.
After a long time, a hologram appeared before my eyes.
Unicorn refers to an unlisted company with a market value of 1 billion dollars marked by a horn.
Decacorn is the mythical animal with ten horns. Compared to the Unicorn, with ten times the horns, it represents an unlisted company with a value exceeding 10 billion dollars.
10 billion dollars…
I chuckled inwardly.
I really chose this one correctly.
