The Accelerated Emergency Management Clock of Lee Jae-hyun... Vietnam Home Shopping Withdrawal "M&A and Investment Stop"

Chairman Lee "Reviewing future business prospects and focusing only on profitable businesses through bold restructuring"
CJ O Shopping Home Shopping undertakes overseas loss-making business restructuring... Continued restructuring of CJ CheilJedang, CJ Foodville, etc.

Chairman Lee Jae-hyun.

[Asia Economy reporters Lee Seon-ae and Cha Min-young] CJ Group is accelerating its transition to an emergency management system this year. As the group's management faces a crisis due to poor performance of its affiliates, it plans to withdraw from businesses with continuing deficits. This year's management strategy has also shifted toward halting all mergers and acquisitions (M&A) and investments. Originally, the group planned various M&As and active investments to achieve its vision of reaching 100 trillion won in sales by 2020 (Great CJ) and becoming number one globally in three or more businesses (World Best CJ), but it was judged to be unrealistic. This is a special directive from Chairman Lee Jae-hyun, who declared the emergency management.

According to CJ Group on the 12th, CJ ENM O Shopping division is pushing to transfer its entire stake in 'SCJ Home Shopping,' a joint venture with Vietnamese cable broadcaster SCTV, to the joint venture partner (SCTV). CJ O Shopping holds a 50% stake in SCJ Home Shopping. If the stake transfer is completed, it will effectively mark the end of its home shopping business in Vietnam after 10 years of joint venture with a local company. Department head-level employees have already resigned, and the remaining staff plan to return to the domestic corporation as early as next month.

SCJ Home Shopping's sales were 27 billion won in 2014, 31.4 billion won in 2015, 36.4 billion won in 2016, 39.7 billion won in 2017, and 36 billion won in 2018, showing less growth than expected. Operating profit was also minimal, with 400 million won in 2014, 500 million won in 2015, 1.1 billion won in 2016, and 700 million won in 2017, turning to a loss of 300 million won in 2018. The cumulative sales and operating loss for the third quarter of last year were 22 billion won and 400 million won, respectively.

A CJ O Shopping official said, "Negotiations for the stake sale are underway, but nothing has been finalized at this point," adding, "Since overseas business withdrawals have been ongoing, this is aligned with CJ Group's overall policy to strengthen profitability rather than expand scale, so please understand it as a matter of selection and concentration."

Since 2017, CJ ENM O Shopping division has been sequentially withdrawing from overseas businesses, including liquidating its Guangzhou corporation Nambang CJ in China and ending local operations of Japan's 'CJ Prime Shopping,' Turkey's 'CJ Mediasa,' and India's 'Shop CJ.' It is also reported that it plans to dispose of its stake in the Thai joint venture GCJ, which entered the market in 2012, and proceed with withdrawal.

This decision is analyzed as part of Chairman Lee's emergency management declaration. His judgment is that future business prospects must be reviewed, and through bold restructuring, focus should be placed only on businesses that will definitely generate profits.

As the emergency management system accelerates, this year's management strategies for each affiliate also focus on internal management. Reckless M&As and investments are avoided. CJ Freshway, which was actively seeking acquisition targets, has stopped this effort. It had planned to invest about 300 billion won in food distribution and group meal services by 2021, but this is also under reconsideration. Apart from the CK facility (food material manufacturing facility for dining out) scheduled to start operation in the first half of this year, there are no other plans. CJ CheilJedang and CJ Foodville also plan to continue active restructuring.

A CJ Group official emphasized, "Although not finalized, reckless M&As and investments will not be executed," adding, "Investments will only be made in businesses that definitely generate profits."

This content was produced with the assistance of AI translation services.