Shinil Electronics Gains Presence in Small Home Appliances

80% of Sales from Seasonal Appliances like Fans
Company Changes Name to Shed Fan-Only Image
Mini Rice Cookers, Ice Makers, and Fan Heaters Popular

Summer has returned. This summer is expected to be more humid and hotter than ever before. The number of rainy days in South Korea last May was 14.4 days, 5.7 days more than the average. It was recorded as the heaviest rainfall since 1973. According to the Korea Meteorological Administration, temperatures in July and August are expected to be similar to or higher than usual. The number of heatwave days is also expected to be higher than average. There are always products that attract attention during the hot summer: dehumidifiers, fans, and air conditioners. These products are loved every summer and record high sales. They are inseparable from summer. Asia Economy aims to examine the management status of Winix and Shinil Electronics, which gain attention every summer, and to forecast their future.

[Asia Economy Reporter Park Hyungsoo] Shinil Electronics, the number one company in the domestic fan market share, is continuously launching new products and reinventing itself as a 'comprehensive home appliance brand.' In March last year, to break away from the brand image of being a 'fan company,' it changed its name from Shinil Industry to Shinil Electronics. After maintaining its name for 61 years since its founding in 1959, it also relocated its headquarters to a new building in Seonyudo, Yeongdeungpo-gu, Seoul, in July last year.

Starting as a small motor manufacturer, Shinil Electronics began mass-producing fans in earnest from 1967. It maintains the number one market share in the domestic fan market. Based on the know-how accumulated from producing fans, it entered the air circulator market in 2015. Air circulators produce stronger wind than fans and circulate cold air quickly to lower the perceived temperature. Over the past five years until last year, cumulative sales of air circulators reached 1.9 million units, with cumulative revenue of 150 billion KRW.

Shinil Electronics recorded sales of 172.4 billion KRW and operating profit of 6.2 billion KRW last year. Sales increased by 18% compared to the previous year, and operating profit rose by 313%. Due to the COVID-19 impact last year, with more time spent at home, sales of seasonal home appliances such as fans and air circulators increased.

Looking at the performance by product, fan sales reached 93.3 billion KRW last year, up 15% from the previous year, thanks to the influence of summer temperatures and expanded sales channels. Compared to mid- to low-priced products imported from China, Shinil Electronics maintains its position in the fan market based on relatively advanced technology and design capabilities.

Sales of summer home appliances other than fans, such as dehumidifiers and portable air conditioners, amounted to 13.4 billion KRW, an increase of about 78% from the previous year. On the other hand, winter heating product sales were 32.6 billion KRW, down 14% from the previous year. General home appliance sales were 33.1 billion KRW, a decrease of 17% compared to the previous year.

Having achieved record-high sales, Shinil Electronics is focusing on developing new products for sustainable growth. The small home appliance market, such as fans, has low entry barriers. Seasonal products are greatly affected by climate factors. Recently, inexpensive products from China have gained popularity domestically, intensifying price competition. Seasonal products account for more than 80% of Shinil Electronics' total sales. The company’s high dependence on fan sales is why it aims to grow into a comprehensive home appliance company.

Shinil Electronics has consecutively launched small home appliances preferred mainly by single-person households and younger generations, such as mini rice cookers, vacuum cleaners, humidifiers, and fan heaters. The mini rice cooker released in April has gained popularity among people living alone by leveraging price competitiveness. Shinil Electronics is responding quickly to recent trend changes. Considering the increase in people enjoying camping and fishing due to COVID-19, it also launched fan heaters and ice makers, which received positive responses.

The company is actively targeting niche overseas markets such as Central Asia and Oceania. The electric heater launched for Bhutan, a high-altitude climate, exported more than 10,000 units last year, an 81% increase from the previous year. It is also entering the Nepal and India markets near Bhutan. Shinil Electronics signed a contract with Australia's largest home shopping channel TVSN and will list five products, including fans, in the first half of this year.

As of the end of last year, total borrowings amounted to 11.3 billion KRW, and cash and cash equivalents totaled 25.4 billion KRW. The debt ratio is a healthy 15.76%. The largest shareholder of Shinil Electronics is Chairman Kim Young, who holds a 10.72% stake. Including shares held by relatives and registered executives, the largest shareholder group holds 11.66%.

Due to the relatively low largest shareholder stake, the company was once embroiled in a management rights dispute. In 2014, an individual investor secured more shares than Chairman Kim Young, threatening his management rights. The attacking party argued that Chairman Kim managed the company without sufficient checks by unfairly using the articles of incorporation and sought to gain support from other shareholders. The dispute led to a shareholder meeting vote battle and legal battles, but ultimately, Chairman Kim's side successfully defended management rights.

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