[The Editors' Verdict]Companies That Nurtured Ugly Ducklings with a 10-Year Vision

Major Companies’ “Vision 2020” Initiatives Begin to Bear Fruit
Former “Ugly Duckling” Businesses Achieve Remarkable Success
“Vision 2030” Disappears, Future Ambitions Now Unclear

LG Electronics' VS Business Division is currently considered one of the most promising corporate organizations not only within LG Electronics but across all of South Korea. The order backlog for the division, which manufactures automotive electronic components, soared from 55 trillion won in 2020 to 60 trillion won in 2021, and then to 80 trillion won in 2022. By the end of this year, it is expected to reach 100 trillion won. Work, in other words money, is flooding in. LG announced its plan to make automotive parts a future growth engine and established the division 10 years ago, in 2013. The start was grand. However, the results were dismal. The publicly disclosed cumulative deficit exceeds 1.6 trillion won.

The VS Business Division was the ugly duckling that ate away at the company's performance. If judged solely by its results, it might have disappeared without a trace. Moreover, there was a perception that the automotive parts business did not fit well with an electronics company. The TV, refrigerator, and air conditioner divisions, which have worked together for a long time, are like one family. The automotive parts business was adopted but could not even earn its keep, requiring contributions to sustain it like a dependent family member. The mental strain ended after last year's earnings announcement. The division posted an operating profit of 169.6 billion won and received performance bonuses that were previously unimaginable. LG Electronics recently announced that its operating profit for the third quarter increased by 33% compared to last year, citing the strong performance of the VS Business Division as one of the reasons.

However, upon reflection, many businesses or companies that have recently achieved remarkable results were treated as ugly ducklings until recently. LG Energy Solution is a prime example. This company, which manufactures automotive batteries, recorded a quarterly operating profit of 731.2 billion won in the third quarter, the highest ever. Originally, LG Energy Solution was the battery business unit of LG Chem. Like the VS Business Division, it was an alien entity within the company. It was also treated as a pariah due to long-term massive losses. At one point, the CEO of LG Chem repeatedly suggested to the owner to shut down the business. Many companies that were once alien entities and money-eating hippos within their corporate groups but have recently begun to shine share the common trait of having been established in the early 2010s. Around that time, South Korean conglomerates collectively began to contemplate new core future businesses. Samsung was the first to take action.

In 2010, Samsung announced it would invest 23.3 trillion won in five new businesses: solar cells, automotive batteries, LEDs, bio-pharmaceuticals, and medical devices. These were called new growth businesses. Samsung soon took concrete steps. For example, it established Samsung Biologics in 2011. Other companies also unveiled ‘Vision 2020’ plans to create new core businesses by 2020. Watching these announcements, there was concern about investing large sums in uncertain ventures and the risk of failure. Indeed, there were many failures. However, the battery, automotive electronic equipment, and bio businesses that started then are now the pride of the Republic of Korea Inc.

Therefore, there is renewed anxiety these days. The number of companies presenting ‘Vision 2030’ plans to prepare for the next 10 years has sharply decreased. Even when such plans exist, they tend to focus on excelling in existing businesses rather than challenging new ones. Samsung Electronics’ ‘Semiconductor Vision 2030’ aims to invest 133 trillion won in system semiconductors to become the world’s number one. Although Samsung is not currently number one, it is already a strong player in that field. Excelling at what one is already doing is important. However, to leap to another level, companies must challenge tasks they have not done or dared to do before. If no company prepares to walk the difficult and risky path and ventures into uncharted territory, there will be no future for South Korea.

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