dividends on the stocks of the enterprises it invests in.

The business community is paying much attention to Taihan Electric Wire’s experiment to become an investment company from a manufacturer.

Taihan Electric Wire recruited outside chief executive officers for its subsidiaries, Muju Resort and Ssangbangul, instead of appointing them. A financial executive of Taihan only monitors the transparency of their capital flow. And the two subsidiaries have kept their brand names.

That principle will be applied to the management of other companies, including Jinro, that Taihan will take over.

Taihan adopts a co-CEO system modeled on that of Berkshire Hathaway. Under the system, one CEO Kim Jung-hoon is in charge of cable manufacturing and sales, and the other, Lim Chong-wook, is in charge of investment.

Taihan Electric Wire originated from Taihan Group, which was Korea’s fourth largest company in the 1950s. Taihan’s chairman and CEO Sul Won-ryang, age 62, is the founder’s third son.

He pursues diversification of his company for two reasons. First, the cable manufacturing market has already reached saturation. Taihan’s sales have dropped more than 30 percent over the last three years.

But the company has never gone into the red since its foundation in 1955. Its net profits accumulated since 1981 are 350 billion won, and the value of the real estate it owns amounts to 1 trillion won. The company is expected to post 1.35 trillion won in sales revenues and 100 billion won in operating profits this year.

Second, for Taihan, starting new businesses, such as LCD and semiconductor, is risky. The company sold its consumer electronics subsidiary to Daewoo Group in 1982 and an aluminum subsidiary to a Canadian firm, Alcan, in 1999.

Therefore, Taihan has decided to invest its abundant capital in good companies through M&A activities. So far, it has invested 550 billion won in M&A.

Mr. Ha said that Taihan will never give up its manufacturing business. “We will develop a new model to achieve secure investment returns.”

eye@donga.com