Investment and Innovation: Keys to Overcome Economic Downturn

At the western Daegu industrial complex on September 16. Although it was a weekday, one could hardly feel the unique, vibrant atmosphere of the industrial complex, where textile companies are compactly located. The mood clearly testified the current situation of the textile industry in Korea.

However, things were somewhat different for Seokwang Industrial Co., located at the center of the industrial complex. Eardrum-tearing screeching sound coming from machines, workers “happily” yelling at each other, lift trucks busily moving back and forth… All these reminded one of the industry’s boom in the 1980s.

The company president Gu Ja-gyun, 52 years old, was so busy that he greeted the reporter with one hand still on the phone, talking with the buyers. He barely managed to say hi and asked the reporter to be please seated. “World’s Best Quality” label stood out on his working clothes.

High-tech Company within Traditional Industry—

Seokwang Industrial Co. is known well as a crème-de-la-crème company in Daegu.

At a glance, the company does not look so impressive in terms of size with 160 employees, and last year’s sales revenue of 18 billion won and operating income of 2 billion won.

However, looking more closely into the company, it does not take long to figure out that the company is indeed extraordinary. Despite that the dyeing industry is a sunset industry among those in the textiles industry, Seokwang Industrial Co. supplies its fabrics at an average of 850-900 won per yard, which is more than four times expensive than ordinary dyed fabric, usually supplied at 150-200 won per yard.

The secret lies in the company’s technology to dye blended fabric. Although China now dominates the world’s dyeing market, there are only a handful of companies—only 10 in Korea—that can separately dye two different kinds of threads woven together.

Earlier this year, Seokwang Industrial Co. signed a contract with the world’s largest fiber company INVISTA, formerly DuPont Textiles & Interiors, to supply fabric to INVISTA for five years. Under the contract, Seokwang has to develop 200 functional fabrics, but the company has already developed 120 kinds of new fabric such as “Thermolite” that does not turn hard even at 50 C below zero, and a fabric that dries within 2-3 minutes at room temperature.

The company has also secured direct export channels by hiring local agents in the U.S., Italy, and three other countries, saving itself from having to export via large companies.

A Company Runs on Two Wheels—

The secret behind the success of Seokwang was investment and innovation, as one can easily expect.

“We spend almost 20 percent of our sales revenue in buying new facilities every year. Despite such effort, we still have a long way to go until we catch up with the ‘textile masters’ of the world,” said Gu, who was once so poor that he could only study at technical high school at night.

He had a strong belief from the beginning that the success of his company depended on technological competitiveness. That was why he started the company at first by manufacturing peach skin fabric, a newly developed fabric in Japan, back in 1990.

In 1995, following the trends of the advanced textile countries, he began to dye blended fabric.

Realizing that he should lower the price by cutting down the cost, he bought and set up a one billion won factory automation system from Italy in 1998, a somewhat bold investment decision considering that Korea was in financial crisis at the time. He purchased a German-made continuous dyeing machine for the first in Korea in 2002, when there were only four continuous dyeing machines in the world.

“People called me odd. But I knew that the company could not go forward without the help of the other wheel (investment).”

Gu is currently working together with the Korea Textile Development Institute to develop fibers to supply to INVISTA. He is also conducting joint research with the Japanese company Interplane to develop functional fabrics.

Like all other entrepreneurs, Gu has had his share of difficulties. However, he always managed to overcome the challenges with technological competitiveness. He points out that he is once again in one of the difficult times, despite the company’s firm foundation.

“Many entrepreneurs complain that it is hard to do business in Korea. They have a point. It’s difficult to find a silver lining in both the political and economic sectors. But what can we do? Shouldn’t the companies continue to play their role?”

Ki-Jeong Ko koh@donga.com