Ten years ago, Daewoo Electronics founded its first plant in Sonora. Could you tell us what were Daewoo's reasons to expand to Mexico?
In 1988, we needed to establish an overseas plant in North America to manufacture our electronic products, especially TVs and VCRs. So we studied three candidates in North America: Canada, the USA and Mexico. Finally, we decided to invest money in Mexico because at that time Mexico had more benefits to invest money. Each Mexican state offered very good conditions. So we investigated the border area and finally decided on San Luis Río Colorado, Sonora. At that time, the Sonora government offered us to provide an industrial park with a 30-years grace period, free of cost. San Luis Colorado is a very hot area. We currently employ 3,500 workers in Sonora, where we produce TV units (3 million units per year), VCR's (3 million units per year), and monitors (1.5 million units per year).
Mexico is a crucial TV market, both in terms of export and with a rapidly growing domestic TV demand. What is your TV domestic market share?
Our main target was the USA, we are exporting more or less 90% of the production and 10% goes to Mexico and Latin America. In Mexico, the consumers are buying some TVs made in Mexico and others made in Korea, but mainly those made in Mexico. Our market share is more or less 10 or 11 percent.
In 1995, Daewoo Electronics established a plant in Queretaro to manufacture refrigerators and washing machines. Did the actual results meet your expectations?
That factory for the manufacturing of refrigerators and washing machines was established in Queretaro on the basis of PITEX Program, which means we have to export 30% of the production to other countries and only 70% can be sold to the domestic market. Year by year, we increase the market shares, especially in refrigerators and washing machines, our market share is more or less 10% but in our segment of products, our market share is much more than 20%. For example, there are two kinds of refrigerators. One is a Indirect cooling system, another is a Direct cooling system. Our product is the former. In that segment, our market share is more than 25%.
Considering all the products you offer in Mexico, what are the biggest sellers in the domestic market?
Last year, our sales turnover was 120 million dollars. Our good sold products are TVs, refrigerators and washing machines which accounts for 70% of our total sales.
To which extent are you planning to increase the output of quality products?
Every factories are investing money to expand their production capability and to improve the production quality. In every years, we had invested money in each factory. The problem of our head office, specially Daewoo Electronics in korea made us not expand our facilities in overseas countries in last year. But as Mexico is a very important country for our business, we will continue to invest money to produce the quality products.
Do you see within the next few years any further plans to establish new plants in other Mexican regions?
No, we don't have new plan in other regions, but in Queretaro we plan to establish our production plant for room air conditioners and microwave ovens. In Río Colorado, Sonora, we are planning to establish the production line for the Digital TV , VCR and Multimedia equipments
Taking into account that Daewoo Electronics Mexico is heading towards a wider product diversification, what is your objective on the telecommunications sector, being aware of the fact, that it offers a huge potential in Mexico?
In our Group, we separated electronics and telecommunications. Daewoo Electronics takes care of consumer electronics and now multimedia, and Daewoo Telecomm handles personal computer and telecommunications. In the case of Daewoo Electronics, in the head office in Korea, they are developing the new multimedia products. In the future, we will concentrate our efforts in multimedia, such as echo-cancellers, optical amplifier, etc. | In September, Daewoo Electronics will open a web-site in Mexico. Are you going to offer through the Internet B2B and B2C services?
Yes, we opened www.daewoo.com.mx and through it, we will extend our service to consumers. In our web-site, we will introduce our products and if possible, we will sell our products to consumers by Internet in future.
What are your expectations towards the business possibilities offered by the Internet in Mexico?
In order to increase the B2B figures, we have to change our global mind, people's minds, the type of transactions from the factories to the stores. We will have to sell the products to the big sized distributors sooner or later by the Internet. In the case of B2C, we have to study some more time because we have to continue our business with our distributors for the time being so it is difficult to say now what we will go ahead.
Do you have any potential partners in mind, who might support your entry on the Internet market?
At this moment, we still don't have any plans.
Several businessmen from Asian companies mentioned similar problems they face in Mexico. What are the main challenges you see for Korean companies here in Mexico?
At the first stage, the most difficult issue is to understand the difference between the Asian and Mexican cultures. The other problem was communication in Spanish. Both problems, we resolved. The most difficult thing is globalization. Here, the normal customs or conditions of open credit lack any guarantee of the payment. In our country, we don't have any open credit, we need a guarantee of payment with guarantors, insurance, real estate, or others. But in Mexico, credit will be given just with confidence. To grant credit, we need a lot of experience. If we have some problems with the payment, it will take a lot of time, from one to three years, to solve this problem by the legal action.
Mexico has signed numerous free trade agreements in the past. How do Korean companies profit from this unique quality and how likely is it that Korea will follow Singapore's and Japan's steps, countries who already started negotiations to conclude a FTA with Mexico?
Currently, Korea's total trade volume with Mexico, as far as I know, is 2 billion USD. Mexico is exporting around 400 million dollars. Korea exports 1.6 billion dollars to Mexico, it's not quite balanced. In the case of free trade, each country must obtain the same benefit. I know the Korean government is negotiating an agreement with Mexico but it will take more time, around 3 years, because each part must solve its problems.
Mr. Suh, as you mentioned Daewoo Electronics Mexico has various projects for the near future and it will increase its product portfolio. Where do you expect to see this company in a few years from now?
In the case of electronics and home appliances, manufacturers are now selling their products. Some years ago, there were many importers, but in 1994 all of them were disappeared. Now, there are some brand segments in this market. In the case of electronics, one is the Japanese segment, another is Korean, others are from the USA and Europe. So, now the Korean brands are growing. In the future, the most important factors will be the service and price competitiveness. I think that in this market, only some brands will be survived. I am sure that Our brand, Daewoo shall belong to those brands.
Finally, could you give us a brief personal background of yours within Daewoo?
I joined with Daewoo in 1978, 22 years ago, after graduating from University and since I've worked in Daewoo Electronics from 1983, I've been working for American market. Especially I spent my important life time in Mexico for 9 years. So, I love Mexico and I am proud of working to grow up the overseas subsidiary of Daewoo Electronics . |
