Story of a Big Player from Gangnam - Chapter 470

Chapter 470: Expanding the Market to India (2) – Part 1

Gun-Ho came back to GH Mobile and called for all executive officers to his office.

GH Mobile’s executive officers started gathering one by one in the president’s office while carrying their notebooks.

Gun-Ho, who was sitting at the center of the table, presided over the meeting.

“I know you all are busy. The reason I convene this meeting is to discuss with you all about expanding our business into the Indian market.”

“Did you say India, sir?”

“I talked with Egnopak’s president this morning. Egnopak is opening its factory in the southern part of India—Chennai. As you may all know, the large automobile manufacturing companies such as Hyundai and Kia have their factories in Chennai, in giant size.”

President Song spoke, “Hyundai is currently manufacturing 500,000 automobiles in India. Chennai used to be called Madras. It has a population of about 8 million. It is a central city in south India. Hyundai, Samsung, and Lotte have their factories there along with more than 100 of their vendor companies. It is the right move for us to get into that market.”

“So, you think we should expand our business there?”

“That’s correct.”

The general affairs director, the accounting director, the production director, and the research chief officer were quietly listening without saying a word. Gun-Ho and President Song did all the talk most of the time.

President Song continued to talk while having his cup of tea, “It will be even better if we could open two factories in two different locations in India such as in the northern part of India, probably in New Delhi and the southern part of India—Chennai. In these two locations, our major client companies—S Group, Mandong Company, and Egnopak—are already there. So, it’s less risky for us to have our factory there since we already have our established clients in those areas.”

“It will cost us a significant amount of money in order to acquire a factory, ship our equipment, and also have our workers there.”

“That’s the problem.”

“We will have to take a loan from a bank or use our own funds in reserve.”

“That’s right.”

“I don’t think we can take a loan because of our high debt ratio. If we use our funds in reserve, that would mean that we won’t be able to pay for our debts.”

“That is the important factor that we have to take into consideration. We are currently preparing for going public, and we need to figure out if we want to grow our business at this very point by having another factory and risking our plan to register with KOSDAQ.”

“Hmm.”

“Even though we decide to lease a factory instead of purchasing one, it will still cost substantially to pay for the security deposit for the premises and getting equipment there. If we open an entity there, it will be wholly owned by GH Mobile.”

“I see.”

“Even though we see great prospects for success in the Indian market, we will have to constantly invest funds in it in the beginning stage. That could cause the lack of GH Mobile’s financial stability.”

“Of course.”

“With our current situation, we want to use our funds in reserve to pay for our debts rather than to expand our business.”

“So, you are saying that it is tempting to get into the India market because of the great prospects, but the timing is not good for us given our current situation where we need to establish our financial stability by lowering our debts.”

“If we want to simply put it, yes, that’s our current situation.”

Silence filled the air for a moment.

“Is there anyone else with a different opinion?”

No one said anything, and they were all looking at their notebooks. President Song spoke again, “There is one way to make it work. If an investor can invest in the Indian market for now, GH Mobile can later merge with that company after it successfully registers with KOSDAQ.”

“So, you are saying that just like the company in China, which Min-Hyeok Kim is running right now, you want me to invest my personal funds in India for GH Mobile for now.”

President Song laughed and said, “I’m not saying we should do that, but I’m just giving an idea.”

“Hmm.”

Gun-Ho thought about it for a moment with his arms crossed.

“Sir, why don’t you pay a visit to India first?”

“Going on a trip to India?”

“Not a personal trip, but you can take a business tour.”

“You mean the planned business tour arranged by the Small & Medium Business Agency or Korea Chamber of commerce?”

“Since it is an overseas tour, it would be organized by the Korea Trade-Investment Promotion Agency (KOTRA). I will find out their schedule.”

“All sorts of official letters and direct mails are being handled by the general affairs department. Mr. General Affairs Director, please find out about the business tour organized by KOTRA.”

“Yes, sir. I will do that.”

After the meeting, President Song quietly came back to Gun-Ho’s office.

“India has more restrictive regulations for a foreigner to purchase a real estate there compared to China. When I worked for S Group, I once visited its factory in India, and I met several retired executive officers from Hyundai or Samsung, who owned factories there and leased them out.”

“Really?”

“The rent varied from 6 million won to 10 million won. Since the income from the national pension is not a lot, those retirees tried to set up a stable income that way. I think we can lease a factory from them, which is another option we can take.”

“Hmm.”

“We can ship one of our extruding machines there. If we take Dyeon Korea with us there, we can stably receive raw materials from them too. I believe that we just need about 300 million won to start. And after about two years, GH Mobile can merge with the factory in India, and you can let it go by selling it to GH Mobile for a higher price.”

“I see. I’m not sure about China, but I don’t think our workers would prefer to work at the factory in India. The weather there is humid and hot, not to mention the language barrier. Moreover, the living condition there wouldn’t be very beautiful.”

“We will have to hire people in India. We will, of course, have to bring key engineers and a manager from here. We can give them an incentive for an easier and quicker promotion after working in the India location. I’m sure there will be some workers who would volunteer. S Group used the same strategy to encourage their workers to go to India.”

“We don’t have to decide anything right now. Let’s think about it.”

“Yes, sir.”

In the late afternoon, Gun-Ho went to Dyeon Korea. Director Kim entered Gun-Ho’s office.

“I was told that you had a meeting with Egnopak’s president. What did he say? Why did he want to see you in person?”

“He talked about going into the Indian market together, specifically in Chennai.”

“You mean with a manufacturing factory?”

“Yes.”

“It’s actually a very good timing to get into that market, but it will cost a lot of money.”

“President Song suggested leasing a factory there.”

“If we want to save some initial investment funds, that’s a good way to do so.”

“The thing is that GH Mobile is currently preparing for registering with KOSDAQ, and we are not sure if this is the right time to expand our business given our current situation.”

“GH Mobile needs to focus on successfully going public by lowering its debt ratio, rather than investing in the overseas market.”

“That’s what President Song said.”