[비즈한국] Binggrae005180, which has been enjoying a strong performance, is facing an unexpected crisis. Public criticism has been pouring in following the news that Kim Dong-hwan, the company's president and eldest son of Chairman Kim Ho-yeon, assaulted a police officer. Concerns are growing that the momentum of Binggrae, which recorded its highest-ever earnings last year and was aiming for the top spot in the ice cream industry this year, might be losing steam. Chairman Kim Ho-yeon, who leads Binggrae, is also facing deepening concerns.
Character
Chairman Kim Ho-yeon was born in Cheonan, South Chungcheong Province, on April 29, 1955. He is the second son of the late Kim Jong-hee, founder of Hanwha Group, and the younger brother of Hanwha Group Chairman Kim Seung-yeon. After graduating from Kyunggi High School, he entered Sogang University to study trade. He earned master's degrees from Hitotsubashi University (Economics) and Yonsei University (Public Administration), and a doctorate in Business Administration from Sogang University. With a keen interest in social welfare, he even obtained a social worker license. He married Kim Mi, granddaughter of independence activist Baekbeom Kim Gu, in 1983, and they have two sons and one daughter.
He is known for his high academic enthusiasm and extensive reading habits. He also has a deep interest in the independence movement. He was so influenced by the ‘Binggrae’ (smile) philosophy of Dosan Ahn Chang-ho that he chose it as the company name. In 1993, he contributed his private assets to establish the Kim Koo Foundation, and in 2011, he created the Binggrae Public Welfare Foundation to continue scholarship programs for descendants of independence patriots.
Career
In 1981, following the sudden passing of his father, Chairman Kim Jong-hee, he engaged in a decade-long management dispute with his older brother, Chairman Kim Seung-yeon. In 1992, he took on the role of chairman of Binggrae, which was separated from Hanwha Group. In 2008, he stepped away from management to enter politics while retaining his title as Binggrae’s largest shareholder. Chairman Kim Ho-yeon ran as a Grand National Party candidate in the 18th general election in 2008 but was unsuccessful, and was later elected in the 2010 by-election. Although he faced another defeat in the 19th general election in 2012, he remained in the political sphere, being identified as a "Park Geun-hye person" and serving as the general director of her primary camp. However, his political career was short-lived. In 2014, he returned to management as an executive director at Binggrae, concluding his six-year political life.
Capability
Chairman Kim Ho-yeon was recognized for his management skills by reviving Binggrae when normal operations were difficult. When Kim took over management in 1992, Binggrae's debt-to-equity ratio reached 4,200%. Although it was considered beyond recovery due to continuous capital erosion, Kim significantly improved performance by launching hit products like Merona. In the early 2000s, he restructured the company by divesting its core ramen division and outsourcing snack operations, reducing the debt ratio to 54% by 2004. In the 2010s, he aggressively expanded overseas. Starting with the establishment of a Brazilian subsidiary in 2013, the company entered markets in the U.S., China, and Vietnam, selling flagship products such as Merona, Banana Flavored Milk, and Dewy Sarang. As Binggrae products gained popularity abroad, the company recorded its best-ever performance last year, with operating profit surpassing 100 billion won for the first time.
Patriotic marketing, leveraging their background as a family of independence activists, has also proven effective. Recently, a social media campaign Binggrae ran for Liberation Day gained significant traction and became a hot topic. Additionally, as the fact that Chairman Kim Ho-yeon has consistently supported descendants of independence activists became known, the company gained word-of-mouth reputation as a "good company" among consumers. He has also managed the company's image by letting the media capture his family’s volunteer activities.
Critical
Binggrae’s dividend policy has been a constant source of controversy. Je-ddae, Binggrae’s logistics affiliate, has been increasing dividends every year regardless of its performance. Last year, Je-ddae’s operating profit fell by 29% and net profit by 14%, yet dividends increased by 18% compared to the previous year. Je-ddae’s dividends have been rising steadily, and last year, its dividend payout ratio (the proportion of dividends out of net profit) exceeded 50% for the first time. Je-ddae is 100% owned by Chairman Kim Ho-yeon’s three children. Industry observers speculate that Binggrae might utilize Je-ddae in the management succession process. Chairman Kim himself is also famous for receiving the highest dividends in the food industry due to Binggrae’s high-dividend policy. This year, the Chairman collected over 9.4 billion won in dividends.
Recently, he has been struggling with family issues. The news that President Kim Dong-hwan, the eldest son of Chairman Kim Ho-yeon, assaulted a police officer while intoxicated has come to light. On June 17, President Kim is accused of causing a disturbance while drunk at an apartment complex in Ichon-dong, Yongsan-gu, Seoul, and assaulting police officers who were dispatched following resident reports. The Seoul Western District Prosecutors' Office indicted President Kim without detention last month on charges of obstruction of official duty.
Challenges
With the assault case involving Chairman Kim Ho-yeon's eldest son, Binggrae’s corporate image has suffered a major blow. Binggrae had built an image as a "patriotic" and "good" company, but public sentiment is worsening due to owner risk.
Some believe that the succession process has also hit a red light. Eldest son President Kim Dong-hwan joined Binggrae in 2014, serving as a manager and general manager in the purchasing department before becoming a senior executive in marketing strategy in January 2021. When he was promoted to president this March, rumors circulated that Binggrae’s succession process was in full swing. However, as a disgraceful incident occurred immediately after his promotion, claims that a reassessment of President Kim is necessary are emerging. As industry observers suggest that this incident could alter Binggrae’s succession landscape, it is predicted that Chairman Kim’s concerns will only continue to grow.