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.”
“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.”