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Interview with South Korean Entrepreneur Sung-Joo Kim
Aired December 30, 2011 - 05:30:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
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PAULA HANCOCKS, CNN INTERNATIONAL CORRESPONDENT: (voiceover): It's late night in Munich, Germany and the luxury brand, Mode Creation Munich, known as MCM is shooting its latest advertising campaign.
Popular in the 1980s, the company is making a resurgence as customers embrace its European feel, style, and elegance. While it may be European in name, its owner is not.
South Korean businesswoman, Sung-Joo Kim, bought the floundering company in 2005 and turned its $100 million sales into $400 million in just six years.
It's not her only success story. She also helped introduce high-end Western brands to Asia by licensing Gucci, Yves Saint Laurent, and Marks & Spencer. But it hasn't been an easy ride for the determined 54-year-old who was born into one of South Korea's most privileged families.
As a female, she was expected to keep with tradition and marry into a family of similar standing. Instead, she embarked on a career. It was a move that would see her temporarily cut off from her parents and without any financial support.
This week on "Talk Asia", we're at MCM headquarters in Seoul with Sung-Joo Kim, who tells us how she broke all the rules to carve out a successful 20-year career in the fashion industry.
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HANCOCKS: Sung-Joo Kim, welcome to "Talk Asia". Now, you are known as one of South Korea's most successful businesswomen. What does that mean to you?
SUNG-JOO KIM, CHAIRPERSON AND CEO, SUNGJOO GROUP, CHAIR, MCM: Well, I never really pursue success. I just worked hard because I'm very mission- driven more than money driven. Because I come from big family. My father's business was big - it's the energy group, called the Daesung Group. Traditionally, women came from big families and not work. Only marrying another big family - that's the legacy - how they want to carry on.
So I said, "Why don't I stand up to prove women can do as good as men in this society?" That became my first mission. So, you know, that was how I really wanted to start my business and succeed.
HANCOCKS: Now, you are chief executive of your own company, Sungjoo, and you are also in charge of MCM. You've taken over this German luxury brand. When you look back at the beginning - where it all began - how did you get to this point? I mean, how difficult was it?
KIM: Early '90s, I start my own company under my name - first name, which is unusual - the Sungjoo group. And I was the first franchisee for one of many prominent European brands, like Gucci, Sonia Rykiel, Yves Saint Laurent, etcetera. And I was quite successful. And later on, I took on MCM as a licensee - that was the early '90s. So, we not only produce for Korean market or produce for American market. It means that we were very much export driven business at that time.
We made MCM very successful in Korea until - when the Asian financial crisis 1998 - I feel my business doubling up every year. So we would be the pioneer in the luxury business. At the same time, we were really running super (INAUDIBLE) in terms of manufacturing bags and exporting and to the American market, too.
So, after Asian crisis 1998, I eventually decide to sell Gucci back to Gucci Group along with Yves Saint Laurent and Sonia Rykiel. And then mainly concentrate on MCM.
HANCOCKS: You bought the company in 2005?
HANCOCKS: It was not in a good state when you bought it.
KIM: That's right.
HANCOCKS: Why did you want to?
KIM: As you know, out of all these banking crises around the world, now, meanwhile, the Europe and Americans really suffering, but Asia's really booming time, as you can see. Especially China's emergence. So, Asia not only taking two-thirds of global population, but our luxury market - probably we take about now 56 percent of total luxury market. It means that this is place to go for. And so, we needed kind of brand name already established instead, study own.
So I thought it was - you know, even though MCM at that time, after the peak of the success until mid of 90s, it wasn't really brand failure because of the original founder's personal failure - that's what the brand went down. And our business, MCM Licensing in Korea, really went up well. So, I thought it was great kind of an opportunity for me to acquire the brand.
And so now, since we acquired, the band already grown more than four times. So this year, we are doing about more than $400 million business. We already in 30 countries. In China alone, we plan to open about 100 stores in the next five years.
HANCOCKS: Now, a lot of the very big, successful luxury brand are European, or they're Western. And you've given it the Asian twist. You've been able to take over the franchise - the company - and make it better. Is it time for Asian companies or Korean companies to be making such an impact in U.S. and Europe. These are still European brands that you're giving the Asian twist to.
KIM: Yes. If you really want to be true luxury, like where we are in, like Gucci, (INAUDIBLE), MCM, and all these - Prada. That level still not Asia, I must say. So it still was a very European dominate. But when you come with the market - with the low market - because a lot production bases are out of Asia.
And also West Coast America, for instance, very. Also, a culture- friendly place for Asian community. That's what they can really create big volume scale business - actually even person around the United States, now even they're coming out to Asia very successfully.
HANCOCKS: Now, another big name that you won franchise for was Marks & Spencer's. You were up against Korea's largest conglomerate, Samsung.
KIM: That's right.
HANCOCKS: And you were a very small company at this point. How did you win that?
KIM: Well, that was interesting story, too. I think there were three things they said eventually. One was they said "transparency". We are very few - very rare company kept in a no bribing, no tax-cheating. So it's a really clean hand policy, which is very unusual. That's what they liked about.
The second was also specialization. But we are only involved in fashion, which is very much specialization. Third issue was harder (ph) issue. They say - it was interesting - they say, well when they got these big, you know, kind of corporation in a boardroom - glitzy and really nice. And about 10 guys sitting - the top guys in middle there are like a stone face or prohibiting (ph) something. Only the top guys speak. And so, that feeling very - how can I say - tight, you know, feeling. A lot distance feelings.
But when they walk into my office, they even could not recognize who was the chairperson or, you know, CEO, because I was striding around everywhere. You know, it was a kind of horizontal and very open kind of atmosphere. They said this was company they want to work with.
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HANCOCKS: Coming up, family friction. Sung-Joo Kim explains why her parents disowned her for almost four years.
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HANCOCKS: Now, if we can look at your background a little bit, you're from a very affluent family. And your father was a self-made business tycoon - you had 25 companies. But he was very traditional.
KIM: That's right.
HANCOCKS: At which point did you realize that, as his daughter, you would not be treated the same way as his sons.
KIM: I had three brothers and two other sisters. Youngest among six. Even though I come from biggest - one of the biggest family, but automatically brothers inherit fathers' multi-billion dollar empire. And girls, always supposed to marry another big family, as I said, and carry on tradition. And so, I want to say, even though I did not inherit my father's business or money, but I inherited an entrepreneur-type DNA.
So, you know, so father - it's rather funny. Before he passed away about over 10 years ago, he really confessed to me that even though you've been always honest to me - therefore we have to fight sometimes. He says I was so brave to stand up for anything - it was like he did something against my mother - my other sibling afraid to speak up, but I did because I knew I'm not going to inherit much. But I loved him and also I have to say truths to him, because that's the way he taught me.
But eventually he said that, "Why his youngest daughter inherit most of my business blood, not your brothers?" Because he was really feeling bad about it. But I told father, "Don't worry father, eventually be as good or could be even better". So I don't think he's so biased at this time. But I'm sure he believe in my capacity.
HANCOCKS: Do you think he was proud of you?
KIM: I think so. From the heaven.
KIM: But I remember at the beginning ,1997, when there were that kind of forum - that forum chose me as one of the global leaders for tomorrow. The Mail Daily newspaper group, you know, the biggest economy newspaper, had a full-page article about me with a big picture. I knew if father look at it, he would have a heart attack. So, I had to call (INAUDIBLE). I don't know why, but they chosen me, and you're going to see my big picture in the newspaper. Father said, "What did you do?" I said, "I don't know". You know. He said, "You must do something wrong to let them think you are that big - great". So he said, "You know yourself and don't get misunderstanding". He hung up. He got very mad at me. So that was the way he see women.
HANCOCKS: So what was expected of you when you were younger was to marry.
HANCOCKS: And not be in business.
KIM: That's right.
HANCOCKS: But you wanted to go and study in the United States. How did you convince your father?
KIM: Well, that was another funny story. When, after graduating from Yonsei University, which is a Korean university - I was accepted at Amherst College, and father said, "No way. You marry your husband. Follow him is fine, but not by yourself". So, you know, I start to convince him - I did everything, but he said, "No way". So he didn't want to even let me leave the country.
So what should I do? So what, eventually, I did was I invite all the Amherst graduate - that's how lucky - we had some prominent ministers and cabinet member who are - even Japanese Ambassador, (INAUDIBLE), in Korea - my father's great respect toward him - were Amherst graduates. I invite them all to my father's house. I told father, "They are coming for dinner". He didn't believe. He said, "Those dignitaries doesn't come with invitations". He completely forgot.
So that evening, I invite them. And, you know, had a nice dinner. We had dinner. Around 10:30, he showed up. He was shocked to death because everybody was in the house waiting for him. He was really, really embarrassed. Eventually, he sat down in the living room and only about 20 people around there. And at that time, the President of Amherst Korean association.
He said, "Well, Chairman Kim, since your daughter got accepted at Amherst, which is great college, even you never heard about it. Secondarily, we see great potential in your daughter. Would you allow her to go?" And, as I'm looking at him, he said, "She does not - ", and he couldn't say "yes". He does not - next day, I left. So it was amazing. Yes.
HANCOCKS: That's incredible.
HANCOCKS: When you were actually in the states, though, you said that you married your sweetheart from college.
HANCOCKS: But, of course, he was non-Korean.
HANCOCKS: What was the issue with that?
KIM: Well, that was the biggest issue. And, as you know, Korean people in general, we are very homogenous kind of a people. Even out of 5,000 years of Korean history, we've been invaded so many times - more than probably 850 times. Small and big war - we never invade - us always invaded because of geopolitical location.
So, people - first place, miracle -- that is Korean people survive as it is. Therefore, they have a great kind of - not animosity - kind of protectionist kind of mind setting. So they are kind to outsiders, but mixing the blood, they feel, is a shame. Therefore, especially in that a family came from kind of high status - they feel we should have kept the pure blood.
So, when I met my sweetheart in college - not Amherst. In fact, when I was at Harvard briefly after Amherst. And it was kind looking boy. And I know, if I don't marry him, I'll be taken away by my parents. So I had to escape. So I confused that poor chap to get married, which we did. And I called my parents - I fixed my marriage, so don't worry about the arranged marriage. They were speechless. Next day, they pull my name out of family tree and they stop sending any single dollar.
It means I was penniless. That's why I had to drop out from college, because he was still pursuing his degree. And he come from a humble background. So one person got to sacrifice, which I did. And that's why I eventually got the job at Bloomingdale's in New York. So I was commuting between Boston. It was quite serious.
HANCOCKS: So what was your first job like at Bloomingdale's?
KIM: Well, I was lucky. I mean, I had no fashion background. Never studied fashion, never even worked in fashion industry. Lucky at that time they were doing a lot of those country promotion - you know, Japan promotion, China, India promotion. So it was middle of 80s. At the time, Korean car industries like Hyundai and electronic like LG, start to sell in America. And also, that was the time also announced that Seoul will host 1988 Olympic Games. So suddenly - and also, maybe one more thing is Korea was still one of the biggest textile-exporting country before China emerged.
So they had a kind of curiosity and things about what's going in Korea - suddenly a very fast-growing economy. So they decide to do Korea project. But they were looking for a kind of project manager for that. So suddenly, when I appeared, even though - the Bloomindales chair, he had a little bit suspicious eyes about me, but he saw my courage. So that's the way I start my fashion business.
HANCOCKS: So this time must have been very difficult for you, not only because you're learning a new industry -
HANCOCKS: But you have been cut off from your family.
KIM: That's right.
HANCOCKS: How long was it before anyone spoke to you?
KIM: About like four years. Nobody spoke with me. No anything. I felt like I was lost in the middle of orbit. In like, in orbit, you're going around as a satellite kind of a star. But you're just lost in a black hole. That's what I felt. And it wasn't really emotional - it wasn't really economical difficulties, it's the emotional trauma.
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HANCOCKS: Coming up, Sung-Joo Kim takes us on a special tour of MCM's design studio in Seoul.
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KIM: I'm here. Good morning. So this is our design room. You know, you can see, you know, this squad is heading for this team. And a lot - I mean, we have actually two big design, actually, area. One is in Europe, of course. In Europe, we have - actually, our creative director's in Berlin. And also we have a smaller in Milan based. Also, our design and also production team. And New York we have a studio (ph) waiting for us, too.
And since you are here, in Seoul - this is our headquarters design team. So, we have more than 20 teams you know, the people working here. So they are really being nice and working hard.
And here, another team, hello. And they saved me a spot. There is another team, they are also looking up - they go the line and a lot collaborations with the oversea designers.
We have, like, 600 employees. All taught in my companies. All this job. 15 different nationalities, too. Because we have a European office, Israel (ph) office. And - also, Chinese office in Hong Kong - things like that. But out of 600, we have 500 waiting.
And among top directors, actually mostly (ph) are (ph) women (ph). So, this is great way to prove to our society, "Hey, you guys, if women run that bad, we are very success and a couple (ph) are scared (ph), too (ph).
HANCOCKS: Now, you're seen as a role model for many women in Korea, across the world, and also for many entrepreneurs. But who was the person that you looked up to when you needed inspiration?
KIM: Well, I mean, not necessarily I really followed the women entrepreneurs' role model, because first, in Korea, not many exist. Maybe I one of very first in that level. As women concerned, I was really always admiring people like who served the society out of love. And also my mother. Even she was wife of biggest tycoon in Korea, she was always humble. And always shared a lot of resources with the neighbors around.
Which I complained, "Why mom doesn't go around with fancy clothing and like "Tai-Tai" ladies and going parties and playing golf (ph) around. And meanwhile, she really went up there to serve, like, orphans and many other - you know, kind of social cause work. And eventually I learn out of complaints and doing something similar. So I must say, my true role model is my mother. I hope my daughter say the same things to me.
HANCOCKS: Sure they will.
The business culture in Korea, though, is still a very male-dominated arena.
HANCOCKS: Do you still come up against this? Do you still have to fight this?
KIM: 20 years ago, when I started business, I remember many of these, like, board meetings or even dinners I go out - I was only woman, and youngest, often. And only other women in the room is pouring the tea - serve and leave. So, male counterparts, obviously, was not really pleased to see me in that level.
I must say, in Korea, changed a lot and even government has like one- third of bureaucrats now compulsory hiring women. Which makes government more transparent, more efficient now. But also, many falling in that state kind of entities in Korea - primarily like a banking system. Also allowed women to promote middle management - top management. But still we are quite behind in the sense of women entrepreneurship. Because of maybe lack of resources or still a lot of stay, of course, as a mother. You know, working mother, like that.
But also, if you look at many major Korean conglomerates, unfortunately, they don't have many women top management. That's, I feel, still lacking there.
HANCOCKS: So I have an interesting quote, here. I'm actually going to quote you back to you.
HANCOCKS: This is what I read. You said, "You can't ignore half of the population's brain power, so be very careful. Unless you listen to what women want, you will fail". What do women want?
KIM: Well, you know, simple. What women want - that's interest - first off the little more socioeconomic background. Now, if you look at who are consumers - like 70, 80 percent of consumers, at least in Korea, they are women. They determine from their children's education to even buying and selling the houses and what car they should buy. Even then, they influence their husband, too. I mean, their take absolute kind of purchasing power.
So what women want, I got to say - women, I feel, could have more value system. And also it means that - you know, it's not sort of expensive or something ostentatious. But value that product gives to us.
Another thing I would just say, also even deeper meaning that - who is company that, you know, produce? It's not only glitzy, very superficial marketing try to attract consumers to buy more, but what kind of spirit the company carries. If I have a choice that - to choose here and get another product - If I look at the company behind, which is really practicing corporate social responsibility, really care for society - often they select that product because, as women, I feel instead of just looking at our own self, we are looking at our, you know, working on our family and working on our community. That's why we care slight (ph) different value system. So that's what women want.
HANCOCKS: Now you've come a tremendous way and you have gained an awful lot throughout your career. What sort of advice can you give to other entrepreneurs who want to become the next you?
KIM: OK. You know, so simply, one, I feel really for me (INAUDIBLE) really, I think is essential to be mission-driven. You know, what figure are you really adding up to your society out of your business? Instead of how big business I want to make. Because if just personal money and success, you're caught up by that. You can be easily tempted by corruptions. But just how can you add up some value to your society. And eventually gain everything. You know.
And another thing is, obviously, business is not easy. It really for me, every morning I walk in my office, I know ultimately worth (ph) of many probably (ph) waiting for me. But for me, just even those obstacles, frustrations, stresses everything up. But not lose the long-term perspective. Then I know how to wisely avoid or to overcome these technicalities, problems. So that's actually the advice from my father - never loose the long-term perspective.
And also, self-discipline. You know, before you control over others, you got to know how to control yourself. So, especially as women entrepreneur. Because of, you know, women's -- the biggest fortitude (ph) of emotion, but weakest is emotion, too. So, we are emotional thing without discipline, because that's the worst enemy to yourself. But with discipline, as I said, emotional intelligence can be the biggest forte (ph).
HANCOCKS: Sung-Joo Kim, thank you for joining us. Thank you very much.
KIM: Thank you.