Lee Jae-Hyun, the CEO of the CJ Group, has stepped forward to dominate the global market with K food and green biotechnology businesses less than a year since he returned to management in order to achieve the ‘Great CJ’.

According to the electronic disclosure system of the Financial Supervisory Service on May 14, CJ CheilJedang, the core unit of the CJ Group, recorded the 1st quarter sales of 4 trillion and 348.6 billion won, and the operating profit of 210.3 billion won. These have increased year-to-year by 12.5% and 9.2%, respectively.

The CJ Group reorganized the entire group into three sectors such as △ food and green biotechnology, △ logistics and △ entertainment for the ‘Great CJ’ to be achieved by the year 2020. This is a company-wide vision to achieve the sales of 100 trillion won.

◆ CJ CheilJedang, the Main Business Unit of CJ, Drives the Globalization of K Food.

The main business areas of CJ CheilJedang are food, green biotechnology and logistics. It was analyzed that the sales of processed food have seen a large growth thanks to favorable conditions in the market of main products such as home meal replacement (HMR), and global growth.

CJ CheilJedang has achieved the sales of 1 trillion and 316.2 billion won only in the food sector, and the sales of HMR main products have increased year-to-year by 60%. Processed food showed the double digit growth rates with the 20 – 30% increase in sales of core products such as Bibigo Mandu dumplings and Kimchi.

By 2020, CJ CheilJedang plans to achieve the 1 trillion won of product sales with ‘Bibigo Mandu’ as a front runner, and take the global leading position. The global dumplings market size is estimated to be 6 trillion won, and currently the CJ CheilJedang is on the fifth in the market share.

For this purpose, CJ CheilJedang bought out a Russian frozen food company ‘Ravioli’ (currently, CJ Ravioli) at 30 billion won last year. ‘Ravioli’ is ranked at the third position in the Russian market of the 1.5 trillion won size. Since CJ took it over, CJ has been focusing its efforts on investment in manufacturing facilities for ‘Bibogo Mandu’ and the transfer of core technology.

CJ applied the Ravioli’s manufacturing technology and knowhow for Russian traditional dumplings ‘Pelmeni’, which Ravioli had manufactured before, to improve the taste and quality of products. In the second half of this year, CJ Ravioli will expand its product portfolio by launching two new products of ‘Bibogo Mandu’ for microwave.

Sources from CJ CheilJedang explained “As Korean dumplings are available in a wide variety, and easy to cook with great tastes and quality, we think we can readily dominate the local market”.

이재현 CJ그룹 회장
◆ Global No.1 is the Goal in Green Biotechnology... "Nucleotide is a big moneymaker”

CJ CheilJedang has already dominated the global nucleotide market in the biotech sector. Nucleotide is a flavor-enhancing material that improves taste of food and its richness. It is used as a key ingredient in adding flavor to seasonings, soy sauce, sauces and various processed foods.

The biotechnology business is divided into three categories of △ Red, △ White and △ Green, and the 'green biotechnology' is the sector that the CEO Lee has focused on. It is a business that produces various useful materials industrially by utilizing the functions and information of living organisms. It is an industrial area that produces new functional materials, plants seeds and additives based on microorganisms and plants such as bio food and biological agriculture.

The global market size for 'nucleotide' that belongs to green biotechnology is estimated to be 400 billion won per year, and China accounts for two-thirds of the entire market. CJ CheilJedang introduced nucleotide for the first time in 1997. It is the No. 1 supplier in the Chinese market and has a market share of more than 60% based on production volume.

CJ CheilJedang's sales for the biotechnology sector recorded 1 trillion and 81.4 billion won in the first quarter of this year, increasing year-to-year by 13.1%, thanks to the increased sales volume with the expansion of global market dominance, and improved global market conditions. The biotechnology sector's operating profit reached 41.9 billion won, which increased year-to-year by 58%.

Industry analysts pointed out that such a market status could be possible thanks to securing of quality and cost competitiveness based on advanced R&D capabilities acquired through continuous and preemptive investment by the CEO Lee.

Given that CJ CheilJedang’s nucleotide products are mainly traded on a B2B basis in the Chinese nucleotide market, it provides ‘customized solutions’ rather than simple product marketing. CJ conducts technology marketing that provides appropriate instructions and recipe in addition to nucleotide products desired by local clients.

◆ Aggressive investment for the external growth…Adding ‘World Best’ to ‘Great CJ’

According to the 2017 business report of the CJ Group, the size of CJ’s investment in tangible assets last year was 2 trillion and 272.9 billion won on a consolidation basis. It was increased by 1 trillion won from the 2016 investment (trillion and 374.3 won).

Upon returning to management, the CEO Lee revealed the investment plan of the size of 36 trillion won by 2020. It was a bold decision in consideration that the CJ Group had not been able to secure its future growth engine while he had been out of office for 4 years. It will proceed over the areas of logistics, biotechnology and cultural contents.

The ambition revealed during this process was the ‘World best CJ’. It is the company-wide goal to achieve the global No. 1 in at least 3 business sectors by 2030.

This is a more advanced plan than the ‘Great CJ’, a company-wide vision announced in 2010. The ‘Great CJ’ targets the sales of 100 trillion won and 70% of the overseas sales among the entire business by 2020. Last year, CJ recorded the sales of 26 trillion won on a consolidation basis.

First of all, the CEO Lee plans to invest 540 billion won in Jincheon, Chungbuk by 2020 as a domestic project. It will be used to build the integrated food manufacturing base on the land of the 330,000 m2 scale in the Jincheon Songdu Industry Complex. It will provide the annual manufacturing capacity of the estimated maximum 120,000 tons with the annual output up to 500 billion won.

CJ carried out global M&A. CJ CheilJedang bought out Brazil’s plant-derived high protein material company Selecta at 360 billion won, and thanks to this, the sales of amino acids for feed have increased, leading to the external growth of the biotechnology sector in the 1st quarter of this year.

[WikiLeaks Korea= Yoo Kyung A]

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