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Aju cements rising ambitions

[The faces inside KOREA’S CONGLOMERATES] Under its current chairman, Aju has rapidly expanded into new business areas, ranging from financial services to car distribution and hotels.
June 07,2010
Moon Kyu-young, Chairman of Aju Group, right, and group employees deliver briquettes to low-income families on Dec. 2, 2009. The group delivered a total of 180 briquettes to families living in 19 areas, including Seoul, Suwon and Jeju. Provided by the company
The beginnings of Aju Group are rooted in the switch from wooden utility poles to concrete ones in the 1960s, which Aju supplied as electricity networks expanded into rural areas.

The concrete poles was the idea of Moon Tae-sik, a founder of Aju Group. Starting with the construction materials business under Aju Corporation, the group grew rapidly to include 14 affiliated companies with annual sales of 1.3 trillion won ($1.1 billion) and 1,300 employees.

The current chairman, Moon Kyu-young, is the eldest of Moon Tae-sik’s five children.

But he had to pay his dues despite being the founder’s son. His first job when he was in his 20s was at Daewoo International, where he worked as a regular salaried employee for five and a half years.

He then joined Aju in 1983, when the business just focused on making the concrete power poles and other construction materials.

But Moon Kyu-young wanted to expand into the other industrial sectors.

After reviewing around 500 different business areas, he decided to enter the ready-mixed concrete industry in which Aju soon became the nation’s third biggest producer.

Moon has since diversified the group into tourism and leisure, car sales, finance, property development and business support services.

The group’s construction materials division includes Aju Corporation, Aju Ascon, VCEM and Aju Vietnam. Affiliates in the auto and finance sector are Aju Capital, Aju IB Investment and Aju Motors.

In tourism and leisure, the group owns Hotel Seokyo, Hyatt Regency Jeju and Aju Investment.

The real estate development businesses include Aju Frontier, and Asan Bangisan Development Group.

Aju Information and Aju Welfare Foundation comprise the group’s business support services.

The group’s main business remains construction materials, including the production of ready-mixed concrete, asphalt concrete and centrifugal reinforced concrete, with 12 plants in Korea.

In addition, it established a concrete pile plant in Ho Chi Minh City, Vietnam, in 2008, with an annual production capacity of 240,000 tons.

Although Aju cemented its position as the nation’s leading construction materials company,

Moon believed this was not sufficient for the group’s future. It acquired Daewoo Capital from Korea Asset Management in a consortium with Shinhan Bank in June 2005.

It was a big turning point for Aju Group. The purchase of Daewoo Capital increased the group’s total assets to 6.2 trillion won.

“When Aju Group was a construction materials manufacturer, its assets amounted to only 350 billion won, but the acquisition of Daewoo Capital allowed us to grow much bigger,” said an official from Aju’s marketing department.

Aju Capital, a financing company, provides installment and lease financing for cars, heavy equipment, special equipment and industrial materials as well as credit for individuals and corporations.

It is the only Aju affiliate to be listed on the Kospi market and is now ranked as the nation’s second largest in the loan industry, with assets of 5.7 trillion won, after Hyundai Capital. It opened offices in China and Vietnam in 2008.

Aju IB Investment, a venture capital company formerly known as Kibo Technology Advancing Capital Corporation, reported investment returns of more than 8 billion won last year.

Aju Motors is a partner of GM Daewoo and is involved in car sales, financing and maintenance.

The company serves as a distributor of GM Daewoo in southern Gyeonggi, Gangwon and North Gyeongsang.

The auto business is expected to generate 350 billion won in sales this year. It works closely with Aju Capital in providing auto loans.

The group’s entry into to the tourism and leisure sector began with its purchase of the Hotel Seokyo in Seoul in 1987 and it acquired the Hyatt Regency Jeju in 2000.

Moon has believed that business diversification is the key to the group’s success.

However, the strategy did not always proceed smoothly. The group had conflicts between management and labor that began in 1987 and lasted four years.

As a result, Moon focused more on transparent management and brought in experts from various industries to further develop the group.

Through its business diversification, the group has protected itself from the downturn in the construction industry, which has affected demand for construction materials.

James Chong, an analyst at Tong Yang Securities, said that the construction materials business is only expected to improve from early next year.

The group is also planning on building up a public golf club business.

According to a source at Aju Group, the group is seeking to construct a 18-hole golf course by acquiring land measuring 1.1 million square meters (11.84 million square feet) located in Yongin, Gyeonggi.

Aju Investment is in charge of new project.

The group believes golf club construction would be the first significant step in entering the real estate development business.

Aju Group is marking its 50th anniversary in September and is confident of growing further under its founding philosophy of “pioneering spirit.”

The group spun off its three affiliated companies - Aju L&F, Aju Autorental and Aju Rental - in 2007.

Moon Duck-young, the third son of the group’s founder, is in charge of Aju L&F Holdings, which controls all three businesses. Aju L&F is involved in cold storage services, Aju Autorental is a car rental service and Aju Rental provides rental equipment.

Moon Jae-young, the founder’s second son, operates an used car online site called Jamycar and holds the operational rights to Sangbong Bus Terminal in Seoul.

Choo Heung-nam, 56, joined as chief executive of Aju Corporation in 2008. He spent most of his previous career at the Hyundai group.

Lee Yoon-jong, 49, the head of Aju Capital, joined the group in 2005. Lee held executive posts at Bridge Securities.

Yang Jung-kyoo, 60, has served as Aju IB Investment chief executive since 2005.

Yoo Jae-hyoun, 50, heads Aju Motors and Sung Nak-eum, 52, has been in charge of Hotel Seokyo after each joined the group in 2008 and 2009, respectively.

By Jung Jae-yoon [jyj222@joongang.co.kr]