The Development History of Daewoo Group

In 1996, no one predicted that the Asian financial crisis would occur in 1997. Daewoo Group, as a huge aircraft carrier, is still braving the wind and waves on its own channel and going forward bravely. In 1996, Daewoo Group, under the leadership of Jin Yuzhong, showed the world the goals and plans of Daewoo in five years:

1. By 2, Daewoo's sales in five years increased by 55%, reaching $172 billion. Among them, overseas sales including exports and overseas local production will reach 71.25 billion US dollars.

In order to achieve this goal, Daewoo will expand the existing 257 overseas offices and producers and sellers to 65, forming a huge global business network. Specifically, it includes 33 trade offices, 6 construction companies, 1 electronic communication offices and 7 production factories, 8 automobile offices and legal persons, 33 heavy industry offices and legal persons, and 47 financial and other legal persons.

2. The five years from 2 will be an important stage for Daewoo Group to implement its globalization goal. Daewoo Group plans to increase its current offices, legal persons and production plants in Asia and the Pacific from 14 to 194 in 2. Daewoo plans to build 18 offices and production plants in China, dealing in electronics, automobiles, construction, trade and finance. It is planned to set up 8 factories in Myanmar, dedicated to light industry, electronics, chromium-nickel steel industry, etc. Plans to set up electronics and accessories factories in Southeast Asia and Vietnam; It is planned to develop the production of primary industry products in Fukuoka, Japan.

in the Americas, Chinese characters group will increase the number of local factories from 53 to 126. Daewoo not only sells electronics and automobiles in America, but also regards this region as the center of world trade and material exchange. Chinese characters are preparing to expand the electronics and automobile market in South America; Plans to set up electronics and automobile production plants in Central and South America; Further expand the home appliance industrial park in Mexico and step up the construction of automobile and heavy industry production plants.

In Europe and CIS countries, Daewoo Group has increased the number of manufacturers there from 62 to 18. Daewoo's planned goal is to eventually build a complete distribution network of research and development, production, sales, trade and finance of Dazi Group throughout Europe and CIS countries. In western Europe, Daewoo is committed to increasing research and development centers and manufacturers, further invigorating automobile sales and establishing a wide after-sales service system; In Eastern Europe, Daewoo is committed to acquiring existing local enterprises and setting up financial institutions. In CIS countries, Daewoo Group focuses on automobile production and sales of automobiles and electronics.

In Africa and the Middle East, the distribution network of Daewoo Group has expanded from 38 to 15. In Africa, Daewoo's main activities are in Sudan, Algeria, South Africa, Nigeria and Cameroon. Daewoo not only uses trade, but also uses the electronic, construction and automobile distribution network on the African continent, so as to finally build Daewoo's production and sales network in Africa. In the Middle East, Daewoo focuses on trade, construction, electronics and automobile business.

As can be seen from the above five-year plan, Daewoo Group will build itself into a global multinational company, an integrated financial system and a world-class distributor.

Jin Yuzhong concentrated his whole life to create the brilliance of Daewoo Group. Daewoo Group has 41 companies, and at the end of 1997, Daewoo had about 26, employees. Unlike other South Korean chaebols, Kim Yu-chung himself is not run by the entrepreneurs' sons and brothers as the general managers of the relevant enterprises, and he basically does not arrange his relatives in the management of Daewoo Group. He adopted the division system. Within Daewoo Group, Chairman Jin Yuzhong is supreme and monopolizes power, especially the major decisions on opening up new businesses, new fields, new projects and new markets, as well as the major decisions on fund raising. In the end, Jin Yuzhong has the final say, and the board of directors and the president have to obey him, not to mention the heads of functional departments and business divisions of Daewoo Group and the managers of subordinate companies.

The brilliant achievements of Daewoo Group are related to the attention paid by Chairman Jin Yuzhong to the investment in science and technology and to the improvement of the quality of the staff. In 1991, the research investment of Daewoo Group was US$ 213 million, accounting for 2.44% of the total sales, and in 1994 it reached US$ 64 million, accounting for 3.89% of the total sales. The number of scientific researchers increased from 6,892 in 1994 to 16,84 in 1999, with an increase rate of 144%.

the financial crisis broke out in Asia in p>1997. Foreign banks and institutional investors began to withdraw funds. The fund-raising situation of Daewoo Group tends to deteriorate. In the past macroeconomic boom, Korean domestic financial institutions borrowed a lot of overseas funds and lent them to chaebol enterprises like Daewoo. The Chinese character group has seen a return on investment with enlarged capital structure. However, after the outbreak of the financial crisis, the high debt ratio of Daewoo Group caused a huge debt burden, and the decrease in profit caused a decline in the stock price, which caused a huge blow to investment. In order to tide over the difficulties, Daewoo Group decided to reduce its subsidiaries from 41 to 12 in order to rebuild Daewoo. However, by August 1999, the debts of the 12 companies of Daewoo Group exceeded 86 trillion won (about 8 won to 1 US dollar), while the total assets were less than 25 trillion won. Due to insolvency and helplessness, the plan of independent reconstruction of Daewoo failed to be realized. In November 1999, Chairman Jin Yuzhong decided to resign. The general managers of 12 companies under Daewoo also resigned. Daewoo Group's problems are handled by creditor banks and the government. At this point, Daewoo Group, an unsinkable aircraft carrier, has begun to sink, and the development myth of Daewoo Group built by Jin Yuzhong in his life has been completely shattered and ended.

In order to deal with the aftermath of Daewoo Group, the South Korean government adopted the method of slowly disintegrating Daewoo. If the subsidiaries of Daewoo Group go bankrupt one after another, the creditor's rights of not only South Korea but also foreign banks will become bad debts, which may cause financial turmoil.