Cuckoo, which has built a business centered on small appliances such as rice cookers and water purifiers, has begun to target the mid-sized and large appliance markets.
Last November, Cuckoo unveiled its first kimchi refrigerator since its founding. Previously, in June, it launched its first freezer and recently released vacuum cleaners as it diversified its business. Through this, Cuckoo plans to step up as a 'comprehensive corporations.'
Currently, Cuckoo is led by Gu Bon-hak (56), the eldest son of founder Gu Ja-shin (84), who is the chairman of Cuckoo Holdings. Following the launch of 'Cuckoo 2nd generation' Gu Bon-hak in 2006, the company is now fully entering the mid-sized and large appliance business after expanding its rental business.
◇ Following small home appliances to mid-sized and large appliances... the success of 'WINIA is unclear'
Gu's business diversification strategy is his second after entering the rental and home appliance market in the 2010s. After succeeding his father, Gu Ja-shin, as the representative of Cuckoo Electronics (formerly Seongkwang Electronics) in 2006, he jumped into the home appliance rental market by launching water purifiers in 2010. He judged that growth was limited with rice cookers alone and began restructuring the Cuckoo business.
Subsequently, in 2017, Gu separated the rental and home appliance business for water purifiers and air purifiers to establish CUCKOO Homesys. At the same time, he separated Cuckoo Electronics, which deals with kitchen appliances like rice cookers, and established Cuckoo Holdings. This is how the current structure of Cuckoo was built, with Cuckoo Electronics and CUCKOO Homesys as its two core subsidiaries.
Gu's first diversification in the rental business was successful. Dividing the company into two enhanced specialization in its existing core businesses, rice cookers and home appliance rentals. In particular, as the domestic rental market for water purifiers and air purifiers skyrocketed, CUCKOO Homesys made significant strides.
As of 2023, CUCKOO Homesys has grown into a mid-sized corporation with sales of 954.5 billion won and an operating profit of 144.8 billion won. Cuckoo Electronics also recorded sales of 700.6 billion won and an operating profit of 76 billion won.
The market is currently focusing on whether Gu's second diversification into the kimchi refrigerator market, where large corporations are competing, will succeed.
First of all, the assessment is that Cuckoo's entry into the kimchi refrigerator market on November 7th was timely. With the sluggishness of WINIA, the top brand producing kimchi refrigerators in the domestic market, market dynamics are changing, making it an optimal time to target.
In particular, Cuckoo targeted single-person and two-person households by launching a mid-sized 1-door convertible kimchi refrigerator priced between 500,000 and 800,000 won. This is a strategy to avoid the large premium market mainly focused on by WINIA, Samsung Electronics, and LG Electronics.
However, Samsung Electronics and LG Electronics have continuously released kimchi refrigerators equipped with AI functions, as well as products priced under 1 million won, leading to analysis that it may not be easy for Cuckoo to succeed in the kimchi refrigerator market.
WINIA, which competed with Samsung and LG Electronics in the kimchi refrigerator market, faced a crisis due to the DAEYU WINIA Group's excessive expansion in home appliances and liquidity issues. Subsequently, the crisis spread to the entire group.
Ultimately, companies including WINIA, WINIA Electronics, WINIA Electronics Manufacturing, WINIA D-Lab, and DAEYU Plus applied for rehabilitation procedures. Former DAEYU WINIA Group Chairman Park Young-woo has been indicted for allegedly failing to pay about 11.4 billion won in wages, severance pay, and various allowances to 251 employees at the WINIA Electronics Manufacturing plant.
An official from the home appliance industry noted, "There is a clear difference between the home appliance rental market, which Cuckoo successfully entered centered on mid-sized corporations, and the kimchi refrigerator market dominated by large corporations. It will take at least a year and up to two to three years to determine Cuckoo's success in the mid-sized and large appliance business." The official continued, "It is also important to see what new strategies Cuckoo will employ, such as enhancing specialization through partitioning like CUCKOO Homesys did in the past."
◇ Gu Bon-hak, becomes largest shareholder… completion of management succession
After the transition to a holding company system, Gu Bon-hak completed the management succession by receiving shares of Cuckoo Holdings and CUCKOO Homesys from Chairman Gu Ja-shin in 2022. Gu currently holds a 45.11% equity stake, making him the largest shareholder. Cuckoo Holdings owns 100% of Cuckoo Electronics and 40.55% of CUCKOO Homesys.
Gu's younger brother, Gu Bon-jin, also holds a 15.22% equity stake in Cuckoo Holdings. Gu Bon-jin is not involved in Cuckoo's management but is known to own 100% of Zenis, an affiliate of Cuckoo Holdings, and manage the company. Zenis manufactures paints used in kitchen products like rice cookers and frying pans and also operates a real estate rental business, recording sales of 36.1 billion won and operating profit of 6.7 billion won in 2023.
Gu Bon-hak's eldest son, Gu Kyung-mo (28), also holds a 3.15% equity stake in Cuckoo Holdings. He does not currently work at Cuckoo Holdings or related companies such as Cuckoo Electronics.
Meanwhile, although Chairman Gu serves as the representative of Cuckoo Holdings, he has effectively stepped back from active management. He is known to participate in management only to discuss important company matters with executives like Gu Bon-hak.