The World Federation of Overseas Korean Traders Associations (World OKTA), made up of Korean businesspeople, is a global business network that supports the overseas expansion of Korea's small and midsize corporations. Members do more than just consolidation between domestic corporations and overseas buyers; they step in as buyers and investors themselves to help Korean corporations pioneer foreign markets. ChosunBiz highlights the challenges and success stories of those expanding Korea's economic domain around the world. [Editor's note]
Instead of buying the "dream car" he had planned to purchase by steadily saving the bonuses he received at work without telling his wife, he chose to start a business. He had $30,000 in hand at the time. The business, which began in beauty retail, expanded into fashion, information technology (IT), and investment, and the combined annual revenue of the companies he owns now reaches about $300 million (about 410 billion won).
This is the startup story of Chairman Eric Choi, who leads the BSW/PPF Group. After graduating from high school in Korea in 1992, he moved to the United States with his parents. In the days before K-culture had the status it does now, the racism and cultural barriers he faced there were formidable. Because he spent his childhood in Korea, his English was poor, and it was not easy to adapt to an unfamiliar culture.
He eventually dropped out of the State University of New York after the first semester. His grades were a mess because he could not understand English. Even when a professor assigned homework, he often missed the deadline because he did not fully understand it. Choi said, "I walked off campus in tears and decided I had to make money before studying, so I started working at a variety store," adding, "After a few months of throwing myself into the job, I gained confidence in my English, and with the mindset that 'if I don't even learn English here, it's over,' I went back to studying." He later earned dual degrees in computer science and electrical and electronic engineering.
After graduation, he got a job as an engineer, making use of his major. But corporate life was not as interesting as he thought. What caught his eye then was a friend's beauty business; they had known each other since kindergarten in Korea. Choi said, "I figured I could start a business with relatively small capital," adding, "I planned to first build a foundation with retail, which has good cash flow, and then expand into a technology-based business that leveraged my major."
The beauty retail venture he started that way led to fashion retail. He then drew on his engineering experience to establish a cloud-based IT corporation that could efficiently manage store inventory. He now sets aside part of the profits from each affiliate to run an investment firm and also serves as a buyer and investor for Korea's small and midsize corporations. Choi said, "Through the investment firm, we invest in promising corporations or carry out mergers and acquisitions (M&A)," adding, "We are preparing to enter the European market beyond North America."
ChosunBiz recently interviewed Choi in Madrid, Spain, where he was looking to find new businesses. The following is a Q&A with him.
— What led you to immigrate to the United States?
"In 1992, right after graduating from high school in Korea, I went to the United States with my parents. Back then, experiencing racism locally was not uncommon, and it took a heavy emotional toll. But the cultural barriers were even tougher. Because I had lived in Korea until I became an adult, I struggled a lot to adapt to American society and the local culture."
— The language barrier must have been high, too.
"I dropped out after just the first semester of college. My grades were terrible. I somehow managed reading and writing, but since I couldn't listen or speak well, I often passed by without even knowing the professor had assigned homework. Studying was so hard that I decided I should make money first. Not wanting to ask my parents for help, I worked as a clerk at a variety store on Broadway.
As I kept throwing myself into the work, I gradually gained confidence in English. Then, thinking 'if I don't learn it now, it's over,' I went back to college and devoted myself to studying. In four years of college, I only went to two parties. The first was in my junior year when a friend invited me, and the second was at graduation. That's how intensely I lived."
— Please introduce the businesses you are running now.
"We operate around four main pillars. In retail distribution, there is BSW, which sells beauty products, and SG, a fashion corporation that distributes clothing brands. There is also PCS (Pantheon Cloud Solution), a cloud solution corporation that manages the inventory of these retail corporations in real time, and Lex Investment, which handles asset management and investments."
— You started with a business somewhat distant from your college major.
"Right after graduating from college, I got a job as an engineer, making use of my major. It was when Dell computers were just taking off and the PC market was growing fast. But I heard that a friend I'd known since kindergarten had come to the United States earlier, left Lockheed Martin, and jumped into a relative's beauty business.
I went to Omaha, Nebraska, where my friend was doing business, and closely observed the operating process. I thought it was a structure that could be started solidly without large capital. I drew a big picture of earning seed money through the beauty business, which had good cash flow, and then expanding into an IT business that incorporated my major."
— What convinced you about the beauty market?
"Beauty retail was a market with a high return on investment (ROI). Typically, if you bought an item for $1, you could sell it in the store for $2 to $3. The cash flow was good, and competition was not as fierce as it is now. Since launching the business, we have never recorded negative growth. Even during the 2008 Lehman Brothers crisis, we were recognized for growth and stability to the extent that the financial sector extended unsecured credit. It also helped that we handled a wide range of beauty-related product lines, from shampoos and makeup supplies to wigs used by Black customers."
— How big is the corporation now?
"We currently operate more than 40 directly managed stores across North America, and the total number of employees is around 550. Franchise stores are also spread across the United States. Our combined annual revenue is about $300 million. About $200 million comes from beauty and apparel retail distribution, about $80 million from PCS, the IT corporation, and about $24 million in revenue through the investment firm Lex Investment."
— As the business grew, it seems you incorporated your major.
"In college I mainly studied hardware, but I also studied software. At my first job, I was in charge of computer-to-computer networking. It's common now, but at the time it was cutting-edge. While running the business, I thought it would be good if we built and used a sophisticated logistics and inventory management platform ourselves.
So, starting four years ago, we developed a proprietary inventory management system and introduced it to beauty and fashion stores. That accumulated into what is now PCS. We manage system operations and some development work in collaboration with outsourcing partner companies in Korea."
— What is the most important standard in hiring and managing talent?
"Character is absolutely the top priority. During interviews, I first candidly ask what compensation or environment they want from the company. Based on that answer, I judge what values and philosophy the person has. Even if someone is a bit less capable, I prefer people who can be considerate of colleagues. No matter how smart they are, selfish people can ultimately harm the entire organization. Next come honesty and diligence."
— I heard your employee compensation system is also unique.
"I think it's important to make employees clearly feel tangible financial rewards. When they feel they are getting more compensation than others, they can't help but immerse themselves in their work. Only then can management confidently demand performance.
In particular, we also grant company stock to the top 10% of high-performing core talent. Some of them even take home more in dividends than in salary. But we don't evaluate only on short-term performance. We re-evaluate the top 10% every five years. It's not easy to deliver new results in just one or two years. You need to give at least five years and wait so they can create new value."
— How do you operate the investment firm?
"We invest 10% of company profits every year. We use it to advance existing businesses, and we also invest in new businesses or promising corporations. If necessary, we consider mergers and acquisitions. In the end, for a corporation to keep growing, I believe you have to reinvest the money earned back into the business and people."
— What advice would you give to young Koreans who dream of starting a business?
"When I meet young Korean founders at global trade shows, I sometimes get the impression that they are too impatient. Rather than metrics they can show right away, many explain only with future potential or future value.
Speaking coldly as a manager and investor, what matters in the investment market is ultimately proven results. Don't try to skip steps; build evidence one by one, slowly and over time, that you can win in the market. Among the plans of some young founders I met, there were cases that looked flashy on the outside but lacked a sober market study. I want to say, build your fundamentals and climb the steps with perseverance."