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 domestic small and midsize corporations. Members do more than just serve as a consolidation point between domestic corporations and overseas buyers; they step in directly as buyers and investors 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" planned with bonuses secretly saved from 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 his companies 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 1982, he moved to the United States with his parents. In an era when K-culture was not as prominent as it is now, the racism and cultural barriers he faced there were considerable. Having spent his childhood in Korea, his English was poor, and adapting to an unfamiliar culture was not easy.
He ended up dropping 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 professors assigned work, he often missed deadlines because he did not understand them properly. Choi said, "I walked off campus in tears and started working at a variety store, thinking I had to earn money before studying," and added, "After a few months of throwing myself into the work, I gained confidence in English, and I went back to studying with the mindset that 'if I can't even learn English here, it's over.'" He later earned dual degrees in computer and electrical and electronic engineering.
After graduation, he put his major to use and found a job as an engineer. But corporate life was not as interesting as he had imagined. What caught his eye then was the beauty business of a friend he had known since kindergarten in Korea. Choi said, "I figured I could start a business with relatively small capital," and added, "I planned to first build a base with retail, which has good cash flow, and then expand into a technology-based business that leveraged my major."
The beauty retail business 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 both a buyer and an investor for domestic small and midsize corporations. Choi said, "Through the investment firm, we are investing in promising corporations or pursuing 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 searching for new business opportunities. The following is a Q&A with him.
— What led you to immigrate to the United States?
"In 1982, right after graduating from high school in Korea, I went to the United States with my parents. At the time, experiencing racism there was not uncommon, and it took a mental toll. But what was even harder was the cultural barrier. Because I lived in Korea until becoming an adult, I struggled a lot to adapt to American society and the local culture."
— The language barrier must have been high as well.
"I dropped out after the first semester of college. My grades were very poor. I somehow managed reading and writing, but because I could not listen and speak, I often missed assignments without even realizing the professor had given them. Studying was so hard that I decided I had to earn money first. Not wanting to ask my parents for help, I worked as a clerk at a variety store on Broadway.
As I threw myself into the work, I gradually gained confidence in English. Then, with the thought that 'if I don't learn it now, it's over,' I went back to college and devoted myself to studying. In my four years of college, I only attended two parties. The first was when a friend invited me in my junior year, and the second was graduation. That's how intensely I lived."
— What led you to join World-OKTA, and what is your role?
"I am always looking for new enterprises. I joined to see if any World-OKTA members run such companies. World-OKTA also serves as a channel to hire talent in Korea. We can invite recommended talent to the local site, train them, and hire them. It is up to me to figure out how to use the playing field called World-OKTA. That is the ability of a business owner."
— Please introduce the enterprises you currently operate.
"We operate under 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 in a business somewhat removed from your college major.
"Right after graduating from college, I got a job as an engineer, using my major. It was when Dell computers were just taking off, and the PC market was growing rapidly. But I heard that a friend I had known since kindergarten had come to the United States earlier, left Lockheed Martin, and jumped into a beauty business run by a relative.
I went to see my friend, who was doing business in Omaha, Nebraska, and closely observed the operations. I saw it as a structure that could start solidly without large capital. I drew a big picture to earn seed money through the beauty business, which had good cash flow, and later expand into an IT business that incorporated my major."
— What gave you confidence in the beauty market?
"Beauty retail had a high return on investment (ROI). If we bought an item for $1, we could sell it in the store for $2–$3. Cash flow was good, and at the time, competition was not as fierce as it is now. We have never recorded negative growth since founding. Even during the Lehman Brothers crisis in 2008, the financial sector recognized our growth and stability to the extent that we could get unsecured loans. It also helped that we handled a wide range of beauty product lines, from shampoo and makeup supplies to wigs used by Black customers."
— How large are the corporations now?
"We currently operate more than 40 directly managed stores across North America, and we have about 550 employees in total. Franchise stores are also spread across the United States. Our combined annual revenue is about $300 million. We generate about $200 million from beauty and apparel retail distribution, about $80 million from PCS, the IT corporation, and about $24 million through the investment firm Lex Investment."
— As the business grew, you ended up applying your major.
"In college I mainly studied hardware, but I also studied software. At my first job, I handled computer networking. It is common technology now, but at the time it was cutting-edge. As I ran the business, I thought it would be good if we built and used our own advanced logistics and inventory management platform.
So four years ago, we began developing a proprietary inventory management system and introduced it in our beauty and fashion stores. That accumulated technical capability became today's PCS. We manage system operations and some development work in collaboration with outsourcing partners in Korea."
— What criteria do you value most in hiring and managing talent?
"Character comes first, no matter what. In interviews, I first ask candidates to be honest about the 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 those who know how to be considerate of colleagues. No matter how smart, a selfish person can ultimately harm the whole organization. Next are honesty and diligence."
— We heard your employee compensation system is unique.
"I think it is important to make employees truly feel solid financial rewards. If they feel they are being compensated more than others, they cannot 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 performers who are core talent. Some of them receive more in dividends than their salaries. However, we do not evaluate based only on short-term performance. We re-evaluate the top 10% every five years. It is not easy to find new outcomes in just one or two years. We 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 corporations to keep growing, I believe the money earned must be reinvested in the business and in people."
— What advice would you give to young Koreans who dream of starting a business?
"When I meet young Korean founders at global expos and the like, I sometimes get the impression that they are too impatient. Rather than metrics they can show right away, they often explain themselves only with future potential or future value.
Speaking candidly as a manager and investor, what matters in the investment market is ultimately proven results. Do not try to skip steps; breathe slowly and build proof, one by one, that you work in the market. Among the plans of some young founders I met, there were cases that looked flashy on the surface without sober market research. I want to tell them to master the basics and climb the steps with persistence."