Success Happy

Helmet firm seeks ubiquity on city streets

Summary: Hongjin HJC Company Ltd is decidedly unique among the lesser known yet highly successful small and midsize companies dubbed hidden champions Whereas most of these firms manufacture inconspicuous products like parts and materials the company known simply as HJC produces a consumer good that can be seen all over the streets of Seoul and other cities across the world motorcycle helmets This fact hasn t escaped HJC Director Kim Yong hae who claims that the company is the only small or midsized Korean consumer focused firm that leads its industry from a global perspective However HJC isn t exactly a hidden company in the purest sense Its logo is plastered on millions of motorcycle helmets across the world serving as a mobile advertisement It has developed a solid reputation in the biker community over the past four decades It has made it into the living rooms of everyday Koreans appearing in the television program Secrets of Creating Myths which aims to introduce viewers to rising local companies and in a public service commercial advocating sound labor relations In 2004 former President Kim Dae jung even paid a visit to the company s Yongin factory after the government selected HJC as an exemplary medium sized enterprise Still the company isn t exactly a household name particularly among those who have never set foot on a motorcycle and it certainly doesn t generate the kind of press coverage of larger firms HJC s roots date back to 1971 when it was founded as a company that manufactured the inner layers of helmets Three years later it branched out and started to produce its own motorcycle helmets We made every effort to take the No 1 position in the domestic market said Hong Whan ki founder and honorary president of HJC And that is exactly what it did grabbing the lead in sales of motorcycle helmets in Korea by 1978 But the market was relatively small and HJC turned its attention to larger opportunities in the United States where motorcycles were used as a form of leisure rather than for delivery services as in Korea Exporting helmets to another country is not as easy as it might seem The company had to go through a fair share of trial and error when developing helmets for the U S market as there are differences in the sizes and shapes of Korean and American skulls The company also had to pass relatively strict safety standards required in the U S These hurdles were eventually cleared only to face others Unlike other Korean small and midsize enterprises tapping overseas markets HJC insisted on selling helmets under its own brand rather than letting other companies stamp them with their own names The biggest helmet company in the U S at the time offered to place an order worth $1 million under the condition that it could sell the products under its own name HJC refused leaving the money on the table The move set the course for HJC s overseas strategy to this day as it continues to ensure that its products are sold under its name The company established itself in the U S by working with local distributors and getting in on the ground floor by doing business with dealers and retail shops selling directly to consumers Rather than give exclusive sales rights to a single large buyer HJC selected several companies in different regions of the United States Today 97 percent of HJC s sales revenue comes from exports and it controls 35 percent of both the North American and world markets Like most companies in the corporate world HJC has had to navigate through its fair share of potholes and speed bumps along the way It hasn t always been a smooth ride competing overseas The company has battled particularly fierce competition in Europe where locally based firms and Japanese companies still hold a dominant position To further penetrate the market which is characterized by the demand for high quality helmets HJC is coming up with new products One of these is a transformer helmet that can be easily modified for different uses such as high speed racing cruising and extreme sports The company traveled down a particularly bumpy stretch of road in 2008 when it posted a net loss of 132 3 billion won $115 2 million despite racking up sales of 92 3 billion won and operating profits of 6 7 billion won HJC was hit hard by losses tied to currency derivative contracts when the value of the won plunged against the U S dollar Hundreds of small and midsize local firms suffered steep losses tied to similar contract called Knock In Knock Out KIKO agreements The KIKO deals put HJC in a precarious position financially as the company found itself buried under a mountain of debt But it was able to work out a deal with the bank that offered it the currency contracts agreeing to a 120 billion won $104 64 million debt for equity swap last fall HJC was able to seal the deal because it had solid cash flow and sizeable exports company officials said As a result HJC had to give up roughly a quarter of its equity to the bank which now ranks as its second largest shareholder Previously control of the company had been concentrated to a few key shareholders The move ironically could give the company more name recognition With the bank having a major say in the direction of the firm an initial public offering is a high probability We will go public at a certain point since the bank needs to sell their stakes in the future Hong said By Suh Kyung ho ebusiness joongang co kr Copyrights ⓒ JoongangIlbo Joins com All rights reserved Hongjin HJC Company Ltd is decidedly unique among the lesser known yet highly successful small and midsize companies dubbed hidden champions Whereas most of these firms manufacture inconspicuous products like parts and materials the company known simply as HJC produces a consumer good that can be seen all over the streets of Seoul and other cities across the world motorcycle helmets This fact hasn t escaped HJC Director Kim Yong hae who claims that the company is the only small or midsized Korean consumer focused firm that leads its industry from a global perspective However HJC isn t exactly a hidden company in the purest sense Its logo is plastered on millions of motorcycle helmets across the world serving as a mobile advertisement It has developed a solid reputation in the biker community over the past four decades It has made it into the living rooms of everyday Koreans appearing in the television program Secrets of Creating Myths which aims to introduce viewers to rising local companies and in a public service commercial advocating sound labor relations In 2004 former President Kim Dae jung even paid a visit to the company s Yongin factory after the government selected HJC as an exemplary medium sized enterprise Still the company isn t exactly a household name particularly among those who have never set foot on a motorcycle and it certainly doesn t generate the kind of press coverage of larger firms HJC s roots date back to 1971 when it was founded as a company that manufactured the inner layers of helmets Three years later it branched out and started to produce its own motorcycle helmets We made every effort to take the No 1 position in the domestic market said Hong Whan ki founder and honorary president of HJC And that is exactly what it did grabbing the lead in sales of motorcycle helmets in Korea by 1978 But the market was relatively small and HJC turned its attention to larger opportunities in the United States where motorcycles were used as a form of leisure rather than for delivery services as in Korea Exporting helmets to another country is not as easy as it might seem The company had to go through a fair share of trial and error when developing helmets for the U S market as there are differences in the sizes and shapes of Korean and American skulls The company also had to pass relatively strict safety standards required in the U S These hurdles were eventually cleared only to face others Unlike other Korean small and midsize enterprises tapping overseas markets HJC insisted on selling helmets under its own brand rather than letting other companies stamp them with their own names The biggest helmet company in the U S at the time offered to place an order worth $1 million under the condition that it could sell the products under its own name HJC refused leaving the money on the table The move set the course for HJC s overseas strategy to this day as it continues to ensure that its products are sold under its name The company established itself in the U S by working with local distributors and getting in on the ground floor by doing business with dealers and retail shops selling directly to consumers Rather than give exclusive sales rights to a single large buyer HJC selected several companies in different regions of the United States Today 97 percent of HJC s sales revenue comes from exports and it controls 35 percent of both the North American and world markets Like most companies in the corporate world HJC has had to navigate through its fair share of potholes and speed bumps along the way It hasn t always been a smooth ride competing overseas The company has battled particularly fierce competition in Europe where locally based firms and Japanese companies still hold a dominant position To further penetrate the market which is characterized by the demand for high quality helmets HJC is coming up with new products One of these is a transformer helmet that can be easily modified for different uses such as high speed racing cruising and extreme sports The company traveled down a particularly bumpy stretch of road in 2008 when it posted a net loss of 132 3 billion won $115 2 million despite racking up sales of 92 3 billion won and operating profits of 6 7 billion won HJC was hit hard by losses tied to currency derivative contracts when the value of the won plunged against the U S dollar Hundreds of small and midsize local firms suffered steep losses tied to similar contract called Knock In Knock Out KIKO agreements The KIKO deals put HJC in a precarious position financially as the company found itself buried under a mountain of debt But it was able to work out a deal with the bank that offered it the currency contracts agreeing to a 120 billion won $104 64 million debt for equity swap last fall HJC was able to seal the deal because it had solid cash flow and sizeable exports company officials said As a result HJC had to give up roughly a quarter of its equity to the bank which now ranks as its second largest shareholder Previously control of the company had been concentrated to a few key shareholders The move ironically could give the company more name recognition With the bank having a major say in the direction of the firm an initial public offering is a high probability We will go public at a certain point since the bank needs to sell their stakes in the future Hong said By Suh Kyung ho ebusiness joongang co kr Copyrights ⓒ JoongangIlbo Joins com All rights reserved

Image Dimensions: 500 x 274