July 2018 - Yongin Citizen Newspaper > Media Room

Dongsung Foods Co., Ltd., located in Yubang-dong, Cheoin-gu, Yongin, is as well-known nationwide for its product brands as its company name. "Hyangmiam," a restaurant brand specializing in udon noodles that has dominated the highway rest area market for over 20 years, is directly managed by Dongsung Foods. The company's brand is also found in schools. The noodle ingredient "Singgeun Bapsang" significantly reduces sodium content, pioneering a new era for noodles for growing youth and supporting their health.

The company's advancements in food distribution are also generating buzz within the food industry. Dongsung Foods' market share is rapidly increasing across rest areas, large catering companies, restaurants, and tourist condominiums nationwide. In the military sector, Dongsung Foods is also the leading noodle supplier in Korea. Since 2005, it has supplied to the entire military, ensuring the health of soldiers with a full range of noodles, including naengmyeon (cold noodles), jajangmyeon (black bean noodles), udon noodles, and jjolmyeon (spicy noodles with spicy sauce).

Recently, the company has been accelerating its expansion into the global market. Building on the success and pride in quality achieved domestically, the company is now sharing the taste of Korea with its Japanese counterparts, the birthplace of udon, and spreading it to the world. Following expansion into the Americas, including New York and Chicago, Australia, the Middle East, and Hong Kong, the company is now knocking on the door of the Chinese market.

# The Challenge of a "Second-Generation CEO" Leading the Noodle Food Industry

Dongsung Foods Co., Ltd. is a leader in the food industry outside of large conglomerates, achieving steady growth and pioneering new markets. The company's CEO is a young leader, Lee Yong-taek (44). "I started on the front lines of management in 2002. It was a terrifying experience, navigating a pitch-black tunnel." There was a compelling story behind this. At the tender age of 28, CEO Lee Yong-taek took over the family business after the sudden death of his founding father due to a chronic illness. He was still married. Furthermore, he had proudly joined Doosan Group a little over a year ago and was already learning the ropes.

Numerous obstacles and challenges awaited him as a "second-generation CEO." Founded in 1984 as "Dongsung Flour Mills," it was incorporated three years later and expanded its market share. However, it was like a sailboat, rocked by even the slightest storm.

"Even before I took over the company, there was no good news. Rumors of bankruptcy and other internal and external noise kept coming in. In fact, I didn't have a plausible sense of mission to save the company, create jobs, and contribute to the public good. It was a very practical matter that left me with no other option." My late father didn't have a single savings account. The house he lived in was already collateralized by a bank. If the company failed, the house would naturally be taken over by the bank, and I would be left homeless. I knew that would be truly devastating. I changed my mind.

I majored in economics and business administration in college and had some brief experience at a large corporation, but the realities of corporate management were quite different. I didn't rush. I carefully studied the company. I learned from the previous executives and experienced employees who had supported the company, one by one. A few senior executives with company loyalty provided the foundation. Gradually, a glimmer of hope for a comeback began to appear.

First, I invested in people. The limitations of small and medium-sized businesses stemmed from their people. With inadequate compensation, I couldn't prevent talented employees from leaving. Despite management challenges, we reorganized the organization and provided appropriate compensation.

The second change involved facility investment and technological innovation. "The core of the food industry is consumer trust in safety. However, for small and medium-sized food companies, achieving perfection is difficult. Billions of won in facility investment is required. The will to take that risk and the ability to execute are the deciding factors."

Dongsung Foods Co., Ltd. was the first food manufacturer to obtain HACCP certification, which certifies the hygiene and safety of the entire manufacturing process for small and medium-sized Korean noodles, rice cakes, and sauces. While others failed to recognize the need, they established management standards across all areas and pursued significant internal innovation. After a year and a half of intense, anxious struggles and significant costs, they finally achieved certification. Dongsung Foods and CEO Lee Yong-taek contributed to elevating the perception of small and medium-sized Korean food companies. Naturally, the safety and reliability of the company's products increased, leading to a surge in sales. It took such arduous effort and determination to become the leading company in the domestic noodle and rice cake market.

#Food Manufacturing Company First in Korea to Obtain HACCP Certification

Meanwhile, Dongsung Foods was the first mid-sized and small-sized food company to adopt a cloud-based enterprise resource planning (ERP) system. This integrated individual operational systems for production, sales, human resources, accounting, finance, cost accounting, and fixed assets into a single system. Dongsung Foods was one of the first SMEs to adopt ERP in 2004, a system that had previously been adopted only by large food companies like Doosan. This led to a rapid infrastructure innovation in the food industry, garnering industry attention.

CEO Lee Yong-taek, a young man in his 20s who unexpectedly entered the management ranks, has now become a seasoned manager, leading the company for 16 years. The company has also achieved significant growth, leading the company to set a new goal: achieving annual sales of KRW 100 billion by 2020, solidifying its position as a solid mid-sized company. "In the food industry, large corporations need to achieve sales in the trillions. They don't have hundreds of billions. For mid-sized companies, the ultimate goal is 100 billion won. This is a time when a leap forward is necessary."

Of course, reaching that goal isn't easy, so they're developing meticulous measures. They believe that achieving qualitative growth from quantitative growth requires a balance between software and hardware. Talent development is particularly crucial. "My slogan is 'Let's work with smarter employees.' Our company is as big as our employees. In the past, we had no choice but to let go of valuable employees, but now, fortunately, we have the foundation to retain them."

# A Breeze of Powerful Small Businesses Creating "Happiness" and Selling "Trust"

With the confidence and passion that came with becoming the first food manufacturing company to achieve HACCP certification, CEO Lee Yong-taek is working to address the food industry's weaknesses, which include lower operating profits compared to other industries. He is shifting his focus to pursuing higher value-added businesses. He is expanding his clientele beyond highway rest stops, which were his primary customers, to include department stores and discount stores.

By moving beyond the traditional B2B (Business-to-Business) business model, he has begun targeting the business-to-consumer (B2C) market. While previous transactions were primarily driven by sales, the company's strategy is to establish itself in the general distribution market by enhancing brand awareness and value, enabling consumers and customers to recognize and purchase Dongsung Foods products.

Expanding high-value-added businesses is also a key pillar of the growth strategy. The food industry, however, is characterized by low margins due to challenges and instability in raw material supply, such as soaring grain prices. Accordingly, the company plans to expand its business into high-value-added sectors, such as materials and food additives, as future industries.

CEO Lee Yong-taek has successfully overcome the burden and social perception that "second-generation managers" are less likely to outperform their predecessors, achieving a soft landing. He is a CEO with exceptional leadership, prioritizing people and fostering an environment that fosters autonomy and creativity, which he has leveraged to drive the company's growth. Like Dongsung Foods' corporate philosophy of creating "happiness" and selling "trust," CEO Lee Yong-taek, a young leader who looks around and practices support, offers a breath of fresh air for small and medium-sized enterprises in the Yongin region.