According to company sources on September 2, it decided to increase the capital after the market was closed on August 29.(image:Woongjin Group)
SEOUL, Sep. 3 (Korea Bizwire) – Woongjin ThinkBig is betting big on a new “book club” business. The company increased its capital by 35 billion won on August 29 in order to use the fund to invest in the book club service introduced just last month. Given it had streamlined a number of new businesses of late, this is an unusual move.
Since Woongjin ThinkBig’s parent Woongjin Group filed for bankruptcy and went under court receivership, Woongjin ThinkBig has become by far the most important unit within the group, which makes the latest capital increase more noteworthy.
According to company sources on September 2, it decided to increase the capital after the market was closed on August 29. The per-share price will be 6,160 won, with the total volume of the capital increase set at 35.1 billion won. The book club is a service to allow the member to get 300 e-books on the Galaxy Tab 4 10.1 model at the cost of 100,000 won a month. As the member gets a free device in exchange for signing up for a long-term service for a few years, it is a form of rental service.
An industry official commented, “Due to the special nature of the rental business, it takes a lot of initial investment until a member stays with the service for a certain period of time. Most of the fund raised from the capital increase by Woongjin ThinkBig will go to paying for the initial investment.” Indeed, the book club has been the center of attention within the group. Yoon Seok-geum, Woongjin Group chairman, has visited the company every week to preside over weekly meeting at the beginning of the book club project development stage.
The circumstances surrounding Woongjin ThinkBig are not so easy to overcome. Woongjin Group, once ranked as one of the top-30 business groups, has shrunk to a mid-level conglomerate after handing over highly profitable units such as Woongjin Coway, Woongjin Chemical, and Woongjin Food. The revenue share of Woongjin ThinkBig is currently as high as 60 percent within the group.
Nonetheless, ThinkBig’s sales revenue has declined for the past several years. The revenue peaked at 865.1 billion won in 2010, followed by 648.8 billion won last year. In the first half of this year, it was 319.6 billion won, down 4.3 percent from the same period last year. For this reason, analysts commented this is a bet that will make or break the group.
In addition, the book club business will be the testing ground for Yoon Hyung-deok, the eldest son of the chairman who joined Woongjin ThinkBig this year as the head of the new business promotion following the 4-year sentence of his father for embezzlement in relation to funneling funds to affiliate companies.
Some in the industry are skeptical whether e-book business would be successful in Korea. Already there are so many e-book ventures that failed after offering free devices in exchange for a long-term contract. As the nickname of Yoon Seok-geum “the genius of door-to-door sale” suggests, it remains to be seen whether his genius will make the difference this time again.
By Sean Chung (schung10@koreabizwire.com)
