Chairman Sohn Kyung-shik of CJ Group.

CJ Group is stepping up efforts to improve profitability by shifting the 2020 management paradigm from quantitative growth to qualitative growth.

The group plans to take preemptive steps to overcome a management environment crisis, caused by the sagging of the Korean national and global economies with profitability-based growth through improving of financial structure, a top priority task.

CJ Group has so far carried massive investments to realize the vision “World Best CJ,” calling for catapulting more than three businesses to the global No. 1 position.

In his New Year’s message delivered at an in-house public address system on Jan. 2, Chairman Sohn Kyung-shik said, “A shift into innovative growth is a process of preparing for a full-fledged global growth down the road.”

He called for the strengthening of R&D related to core businesses, developing new technologies, and securing gifted manpower to ramp up challenging, unmatched capabilities.

The group carried out big M&As like the acquiring of the U.S. frozen food maker Schwan’s Company with a focus on core business areas such as food, bio, logistics and content expand global influence and accelerate growth.

Now that the group has laid foothold to become a global company, each business has turned to the improving of financial soundness and the strengthening of core capabilities and management fundamentals.

The group will focus on maxing out profitability of the conventional businesses and substantiating management fundamentals to transform subsidiaries into top-tier companies.

All CJ group subsidiaries, including CJ Corp. the holding company of CJ Group, and CJ Cheiljedang and CJ Logistics are restructuring inefficient and unprofitable operations and manpower with the goal of refraining from outward expansion and maxing out profitability.

CJ Cheiljedang, entering into an emergency management mode, are disposing of properties, and the company is conducting manpower relocation at sagging food service businesses.

The steps are taken to fix the financial burden, caused by soaring borrowings related to M&As on top of performance deterioration, caused by sagging domestic demand.

CJ Cheiljedang saw operating profit in the third quarter 2019 reducing 15 percent over the same period of the previous year and net borrowings surging to 11 trillion won, 3 trillion won more than 7.7 trillion won at the end of 2018.

Of late, CJ Cheijedang decided to fluidify a real estate property in Gayang-dong, Seoul, worth 850 billion and a site in Guro-gu worth 230 billion won and hand CJ Manpower Center building over to CJ ENM.

If all deals are done as planned, the company is expected to secure more than 1.1 trillion won. CJ Cheiljedang, warned of the ever-worsening financial situation, is expected to give a sigh of relief.

CJ Group is expected to concentrate its capacities on business areas such as food, entertainment, and logistics.

The group plans to expand global businesses based on unmatched capabilities in Korea, strengthen fundamentals and profitability through constant structural reform to brace for recession and long-term low growth rate.

CJ Group Chairman Lee Jay-hyun has constantly maintained choice & concentration strategies since 2017 when he returned to management.

In a CJ Group’s global management strategies meeting in which he presided over in the United States in 2018, Chairman Lee stressed the need for constant restructuring of underperforming businesses and the future of the group depending on global expansion.

A CJ Group official said all group subsidiaries are expected to improve fundamentals by securing the competitiveness of mainstay businesses to achieve a qualitative growth this year.

The year 2020 is a year in which management paradigm is shifting and a significantly important year to secure unmatched capabilities and shore up foundation for innovative growth, he added.

A view of CJ Group building in Jung-gu, Seoul. (Photos: CJ Group)