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Date [ 2008-09-22, 15:50 ]

The Dong-hwa Group crashed spectacularly and no one expected it to survive. But like the legendary phoenix, it has spread its wings again in a new place, under a new name.
 



(Kuala Lumpur=Koreanpress) by John Kim = The staff at Upeck, Indonesia are busting with pride. They have just received a long order, a very, very long order. It stretches from Vivork, Russia to Gryfsbalt in Germany.

And the order? To build an ocean pipeline that will link these two spots through the Baltic Sea for a distance of 2,500 km, making it the longest in the world.

  
If Upeck is feeling on top of the world, its parent company, the Korindo Group, is basking in a glow of quiet satisfaction. For a company that was battered flat to the ground and pushed out of South Korea, the success of its affiliate vindicates all that Korindo had to undergo.

  
They say politics is a dirty game and Korindo was unfortunate to be caught in the middle of it.  Back in the 70s there was no Korindo Group. Instead there was the Dong-hwa Corporation. Its main line of business was trading in timber. From its 18-storey headquarters in Ul-ji-ro Ib-gu, and with a staff count of 800, it traded with important timber producing countries.

  
The corporation was in the midst of winding up its timber imports from the Philippines and Malaysia, with the intention of concentrating in Indonesia, when its world came crashing down. In March 1974, the National Police Agency raided the offices of Dong-hwa. Ten staffs were hauled away without explanation and all chief executives, including the President and Director, were put behind bars.

  
Kim Hyung-wook, the General Manager of the Korean Central Intelligence Agency, denounced the then President, Park Jung-hee, from the safety of the United States. To further rub salt in, he came out with his memoirs which carried unflattering remarks about Park. And Dong-hwa’s crime? Its Vice-President, a friend of Kim Hyung-wook,   had extended him a political fund. The Park regime did not take kindly to this and so brought the axe down on Dong-hwa. In the melee, the corporation’s banker, the Han-il Bank cancelled a USD200 million bill of settlement. For the first time Dong-hwa was unable to honour one of its bills. 

  
Those in the industry were certain that this was the end of Dong-hwa. But Fate had a trump card called the Goa Commercial Company. Based in Nagoya, Japan, it had done a large number of business transactions. Now it came forward with the proposal of extending USD13 million for the re-establishment of an office and the purchase of equipment. In return Goa would hold shares in the new company with Dong-hwa having the option of a buy-back in full. At that time, it also suggested Dong-hwa leave South Korea and move to Hong Kong.

  
That suggestion and the financial offer were taken up. But there was still a lack of working capital. CEO, Seung Eun-ho, going very much against his grain, requested Goa to open a Red Cross Letter of Credit .It would give Seung the opportunity of withdrawing 80% of capital with another bill of credit. Goa accepted this proposal as well. After 4 years, the CEO re-paid all the money borrowed from Goa and retrieved his shares as well.

  
Dong-hwa began its life in Hong Kong as the Korindo Group. In time it found its main focus was the timber industry. The decision was made to move again, this time to Indonesia in 1969. It concentrated on the pulpwood industry, producing plywood and paper. Very soon, close to thirty affiliated companies were established with total sales reaching USD 8 million. Now that the scramble for alternative fuels has begun, Korindo has turned its attention to the palm oil industry. The profits have rolled in, with 2007 bringing in a profit of USD34 million from 1,5000ha.

  
You would think after Dong-hwa and South Korea, the corporation would stay away from politics. Seung revealed otherwise."It was inevitable that a cozy relation be developed between politics and business. We took care of President Suharto’s government officers and soldiers and were the main reason we escaped unscathed when the 1991 racial riots began. While Indonesian marines guarded our company, the Chinese and Japanese closed their businesses and ran. In the aftermath, our business boomed as word spread about our rock-bottom stability, even during periods of crisis.

  
Today Korindo is hale and hearty. It has forested land as big as Choong-chung-buk-do in Korea and grows eucalyptuses in a controlled manner. It has also gone from the mere exporting of palm oil into R & D of its own for the extraction of palm oil itself as a bio-diesel fuel. Its 30 different businesses deal in timber, customs clearance, shipping and others. The only business that failed was footwear. In the beginning it was profitable but wore out when cheap Chinese shoes came in.

  
Upeck was created in a spirit of rivalry. Korindo went into partnership with the Sin-ho Group just before the economic crises of 1997. Seung explained further. “They got into trouble and I fully took over the business.  Even though this company was unprofitable for 7 years, and quite a problem for me, I hung on and put it in cold storage. But when we lost in a competitive bid with Taiwan for orders, I decided to swing into real action.  So we took over a French pipe coating company, ranked as the second in the world, at 28 million Euros. It would have been impossible to secure the ocean pipeline order between Russia and Germany without this company.” He was of course referring to Upeck.

  
Nothing creates success like success. Seung also said that there is a good possibility of receiving another order for the construction of a huge ocean gas pipeline in South America. Meanwhile the Korindo Group grows from strength to strength.  It has now embarked into the heavy and wind power industries. For the former, the production of construction trucks and buses with Hyundai Motor is in the pipeline. Next, with new capital funds secured for the wind power industry, Korindo which was once Dong-hwa, is set to rise once again, like the proverbial phoenix. / KP
 

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