Yongmaan Park discusses the forces that changed the company’s core business and led to South Korea’s largest foreign acquisition.
September 2008 Dominic Barton and Clayton G. Deutsch
The conglomerate Doosan survived corporate and regional crises in the 1990s to emerge a decade later as one of South Korea’s leading global businesses. A debt crisis that peaked in 1996 forced the family-run chaebol to restructure drastically—just before a financial crisis swept through much of Asia. The effort set in motion radical changes that transformed Doosan from a consumer goods company into one of the world’s leading industrial- and construction-equipment manufacturers.
In 2007, Doosan Infracore, the group’s construction-equipment arm, orchestrated the biggest foreign acquisition by a South Korean company. It bought Bobcat, the world’s largest maker of compact construction equipment, along with smaller units, from Ingersoll Rand for $4.9 billion. The man behind the globalization effort is Yongmaan Park, Doosan Infracore’s chairman, who has brought to Doosan some of the most progressive approaches to business and leadership development.
Started by Park’s grandfather, in 1896, with a single store in Seoul, Doosan rapidly moved into beer and later into other beverages. By the late 20th century, it was South Korea’s leader in a broad range of them—from soft drinks to dairy to whiskey—and active in packaging, bottle caps, and advertising as well. Following the Asian financial crisis (known locally as the IMF1 crisis), Doosan’s top management, including Park, surveyed the landscape and chose a drastically different path for their company.
In an interview with McKinsey’s Dominic Barton and Clay Deutsch at Doosan Tower, in Seoul, Park discussed the group’s turmoil and transitions, as well as its aspiration to be a global player in the infrastructure-support industry.
Yongmaan Park
Education
* Graduated with BA in business administration in 1978 from Seoul National University
* Earned MBA in 1982 from Boston University
Career highlights
Doosan Infracore
* CEO and chairman (2007–present)
* CEO and vice chairman (2005–07)
Doosan Heavy Industries and Construction (2005–present)
* Vice chairman
Doosan Corporation (2005–present)
* Vice chairman
Fast Facts
* Received Silver Tower Industrial Award (2000)
* Named “Best CEO in Korea” by Maekyung Economy (2001)
* Avid photographer and athlete
* Awarded Order of Civil Merit of Spain (2003) in recognition as Chairman of Korea–Spain
* Economic Cooperation Committee (2000–present)
The Quarterly: Even before the financial crisis hit Asia, in the late 1990s, Doosan faced its own crisis. What happened?
Yongmaan Park: By the end of the 1980s, we dominated all our sectors. We had about a 70 percent market share in beer, 50 percent in soft drinks, and about 70 percent in whiskey. But then several things happened. The Korean market went through another boom. People started spending more money, trying to enjoy their lives. At the beginning of the 1990s, we were busy adding capacity to meet that demand, and we borrowed heavily to support our expansion. Most Korean companies were doing the same. That’s how Korean companies ended up with debt-to-equity ratios of 300 percent or even more.
Then, competitors attacked us in many of our industries, and we were not ready. Our management emphasis had been on adding capacity, not on sales and marketing or preparing ourselves for competition. Our competitors started winning the battle. Suddenly, our revenue was not enough to support our profit expectations or our debt. By 1996, our annual negative cash flow was 940 billion won2 out of 3 trillion won in revenues. We were literally bankrupt at that time—two years before the IMF crisis hit the country. We were in deep trouble, and we knew it would just get worse.
