– Promoting New Business by Discovering and Investing in Promising Startups
Hyundai Corporation, like other Korean and Japanese general trading companies, has consistently sought to diversify its business. In 2021, the company added electric vehicle parts and eco-friendly materials to its target businesses. This led to the construction of a joint factory in Indonesia with a Japanese auto parts company. In 2022, Hyundai Corporation selected a business to recycle secondary batteries and solar panels.
Up to this point, it’s not much different from other general trading companies. But this is not all. This year, the company is pushing a new business that is rarely seen in the trading industry: robotics.
On July 11, officials from 12 startups visited the headquarters of Hyundai Corporation located in Jongno-gu, Seoul. They came from promising startups with technologies related to robotics or recycling of waste plastics/batteries. They were applicants who came for an interview for the open innovation program jointly promoted by Hyundai Corporation and the Seoul Creative Economy Innovation Center. Hyundai Corporation screened them to select 4 to 5 winners.
This is the first time Hyundai Corporation engaged in this kind of open innovation program. This attempt can be interpreted as a signal for the company to start the new business in earnest. In fact, Hyundai Corporation selected robotics and recycling as strategic businesses to promote future profit generation.
Early this year, the company specified its robot business as “business related to robotics manufacturing, selling, and related parts of robotics for industrial and logistics purposes, etc.” as one of the target businesses in the company’s articles of incorporation. It seems that Hyundai Corporation is the only one among Korean or Japanese general trading companies in recent years that promotes robotics as a new business. Robotics is a field that Chairman Chung Mong-hyuck has shown great interest in for several years. In fact, Hyundai Corporation has been holding in-house lectures on the status and outlook of the robot industry.
However, this new business lacked specific plans or profit models. So, Hyundai Corporation chose a strategy of discovering and investing in promising startups. It seems to be the best choice to make for a general trading company without manufacturing workforce, technology, and facilities.
In this open innovation program, Hyundai Corporation is looking for startups with robot technology for manufacturing, service, or logistics purposes; robot parts/component technology; or AI technology to control robots.
Robotics Startups Sought by Hyundai Corporation
| Fields | Detailed Business and Technology |
|---|---|
| Robot Parts/Components | Technology applicable to robots for manufacturing, professional services, and logistics purposes Technology applicable to special environments |
| Service and Logistics Robots | Robot technology applicable to daily life, education, agriculture, fisheries, construction, etc. |
| AI | AI technology applicable to robot control |
Hyundai Corporation plans to not only invest directly in the selected companies but also consider making equity investments through “Prologue Ventures”, a corporate venture capital (CVC) within the group. The venture capital was jointly established by Hyundai Corporation and Hyundai Corporation Holdings with a capital investment of KRW 11 billion. Hyundai Corporation is also considering establishing a joint venture with selected companies depending on their growth potential or conducting a merger and acquisition (M&A). In fact, Hyundai Corporation sought to acquire management rights of SHINKI Intermobile, an automobile parts company, last year. However, the deal was not made since it was judged to have low business feasibility.
Hyundai Corporation plans to provide full support to the selected companies by mobilizing the company’s trade network. The global network of over 40 corporations and branches will become import and export channels for those companies. In fact, Hyundai Corporation invested KRW 5 billion in Bereum, a Korean company with next-generation biotics technology, last year. This investment played a major role in helping Bereum sign an export contract with Vitamed GmbH, a European pharmacy distributor.
“We will pursue the new business by discovering small but strong domestic companies that have products and technology but are having difficulties, such as developing new sales channels in overseas markets, ” said an official from Hyundai Corporation.
Chung Mong-hyuck, Chairman and CEO of Hyundai Corporation, intends to make small investments in startups instead of pursuing large-scale M&As. Mr. Chung pursues a business strategy that produces small but certain results. The plan is to make small progress and then gradually take on the challenge of large-scale business to achieve the goal of “going beyond a general trading company”.
This strategy may seem to be slow-paced but has the advantage of minimizing risks. Under this plan, the robot business will also be promoted only through collaboration with startups selected through open innovation for the time being.
July 24, 2023
The Bell