SK magic plans to boost Malaysian revenue to RM3.2bil
22 Sep 2022
K magic, a subsidiary of the second largest conglomerate in South Korea, the SK Group, has ambitious plans to boost the company’s revenue in Malaysia by 23-fold, to a whopping RM3.2bil, as part of its efforts to establish it as a regional hub in the next five years.
Year-to-date, SK magic has a revenue of around RM140mil.
The company plans to achieve revenue of around RM230mil by the end of this year.
SK magic is currently importing two key products from South Korea, namely air and water purifiers.
SK magic chief executive officer Yoon Yo-seop foresees accelerated growth for the company in the next five years after it expects to achieve break-even by this year.
“When we reach breakeven, the profits for the company will be generated extremely quickly, and then we will see our Malaysian office positioned as a regional hub.
“So that’s our first priority for the Malaysian business,” he told reporters during a media briefing in SK magic’s headquarters in Seoul.
As the business grows, Yoon said its Malaysian office is expected to exceed the workforce of 7,000 direct and indirect staff that it currently has in South Korea.
“Our office in Malaysia is expected to be bigger than our South Korean office when it becomes a regional hub for South-East Asia,” he added.
Currently, the company has a workforce of 2,000 direct and indirect staff in Malaysia.
The home appliance industry is saturated in South Korea as the country battles with a low birth rate that has resulted in a decline in the average household size.
Thus, Yoon intends to develop the SK magic office in Malaysia as a regional hub in South-East Asia because of the “good” business environment and infrastructure in the country.
“When I say regional hub, I mean that Malaysia would be the role model for the strategies in place and product selection for other South-East Asian countries to follow suit.
“We believe that Malaysia has strong purchasing power given that the majority are from the middle and higher-income groups of people.
“The country, which is also a multi-racial country, has strong potential to house global businesses, and that’s why we selected Malaysia as a first destination in South-East Asia. We believe our innovative technology and products will be loved by Malaysians,” he explained.
Malaysia is the first South-East Asian country that SK magic has launched in, marking its foray into the region in 2018.
SK magic in South Korea has grown its business to include gas and electric ranges, microwave ovens, dishwashers, water and air purifiers, as well as bidets.
The company has been a trendsetter in South Korea’s home appliances industry since its establishment in 1985.
Meanwhile, the home appliance company has expanded its reach by selling its home appliance products by one-off purchase as well as on a rental basis, better known as an installment plan.
However, to boost the company’s revenue in Malaysia, Yoon said the priority would be to focus more on increasing the one-off purchase sales of its products compared to rental sales.
“For Malaysia, we want to focus on selling our products through both the offline and online sales channels just like in South Korea and also grow our outright sales to achieve the revenue of RM3.2bil,” he said.
Notably, SK magic in South Korea posted revenue of around one trillion won (RM3.2bil) year-to-date stemming from 70% of rental-basis sales with the remainder from one-off purchase sales.
Yoon disclosed that the company plans to invest and set up a research and development (R&D) centre in Malaysia once it reaches the status of being a regional hub.
Year-to-date, SK Magic has injected about RM100mil into the Malaysian office to import products from South Korea and use the funds for its rental business, which requires high capital of investments.
As such, SK Magic will also be launching its dishwasher for the Malaysian market as well as mattresses from the second quarter of 2023.
“According to our on-field survey, the dishwasher will be the next hit in the Malaysian market, despite the low usage of dishwashers in the country.
“So this is why we will be launching the dishwasher next year,” he pointed out.
In the long run, Yoon said the company is eyeing expanding its sourcing channels by obtaining products from Indonesia, China and Malaysia.
For the company to position itself as the market leader in Malaysia for its key products, SK magic vice-president Hak Jin Yoon said its smart factory in South Korea would customise and localise the products for the Malaysian market.
“We are having continuous strategic discussions with our Malaysian office on the right products to be launched in Malaysia and this will be offered to customers by 2023.”
“To put it simply, we are researching technological functions that are required for the appliances in the Malaysian market, and we will develop products according to the local customers’ preferences,” he explained.
Source: The Star