Coway Narrows Down Two Candidates for Overseas Production Bases

Expansion Strategy for Smart Home Subscription Economy... Malaysia and Vietnam as Leading Markets

[Asia Economy Reporter Kim Daeseop] Coway has started securing overseas production bases. This is a strategy to expand its business into the smart home subscription economy market promoted by Netmarble, a game company that recently acquired Coway.

According to industry sources on the 23rd, Coway is reportedly considering establishing production plants overseas in preparation for increased demand in the smart home subscription economy market. Malaysia and Vietnam, where the rental market is rapidly growing, are the two most likely candidate regions.

Coway established a local corporation in Malaysia in 2006 and has maintained the number one market share in the Malaysian water purifier market through strategies such as introducing the first rental service locally and obtaining halal certification for water purifiers. It can accelerate growth as a hub for Coway's overseas business and as a production base for expanding the Southeast Asian market.

Vietnam has the advantage of rapid economic growth, exceeding 7% last year, and many domestic companies such as Samsung Electronics have entered the market.

Industry insiders said, "Considering current performance, Malaysia is more likely, but from an economic feasibility perspective, securing a production base in Vietnam might be advantageous."

Regarding this, Coway stated, "Nothing has been decided yet," but added, "If business expansion into the smart home subscription economy market is actively promoted this year, it may be difficult to handle the increasing product supply volume with the current production plants alone," hinting at the necessity of establishing overseas factories.

Coway exports air purifiers, water purifiers, and other products to more than 40 countries worldwide. Its business performance is continuously reaching record highs. As of the third quarter of last year, sales amounted to 2.2243 trillion KRW, an 11.5% increase compared to the same period the previous year (1.9956 trillion KRW), and operating profit rose by 5.8% to 413.6 billion KRW. In particular, the Malaysian corporation recorded its highest sales ever, with a cumulative 1.244 million accounts as of the third quarter of last year.

Coway's domestic and overseas rental sales target for this year is to surpass 8 million accounts. As of the end of the third quarter last year, the cumulative number of domestic and overseas rental accounts was 7.63 million. Among these, overseas accounts numbered 1.39 million, with a goal to reach 2 million customer accounts in the Southeast Asian market this year.

Coway mainly produces home appliances such as water purifiers and air purifiers. Currently, it operates production plants in Namdong Industrial Complex in Incheon, Pocheon in Gyeonggi Province, and Gongju in Chungnam Province. It also runs local corporations in the United States, China, Malaysia, Thailand, and Indonesia. In Guangzhou, China, there is an outsourced production plant for air purifiers.