Donghwa Enterprise PB·MDF Expands from Domestic Market to Vietnam

[Interview] Kim Hong-jin, President of Donghwa Enterprise

Hanoi Factory to be Completed Next Year; Market Share Expected to Reach 40% Once Operations Begin

"Despite COVID-19, Performance Maintained Through Cost Reduction Efforts... Expecting Good Results Again Next Year"

[Asia Economy Reporter Kim Jonghwa] Dongwha Enterprise is a company primarily producing 'PB' (Particle Board), 'MDF' (Medium-Density Fiberboard), and laminate flooring, which are used in furniture and building materials. PB and MDF hold the number one market share domestically. Last year, the company recorded sales of 717.4 billion KRW (consolidated basis) and an operating profit of 58.5 billion KRW, with similar levels expected this year. It is clear that these results were achieved despite the COVID-19 crisis. When meeting CEO Kim at Dongwha Enterprise’s office in Wonchang Building, Yeouido, on the 16th, his expression was bright and his tone exuded confidence.

CEO Kim stated, "I believe we are unrivaled among domestic PB and MDF manufacturers," and confidently added, "We will soon secure an absolute leading position in Vietnam as well." The basis for this confidence lies in "Dongwha Enterprise’s unique differentiated capabilities." He emphasized, "We must be able to produce new products that satisfy the market and consumers every year, and have price competitiveness through cost reduction. Dongwha Enterprise, with over 70 years of history, possesses all of these, and our advanced technological capabilities and the relentless cost-cutting efforts of our excellent employees demonstrate competitiveness not only domestically but also globally."

CEO Kim joined Dongwha Enterprise as a professional manager in June 2010 and has led the company for 10 years, laying the foundation for its future. In 2008, during a construction boom in Vietnam, he established 'VRG Dongwha' in a joint venture with the state-owned company VRG, successfully diversifying MDF production bases.

Since April, Dongwha Enterprise has been independently constructing additional laminate flooring and MDF factories in Hanoi. The laminate flooring factory is scheduled for completion in April next year, and the MDF factory in August, after which sales will begin. He expressed expectations, saying, "Once these two factories are operational next year, we will achieve a 40% market share in Vietnam’s board and building materials market, strengthening our position as the market leader in Vietnam."

For 10 years, the company has continuously innovated across the entire value chain?from raw material procurement to production, logistics, and sales. By introducing the 'S&OP (Sales & Operations Planning) system,' they forecast market demand, analyze sales volume, and assess profitability by product category, moving the value chain according to established strategies. The Incheon PB factory operates as a smart factory optimized in equipment, products, services, and work environment to enhance productivity, and the Asan MDF factory is planned to be transformed into a smart factory within this year.

Through these efforts, costs were reduced by about 15% in 2015 compared to the end of 2011, and this year, costs have been cut by up to 20% compared to 2011. This has become the driving force behind Dongwha Enterprise’s dominant 60% market share in the domestic PB and MDF market.

He said, "Despite the unpredictable variable of COVID-19, we were able to defend our performance because we optimized costs," adding, "Although this year’s target level may not be fully met, we will achieve operating profits similar to last year’s, and while the situation will not be easy, we expect to perform well again next year."

Dongwha Enterprise has maintained 24 consecutive years of labor-management peace and was awarded the '2017 Best Workplace in Korea' by Aon Hewitt, the world’s largest HR consulting firm. CEO Kim said, "We regularly meet with the labor union to share management information and honestly explain performance," describing the mutual understanding and trust as "quite deep."

He also did not forget to express gratitude to employees who are tightening their belts to survive. He promised, "I am very grateful for their efforts to defend and improve profits despite difficult conditions, and I will do my best to improve the hardships faced by our employees."