Gamsung Corp Competes with Snow Peak Apparel

Due to the COVID-19 pandemic, people who could not travel abroad are flocking to domestic travel destinations. Domestic campsites have become one of the popular travel spots, making reservations difficult. Not only department stores and large marts but also major online shopping malls are eagerly holding 'camping special events' to sell camping supplies. Famous domestic outdoor brands are also increasing the supply of camping products and conducting various events to improve their performance.

Helinox, known as the pride of domestic outdoor brands, is one of the brands consistently loved among camping enthusiasts. Gamseong Corporation launched a clothing brand last year based on the Snow Peak license. Asia Economy takes a closer look at the business structure and management status of Helinox and Gamseong Corporation to gauge their future growth potential.

[Asia Economy Reporter Park Hyungsoo] Gamseong Corporation, which recorded losses for three consecutive years from 2018 based on consolidated financial statements, has embarked on a dual pursuit of external growth and profitability improvement by leading with Snow Peak Apparel. With the resurgence of camping culture since last year due to the impact of COVID-19, Gamseong Corporation integrated the Snow Peak brand, known as the 'Chanel of tents,' into the fashion market. Snow Peak Apparel recorded sales of 5.5 billion KRW in its debut year. Confirming its potential through first-year sales, Gamseong Corporation merged its 100% subsidiary Devgroo, which was responsible for the Snow Peak Apparel business. This decision reflects the company's determination to make it a leading brand in the outdoor fashion market.

◆A dazzling debut during the dot-com bubble= Gamseong Corporation is a company that changed its name from VirtualTech, a first-generation venture. VirtualTech, which converted to a corporation in 1994, was listed on the KOSDAQ market in January 2000. Riding the dot-com bubble, VirtualTech's stock price soared 27 times within two months of listing. Seo Jihyun, director of Gamseong Corporation and founder of VirtualTech, was once ranked among the 'Top 50 richest in the first half of 2001' as the value of his shares skyrocketed. VirtualTech also showcased its technological prowess by supplying self-developed software to Microsoft in 2001.

However, despite its well-known technology and founder, VirtualTech failed to generate profits for a long time after going public. To create a stable source of income, it acquired Sepung (now Paper Korea) and entered the paper manufacturing industry. Subsequently, it continuously pursued new businesses such as electric vehicle charging, virtual reality (VR) solution development, cryptocurrency mining, brokerage, and sales to seek survival.

Seo Jihyun, who led VirtualTech until 2019, transferred part of his shares and management rights to CEO Kim Hoseon. Kim previously served as CEO of Genie Contents, Vice President of No Money Communication, and CEO of Mobile One Communication. He accumulated wealth by investing in shares of KOSDAQ-listed companies such as Liveplex (now ES Cube) and CTL (now Cloud Air). From 2008 to 2011, while serving as CEO of Liveplex, which operated an original design manufacturer (ODM) business for tent manufacturing, he established ties with the Japanese tent goods company Snow Peak.

In May 2019, CEO Kim established the subsidiary Devgroo and acquired the Snow Peak license in October of the same year. In February of the following year, Snow Peak Apparel was launched, starting sales on the online shopping mall Musinsa Store. As of March this year, it secured offline distribution channels including 53 department stores nationwide such as Shinsegae, Lotte, Hyundai, Galleria, and AK, as well as comprehensive shopping malls and dealerships. Devgroo recorded sales of 5.5 billion KRW and an operating loss of 5.7 billion KRW in the year it started the Snow Peak Apparel business. Selling and administrative expenses amounted to 9.6 billion KRW, resulting in a large loss.

◆A decisive move in the clothing business... name change= To focus on the clothing business, CEO Kim decided to abandon the long-held name VirtualTech. In March this year, the company changed its name to Gamseong Corporation and is in the process of merging with Devgroo. The strategy is to enhance organizational efficiency through the merger and maximize synergy effects through swift decision-making and bold investments. Additionally, the company plans to strengthen the offline distribution network of Snow Peak Apparel and increase brand awareness through TV commercials using exclusive models and online marketing. At the beginning of this year, actor Ryu Seungbum was appointed as the exclusive model. Marketing using the exclusive model began from the spring and summer seasons. A company official explained, "The first business after changing the name to Gamseong Corporation is the merger with Devgroo," adding, "Through the merger, we will secure efficiency through synergy between the Snow Peak Apparel business and existing businesses and additionally discover new businesses that fit new trends."

Gamseong Corporation expects Snow Peak Apparel to become a popular brand following lifestyle outdoor brands such as Discovery and National Geographic. This is why it spared no investment from the first year. It offers both high-priced clothing products that reveal the original brand identity of Snow Peak, known for its premium tents, and mass-produced clothing products with price competitiveness. The company targets the market by producing small quantities of high-priced products and large quantities of competitively priced products.

Gamseong Corporation recorded sales of 16.4 billion KRW and an operating loss of 5.1 billion KRW last year. Previously maintaining sales of around 7 to 8 billion KRW, the addition of Snow Peak Apparel sales increased the company's sales scale. Although losses were recorded due to increased marketing costs for initial market development, profitability is expected to recover as brand awareness rises. As of last year, Gamseong Corporation's debt ratio was 55.2%.