Real Estate Slump Leaves 'Changho' in the Dark... Fierce Discount Competition

Prolonged Real Estate and Construction Slump
Window Dealerships Offer Deep Discounts Since Early Year
KCC and LX Hausys Accelerate Overseas Expansion

"If you replace windows and doors by the end of this month, you will receive a 1.5 million KRW discount." Discount competition is fierce at window and door dealerships nationwide from the beginning of the new year. This is the aftermath of the real estate market slump and the downturn in the construction industry. The reason for the 'tearful discount' is because the construction industry downturn is expected to continue this year as well. KCC and LX Hausys, which dominate the domestic window and door market, are seeking an escape route through overseas market expansion.

[Image source=Yonhap News]

Tearful Window and Door Discounts

On the 29th, an official KCC dealership in Gyeonggi-do is holding an event offering a 1.5 million KRW discount on window and door replacement costs until the end of this month. This dealership has held discount events around the same time every year, but this year, the discount amount was increased by 500,000 KRW compared to last year. This is the same for other dealerships. A dealership of LX Hausys has started offering up to a 25% discount on window and door replacement costs, and discount competition is taking place at window and door dealerships nationwide.

The window and door market is directly affected by the real estate and construction market conditions. The market revives only when new apartments are newly constructed or real estate transactions are active, but related markets have been in a slump since last year. An owner of a window and door dealership in Gyeonggi-do said, "At the beginning of this year, the number of inquiries has decreased significantly compared to last year," adding, "Since the economy is bad, there are no households moving, and remodeling demand has sharply dropped."

According to the Ministry of Land, Infrastructure and Transport's Statistics Nuri 'Housing Construction Performance Statistics (Start of Construction)', the nationwide apartment construction performance from January to November last year was 133,585 units. This is a 52% decrease compared to 278,566 units during the same period the previous year. It is the lowest ever since related statistics were compiled in 2011. This year, construction performance is expected to decline further due to concerns about the insolvency of real estate project financing (PF) by large construction companies and credit rating downgrades.

LX Hausys 'LX Ji-in Window Super Save7'. (Photo by LX Hausys)

KCC and LX Hausys... Seeking Business Diversification

As the economy is expected to worsen this year, KCC and LX Hausys, which dominate the window and door market, are seeking escape routes through overseas market entry and business diversification.

From the 24th to the 26th (local time), LX Hausys participated in 'TISE 2024,' the largest flooring exhibition in North America held in Las Vegas, USA. This was to target the North American flooring market. In the third quarter of last year, LX Hausys established a Mexican subsidiary under its North American corporation and opened a B2C (business-to-consumer) showroom specializing in engineered stone called 'Viatera' in the Long Island area of New York, USA. Although LX Hausys had previously operated overseas showrooms for corporate clients, this is the first showroom for general consumers.

The LX Hausys booth at the American flooring exhibition 'TISE'. (Photo by LX Hausys)

LX Hausys plans to continue participating in building materials exhibitions held worldwide this year, focusing on discovering new global customers and concentrating business capabilities on expanding overseas sales in preparation for the domestic market slump.

KCC is also focusing on overseas market penetration. KCC Glass, which manufactures glass, will complete its first overseas production plant in Indonesia this year. Using the Indonesian plant as a foothold, it plans to advance into new overseas markets from Southeast Asia to the Middle East and Australia. Additionally, KCC has participated annually since 2022 in 'TISE,' and this year as well, it set up an exhibition booth to introduce flooring technology and products to the market, pursuing business diversification.

Last year, KCC also established the 'U.S. Refinish Color Center' in Dallas, Texas. It is KCC's first automotive repair paint center established overseas. KCC targets the U.S., South America, and Canada based on this center. Furthermore, it is targeting the Southeast Asian market by strengthening partnerships with 27 major partners of its local Malaysian subsidiary (KCM).