[Initial Moment] Quten Group, The Ending of the Puppet Show

Looking into the governance structure of the Qoo10 Group, it truly brings to mind a puppet show manipulated by strings, a 'marionette.' The puppeteer ties the joints of wooden puppets with strings to move them, immersing the audience in his story. The wooden puppets of the skilled puppeteer, Koo Young-bae, CEO of Qoo10 Group, are the various affiliates of the Qoo10 Group. In his puppet show, companies can be acquired without money, and even if a company does not make a profit, it can still be listed and traded.

After founding Gmarket in 1999, CEO Koo succeeded in listing it on NASDAQ in 2006. He made a name for himself as a successful venture entrepreneur by selling it to eBay in 2009. Subsequently, through the e-commerce platform Qoo10, CEO Koo expanded the shopping mall business starting from Singapore in 2010 to Japan, Indonesia, Malaysia, China, Hong Kong, and other regions.

However, the companies under his control were not profitable. Despite Qoo10 operating at an annual deficit of around 100 billion KRW, it aggressively acquired companies. Qoo10 incorporated TMON in September 2022, Interpark Commerce and WEMAKEPRICE in March and April of last year respectively, and this year, through Interpark Commerce, it successively absorbed AK Mall. In February of this year, it even acquired the US shopping mall Wish. During this process, suspicions arose that Qoo10 conducted capital-free mergers and acquisitions (M&A). The companies that sold shares of TMON, WEMAKEPRICE, and Interpark Commerce received shares of Qoo10 or Qxpress instead of cash or used them as collateral. They attempted to list their logistics company Qxpress on the US NASDAQ, but since a deficit company must meet conditions such as sales scale to be listed, it can be seen as an aggressive M&A move.

As the e-commerce market situation worsened, the financial conditions of Qoo10 affiliates deteriorated further, with the current liabilities of TMON and WEMAKEPRICE exceeding five times their current assets, spiraling out of control. The unpaid settlement funds of TMON and WEMAKEPRICE are currently unaccounted for, and investigations are underway regarding suspicions that Qoo10’s management misappropriated these settlement funds for other business expansions. CEO Koo’s blind ambition to grow the company by any means necessary and succeed in listing first, along with his grand vision of a global e-commerce empire, ultimately caused tremendous damage to consumers, sellers, and the domestic e-commerce industry.

The framework of a for-profit corporation, legally granted personhood so that people can create and engage in various economic activities out of necessity, can, if used well, accomplish tremendous economic, social, and cultural activities that a single natural person cannot. It can produce and sell semiconductors or automobiles, or create a group like BTS to export K-pop content. However, when the corporate vehicle is bought and sold like a puppet for one person’s ambition or greed, and funds are even misappropriated, the corporation can cause enormous damage beyond its inherent power.

Corporate managers hold a difficult position, having to endlessly strive to achieve the primary goal of a for-profit corporation?profit?while resisting the temptation to cheat. Corporate groups and managers, including Qoo10, who survive by leveraging flashy capital market tricks rather than fundamental value creation, need to realize this. Blind success without a process that can be understood by common sense and without a purpose to contribute to society is ultimately a failure of the corporation. Since corporations are inherently created for natural persons (people), a company that does not serve people, cheats, and runs solely toward results will inevitably end in disgrace. No matter how skilled the puppeteer is, he cannot complete the puppet show alone. The moment the immersion breaks and the audience senses the lies deceiving them, they leave the puppet show without hesitation.