The South Korean entrepreneur who made Bangladesh his home
Kihak Sung is what he is today, an apparel Mogul in Asia because he follows his life's philosophy closely.
For one, he believes you will reach your goal if you work, work and work hard. At the age of 75, the Korean apparel entrepreneur still wakes up at 5 in the morning and goes to sleep late at night. During these long hours, he doggedly goes around his factories, checking on every detail of the production process.
The second thing he believes is everything has to be sustainable for the Earth to survive. Go around his sprawling 2,492 acres Korean Export Processing Zone (Kepz) in Chittagong and you get a vindication of his belief. More than half the land of the industrial zone has been preserved to grow trees and forests where 87 species of mammals and 137 species of birds thrive.
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His third philosophy is when you are in trouble, you walk, walk and walk. And that is how Kihak one day chanced upon a sprawling sandy land that he worked hard on to turn into the KEPZ.
A modest beginning
But the man who has invested $600 million in Bangladesh through his company Youngone and KEPZ had a very modest beginning in 1972.
As is customary in South Korea, Kihak Sung had completed his 18 months of training as a soldier in the Korean army and was looking for a path in his life. He would not join his father's cold storage business. He was rather fascinated by the variety of clothes that were displayed in the high street stores.
So at the age of 25, he joined a garment company as a sales executive.
Korea was already in a transforming stage. Its journey in textiles and garments manufacturing started in the mid-sixties and by the mid-seventies, it was a big name worldwide.
"I was selling products for the textiles company," he recalls. "Salesman means to meet and communicate with the clients, receive sample products or designs, develop the sample or commercialise it, then get the approval of buyers, and also supervise the production schedule and quality. It's not just sales—it's a whole spectrum," he said.
He very quickly became a Swedish business specialist and also developed a network with US clients.
After two years of salesman experience, Kihak Sung founded the Youngone Corporation with two partners in 1974. Youngone set up its first factory in suburban Seoul city to produce and export garments.
His salesman experience not only worked for Korea based Youngone initiatives but also in Bangladesh.
Back in 1979, when the young entrepreneur Kihak Sung flew from Seoul to Chittagong to see if he could set up an apparel factory there— the place did not look so promising. Bangladesh did not allow 100% foreign investment and its infrastructure support was abysmal.
But Kihak came to Bangladesh for a reason—it had quota-free access to the European market. At that time Korea was facing quota restrictions in the developed world. Many Korean exporters were exploring Sri Lanka, India or Pakistan to see if they could set up factories there and utilise their quota-free access to remain competitive.
Youngone starts its journey
Kihak Sung chose Bangladesh despite its shortcomings. A few months after his visit, Kihak set up his factory with Bangladeshi partners in May 1980 under the name Youngone Bangladesh Limited.
He had with him his Swedish buyer's favourable order—a batch of simple garments. That factory had around 250 workers who received training from experienced Korean operators. By 1984, Kihak Sung recalls, his company was exporting $18 million worth of apparel.
Today, Kihak Sung's Youngone Corporation employs nearly 85,000 people around the world—of which 70,000 work in Bangladesh. Youngone, enlisted in the Seoul Stock Market, has an annual turnover of $3 billion dollars—and one-third of this revenue is from Bangladesh.
While his company now has factories in Vietnam, Uzbekistan, El Salvador and Ethiopia—his biggest legacy is the Kepz in Anwara which is still flourishing with new industrial complexes every year.
"We have invested around $600 million dollars in Bangladesh," he said while talking to The Business Standard at his Kepz residence in late March, "it would become $1 billion dollars soon."
The Kepz already has 40 industrial units making garments, textiles, man-made-fibres, shoes, bags and other articles and it employs 30,000 workers—mostly women from in and around the Anwara area. Youngone has factories in some other EPZs too.
Youngone's value addition to exports averages 50% to 55% while, for some items it goes up to 95%.
Youngone is still rolling out investment in man-made fibres, which are high-tech and used in costlier items. It would become the major source of MMF for other apparel industries in Bangladesh.
Spread around more than 2,500 acres of land with 38 km of road network, more than half of the Kepz land holds forests and water bodies—it sets an example of what an industrial area should look like.
Kihak Sung's dislike of untidiness and pollution is visible all around the Kepz factories and compound. Unlike any industrial areas, one can not find any trash on any premises or any roads. The floors of the washing and cleaning units there are amazingly dry in stark contrast to what other factories in the country.
Kihak Sung has recently pulled out from investing in China. But he is now making a new textiles investment in Telangana, India and planning to invest in Indonesia.
Sung's journey in Bangladesh
He recalls how Youngone Bangladesh managed the first order in May of 1980.
"The raw materials came to the port and to take delivery we deployed hand carts. These carts created a queue of one kilometres when they brought the materials to the factory," recalls the 75-year old business tycoon.
The venture clicked. With 250 workers, the factory thrived as Kihak brought with him technical support from Korea and experience. Alongside his marketing skills, Kihak brought in his culture of keeping the factory neat, clean and trouble-free.
"But back then there were often political protests outside in Agrabad. Inside the factory, there were some labour issues that I did not like and my partners did not resolve," he says.
Kihak absolutely did not like the factory to look dirty. He would take up the broom himself to clean it up while his partners would wait for the cleaner to show up.
By 1984, Kihak decided to buy the shares of his partners of Youngone Corporation back in Korea. His partners were much older than him and the business back then was not very big. But Kihak thought if he took all the decisions by himself, it would help his company grow.
He applied the same strategy with Youngone Bangladesh Ltd by parting ways with them in 1986. In the same year, he set up a factory in the Chittagong Export Processing Zone (Cepz) hoping it would have better electric supply and a trouble-free environment.
CEPZ and a deadly cyclone
The government in the early eighties built the Chittagong EPZ. Kihak Sung recalls, "The start was very slow when I was considering moving in there. At that time there were only two small factories. The government had built some more factories there for investors and garments makers. It picked up very slowly.
In 1986, Youngone Corporation rented a factory space marked as SS2 in CEPZ which was a properly built factory. Gradually, as the company grew bigger, it took over other buildings. "I was selling and buying. I visited for a week every six months," he said.
"I was not very satisfied with our growth here. By the time we were moving into CEPZ, we had also established a factory in Jamaica in 1986. We were reasonably successful there. Meantime we were trying in Indonesia—that's a much bigger place," he said.
"In 1988, Youngone floated an IPO in Korea. This improved our cash flow. We wanted to make more investments in the CEPZ. So we built the-then rather big factory having 1,00,000 sq ft area in 1990. We were getting a lot of orders back then.
In April 1991, a deadly super cyclone hit Chittagong. The cyclone devastated the coastal region—killing 1,38,000 people.
"The cyclone blew out our main door. Then torrential rain water got in and the factory floors were covered in mud.
I stayed in Chittagong for a long time to salvage the factory. During the recovery period, I realised that these workers here really want their jobs and they want to keep us in this country. After this rough recovery when I was leaving, they all cried.
After that, we decided to make further investments. Because we recovered from the disaster successfully and our customers saw our strength and how we protected their business. Our buyers recognised our efforts very well and they were really pouring orders to us," he said.
After that disaster, Youngone started making multi-storied buildings and putting all warehouses above the flood level. Youngone was enjoying massive growth.
"At that point, we came across a lot of problems—the EPZ was not designed to handle massive business growth. The administration was not simply able to cope with the growth. So I was thinking, maybe we should have our own EPZ."
The long story of Kepz
By the mid-nineties, a new chapter opened for Sung when he attended a Jica programme where the Japanese development agency shared its study on making a new furniture export processing zone in Anwara. Jica suggested that the zone may be set up under a private-public collaboration.
At the programme, Kihak Sung gave his opinion that if something should be done, it should be a private initiative. The private sector knows the pulse and it works faster.
"I was not planning any EPZ myself at that time," Sung recalls, "but after that Jica programme, I was being persuaded by the Korean ambassador in Bangladesh who believed I could develop such an EPZ."
Sung started working on developing an EPZ in 1995.
When Sung visited the place marked out by Jica, he noted how arid and barren the land in Anwara was.
"People used to collect sand for this area that was infested with smugglers, pirates and goons back then," recalls Sung, "in fact, the local people called the place Texas because of its sandy environment."
"I knew there was some water on the northern side. There was nothing. It was dry most of the time—but during the monsoon, everything would go under water. But to set up factories we will need water," he said.
The Karnaphuli river water here is saline, and there were not many water bodies in the area. The adjacent newly launched Kafco factory drew huge underground fresh water and local villagers began complaining that their tube-wells were running dry because of Kafco.
Solving a water crisis
Keeping the water problem in mind, Kihak Sung turned to the government for land acquisition for the Kepz. The government acquired more than 2,500 acres of land (about 1,700 acres belonging to the government) for the Kepz by 1999 and framed a new law under which the private EPZs would operate.
But then things slowed down following the change of the government. While the Youngone spent Tk 100 crore for the purchase of land and to build roads and some basic infrastructures, the government held back from issuing it the licence to operate the EPZ. Youngone finally was given a conditional licence in 2006 and then again a revised licence during the caretaker government regime in 2007. It took several more years for Youngone to get environmental clearance. The Kepz still has not received land mutation documents.
But despite the problems, Kihak Sung gradually went ahead to build an industrial complex beginning in 2008.
The Kepz launched its first factory operations in 2011.
"We sourced our water through medium depth tube-well. But our water consumption is much less compared to Kafco. The Kepz also recycles its water," he said.
"Then we decided to store the rainwater. We built dams and roads together—which did the magic. We are keeping all rainwater in the huge water bodies (that we have created). Before that the rainwater would drain down the river or villages".
The Kepz now stores about 500 million gallons of water a year in its water bodies. It has prevented flooding in the villages as it used to happen before while water is found here even during the dry seasons.
The power grid there was unpredictable in the early years. To run factories, the Kepz installed three diesel run 1.5 MW power plants.
Kihak Sung points out that the major breakthroughs came a couple of years ago.
"The electricity is now stable by Bangladesh standard. Our new solar panel system (Bangladesh's biggest rooftop solar plant now having 20 MW capacity while another 20 MW is being installed) is being used by our weaving unit," he said.
"I want to make the Kepz one of the best areas to live and work in. Kepz has so many hills and forests. I want to preserve this area with very productive industries with good living and nature. From the start, 50% of this area has been kept reserved for green. EPZ can not just be all concrete, sell plots and go away—I don't want to go away. I cannot go away with Kepz. So I make it a good urban setting for healthy living and work," the veteran investor says.
With an annual turnover of $3 billion dollars, Youngone now plans to invest in Portugal, Tunisia and Morocco in the future keeping in mind the ability to quickly supply to the buyers (in Europe or the USA)—because Bangladesh is far away by any standard. "We want to supplement our productions with quick response units around the world," he said.
Traveller, collector, restorer
Kihak Sung got married in 1975 through an arranged marriage. He has three daughters. His second daughter has been named as his successor.
"When I was a kid, I came across an astrologer who read my palm and said I would travel more than a thousand times," said Kihak. It became more than true as he has been flying for half of his time in a year visiting different countries for sales or to supervise production.
Despite his business, Kihak is never away from his friends and families. In fact, his childhood friends and his brothers and sisters still get together in his Seoul home or his ancestral village home.
"My batch of friends have visited Bangladesh twice. They have a plan to visit Bangladesh this year too," he said.
"In my youth, I used to swim—long-distance swimming. But not anymore. I also won the number 1 prize for swimming," he said.
Now I collect cameras—old mechanical cameras; the small ones. Maybe I have 10,000 cameras. I also collect audio equipment. I collect them from the local shops in Seoul. In recent times he bought 10 record players from Braun's designer Dieter Rams. Five of them were okay—and he had to extensively repair the remaining five to make them work again. German designer Dieter Rams is considered a designer of the designers whose works inspired the iPhone design.
Kihak also likes to work on old structures. His Kepz residence used to be an old cement godown back from the time the land was purchased. This building was later refurbished and made into a livable building.
He and his siblings still maintain their ancestral home in the Korean countryside that his great great great grandfather had purchased back in the 1830s. The old structures of the home are still intact. "This is one of the best preserved old houses in Korea," he said.
Sharing the secret of his success, he said, "you work, work, work and don't quit easily. Sometimes we quit easily. But once you start, you want to continue and find out how you can work it out. Giving others credit for good work is also important. You should function all the time, despite difficulties.
As a patron of Bangladeshi art, Kihak Sung has accentuated the suitable Kepz structures with many artworks over the years.
Besides, he has funded the restoration of the hundreds of years old Bara Sardar Bari in Sonargaon. he notes, "I knew the place and when I saw it I realised if I did not do something, it might collapse. It's always been my hobby and pleasure to restore something. I manage and finance such restorations, and make the quality inspections."
