3C Tae Yang, share their journey of turning a modest startup into a global player in cable assembly and thermal solutions.
In recent years, Korea's domestic market has become increasingly saturated and competitive, prompting many Korean suppliers to explore opportunities abroad. With your extensive international experience, what do you see as the main challenges and opportunities for Korean suppliers in the global market? Additionally, how can Korean companies benefit from the ongoing realignment of supply chains, the trend toward onshoring, and policies like the IRA (Inflation Reduction Act) and the CHIPS Act?
In the past, there were around 20 electronics companies in Korea outside of major conglomerates like Samsung and LG. Unfortunately, most of these smaller companies went bankrupt, leaving only the conglomerates to thrive. In the automotive sector, the dominant players are Hyundai and Kia Motors.
When Korean multinational corporations (MNCs) expanded into foreign markets, particularly in China and the U.S., they often took their tier-one (primary) and tier-two (secondary) suppliers with them. These MNCs and their suppliers established a global supply chain network in regions such as the U.S., China, and Vietnam. Since Korea is a high-cost country, many Korean companies now focus on research and development (R&D) domestically, while outsourcing production to countries like Vietnam.
However, the intensifying geopolitical tension between the U.S. and China, and the push for block confrontation, are reshaping global supply chains. The U.S. is encouraging its allies, including Korean companies, to shift their manufacturing hubs away from China to other countries like Indonesia and Vietnam. As a result, many Korean companies are withdrawing from the Chinese market, particularly due to fierce competition with Chinese firms. Now, Korean MNCs' tier-one and tier-two suppliers must align with their conglomerates’ strategies to comply with U.S. policies such as the IRA and the CHIPS Act.
I recently attended the SelectUSA Investment Summit in Washington, D.C., and learned that Korea was the second-largest contributor in terms of foreign direct investment (FDI) into the U.S. It was also the country that created the most jobs in the U.S. Korean investments are concentrated in key industries like automobiles, batteries, and semiconductors, often accompanied by their trusted local partners. However, with over 24 years of experience in this field, I can say that the U.S. market is both highly competitive and challenging.
One key advantage for Korea is that it has signed more bilateral free trade agreements (FTAs) than any other country in the world. This allows Korean companies to engage in free trade with countries that are part of these agreements. For instance, Korea’s FTA with Chile enables us to export automobiles and electronic devices while importing agricultural products and minerals.
I believe that U.S. policies like the IRA and the CHIPS Act will strengthen Korean companies' competitiveness by providing them with a strong foothold in the U.S. market. Chinese companies remain our main competitors, particularly for giants like Samsung and LG. While Korean companies have a competitive edge outside of China, we still lag behind local Chinese companies within the Chinese market. That’s why we're focusing on exporting to the U.S., Europe, and other regions.
In North America, we’re seeing a trend towards onshoring in the U.S. and the emergence of a major industrial hub in Mexico. This shift benefits many companies that have relocated to these areas by providing a localized production center. However, for companies that have not moved or are not planning to move to the U.S., this could place them at a competitive disadvantage. Could you provide an overview of your field? How challenging is it for companies to enter the U.S. market today?
Companies that serve as tier-one or tier-two suppliers to Korean multinationals are in a relatively secure position. However, we also work with partners in niche markets, both domestically and internationally. Because of our focus on niche markets, we’re currently expanding into Mexico by opening a sales office there, and we've already hired a local employee. In fact, we recently completed an interview with another Mexican candidate who will work with us here in Korea.
Many of our partners operate in the southern U.S., in states like Kentucky, Kansas, Georgia, and North Florida. Due to high labor costs in these regions, some of them are planning to expand their operations into Mexico, and we plan to collaborate with them as they do so. Additionally, we’ve recently opened a sales office in Dallas, Texas, which will help us better serve our clients in the U.S.
Productivity is a key factor in remaining competitive, and Korean companies are known for implementing significant automation to streamline processes. How crucial is the integration of automation and Industry 4.0 technologies to maintaining competitiveness in your industry?
While certain processes, like harness or assembly lines, are challenging to fully automate, we are focusing on areas where automation can be effectively implemented. For instance, in high-labor-cost sectors such as connector manufacturing, where there are strong labor unions and shortened working hours, we are increasingly integrating automation. Korea, in fact, has one of the highest industrial robot densities in the world, reflecting our commitment to this approach.
Most Korean companies are investing heavily in research and development, but they are not hiring many workers domestically. Instead, they are relocating their manufacturing hubs overseas. This means that when the Korean economy thrives, countries like Vietnam, where many Korean companies have manufacturing operations, also benefit. Conversely, when Korea faces economic difficulties, it can have a negative impact on economies like Vietnam’s as well.
Right now, Korea is in fierce competition with other major players in Asia, such as Taiwan, China, Japan, Singapore, and Hong Kong. Interestingly, Hong Kong has been losing its shine recently, as it is gradually losing its foothold as a financial hub.
The shift from internal combustion (IC) vehicles to electric vehicles (EVs) has dramatically increased the number of connectors and cables used, particularly in applications like infotainment, audio, video, and navigation systems. Can you give us a better understanding of how this transition from IC to EVs has transformed the automotive industry, and how it has impacted your field?
The rise of EVs and batteries has indeed been a global phenomenon, sparking excitement in the stock markets and driving significant investment, particularly here in Korea. While the EV and battery sectors have experienced massive growth, we are now seeing what some journalists refer to as "the chasm"—a temporary slowdown. For example, we tried purchasing an EV, but it was nearly double the price of a conventional vehicle, and the charging infrastructure is still quite underdeveloped, making it difficult to find charging stations. Additionally, there have been concerns over battery explosions.
Looking at the automotive industry's history, it took Ford nearly 100 years to make internal combustion engine vehicles (ICEVs), like the Model T, accessible to the general public. Over the last century, Ford played a major role in building the global infrastructure of gas stations and driving down car prices to make them affordable. While I believe EVs will follow a similar trajectory, their growth will likely be much more gradual than that of ICEVs.
Even though Korea has seen significant investment in the EV sector, I worry that without sustained demand, we may eventually face overcapacity. I see a similar trend with Chinese companies. They’ve enjoyed a boom in the EV market thanks to strong domestic demand, but now that growth is slowing, they are turning to exports to maintain momentum. Many Chinese companies are rushing to export their EVs, particularly to the U.S. and other global markets.
Established in 1983, 3CTY initially supplied major connectors to the South Korean market, working with companies such as Sumitomo. To add value, the company diversified its offerings to include harness assembly and entire systems/modules, collaborating with major corporations like Hyundai, LG, GE, and Siemens. Could you outline the historical milestones of the company? What has made 3CTY stand out from its competitors?
I'd actually prefer to talk more about my failures than my successes. I’ll start with a tough story: when I founded the company, it was just me and $2,000. We initially entered the logistics market, supplying harnesses, and later expanded into wire harness production. At the time, there were around 10,000 companies in a similar business. However, in the mid-1990s, when Korea established diplomatic ties with China, Taiwanese and Chinese companies began entering the domestic market. This led to a significant loss of market share, and only companies backed by large automakers could survive.
Next, we ventured into the LCD monitor business, assembling backlight lamps. The business did well for two to three years, but it couldn’t last more than seven years because we couldn’t compete with the rapidly falling prices from Chinese manufacturers. As a result, we were forced to downsize, as the industry was highly labor-intensive. Every five to ten years, we faced ups and downs, but in hindsight, these crises were valuable learning experiences for our company.
We drew inspiration from Swiss companies. Though small, they are highly specialized and skillful, producing only 2% to 3% of niche products globally. We decided to target a similar strategy, focusing on niche markets such as cable assembly, just like the Swiss. We avoid competing directly with tier-one companies in the IT, medical, and automotive industries, including semiconductor testing equipment, because we simply can’t match China's pricing.
Our strategy for sustaining the business has been to focus on semiconductors, medical equipment, and other niche markets. In terms of medical products, most of our sales come from our U.S. sales office. We manufacture the products here in Korea and then ship and deliver them to our U.S. clients.
Your focus is on specialized maintenance cable supply, particularly in the semiconductor and medical fields. According to your 2023 financial report, 75% of your revenue comes from automotive semiconductors, while 20% is from ultrasonic probes. How important is the automotive industry compared to other sectors, and how do you balance your efforts across different industries?
Currently, the automotive sector is our most important market, but we see the medical and other niche markets as our future growth drivers. That’s why we are heavily investing in R&D to diversify our product offerings. For example, with our Hawkeye project, we’re using CMOS image sensors, and we’re also working with LED semiconductors. By combining our expertise in harness technology and microcode technology, we can create advanced display systems—that's my vision for the future.
To capture these specialized and niche markets, you’ve developed your own Ultra-Fine Wire Process, which is a highly technical and complex process. How advanced is this process, and how does it compare to the competition?
I believe it’s only a matter of time before our competitors attempt to replicate our technology. We are strategically targeting sectors like medical, military, aerospace, and other specialized industries. As a small company, we need to concentrate on areas where we can differentiate ourselves and avoid direct competition in oversaturated markets.
How do you transform your company? Is it through R&D to develop new products, or by creating new processes? How do you evolve to penetrate these niche markets?
Our transformation comes from blending customer needs with our existing technologies to determine our direction. We are not a pure R&D company; we are a market-driven R&D company. Our goal is to be responsive to the market and develop solutions that align with demand.
A great example of this development is Hawkeye, where the endoscope achieves a high level of miniaturization by combining coax cables with innovative nanomaterials. Could you explain more about this technology?
We specialize in cable technology, and Hawkeye represents a collaboration with a U.S. company that has advanced semiconductor capabilities. The resolution of this technology has now reached 720p, and every two years, we need to stay ahead of technological advancements. Due to NDAs and confidentiality agreements with our clients, I can't share too many details. However, this project represents significant growth momentum for us. As I mentioned earlier, we're laser-focused on niche markets. Once we gain more recognition, Taiwanese and Chinese companies will likely target us, and their strategy will be to compete on price.
3CTY THS has developed several thermal solutions—like pads, gels, and potting compounds—to improve electronic heat dissipation. Could you elaborate on this?
While we receive substantial orders from Korean conglomerates, as a latecomer in this field, it's difficult for us to make large-scale installation investments. For now, we mostly supply to small and medium-sized enterprises (SMEs). Our long-term goal is to provide heat dissipation materials for chip manufacturers. However, due to our limited track record and experience in this area, gaining the confidence of chip makers is challenging. Nevertheless, our ultimate aim remains to serve both the medical industry and chip makers.
Since most of our investments are self-funded, our strategy is more like guerrilla warfare—we adapt, fight, and adjust based on the specific needs and challenges in different markets.
Your approach to the market is very clear—you aim to be agile, targeting niche and maintenance markets. What are the key challenges with this strategy, and how do you plan to overcome them and continue growing?
Our biggest challenge is achieving global leadership in this field. With our subsidiary Quin Tech, a mold manufacturer specializing in semiconductor packaging, I’m confident we can overcome this hurdle. While the semiconductor industry may seem complex, its principles are actually quite straightforward, and I believe we are well-positioned to navigate it successfully.
In 2023, 3CTY was listed on KONEX, marking a significant milestone and reflecting the company’s ambitious goals. Why did you decide this was the right time for an IPO, and what are your expectations?
Our company has weathered many storms, much like a cactus surviving in the desert without water. We aimed to list on KOSDAQ to attract more capital for investment. In fact, we wanted to join KOSDAQ around 20 years ago as well, but we weren’t profitable enough at the time. Now, we’ve realized that it may have been a bit too late, as it hasn’t attracted much attention from institutional investors. As a result, our company’s value is somewhat undervalued. For now, we’ve decided to put the IPO on hold and wait until our offerings become more appealing to investors. With our current sales income and bank credit, I’m confident we can manage everything independently. So, I’ll continue to forge my own path.
I recall your interview last year, where you mentioned that the 2020s were the right time for international expansion. In 2021, you established a factory in India, and in 2022, you set up an office in the U.S. You also spoke about plans for an office in Mexico. What is your international strategy, and how crucial is internationalization for your company’s growth?
We sell most of our products to Korean customers, as well as some U.S. customers and global corporations like Siemens. Since 80-90% of our components are exported to countries like India, Mexico, and Vietnam, we've established sales offices there and are planning to launch a manufacturing hub in India. International expansion is vital for us, as it aligns with our goal to serve both local and global markets more efficiently.
In the overseas market, being recognized as a cable, wire, and module manufacturer is essential. What key advantages can you offer to international customers? What products or technologies will be your flagship offerings?
Our strategy is to first supply components and then establish assembly plants to support Korean and international multinational corporations (MNCs). Many Korean SMEs entered China, set up factories, but eventually struggled to stay profitable and had to withdraw. I wanted to understand why they couldn’t sustain their operations in China, and I believe the strength of a country’s influence plays a critical role. With the global popularity of K-pop, the Korean language has become attractive to foreigners. When we expand into markets like India and Mexico, we are able to hire local talent fluent in Korean to manage operations and marketing. This is a key insight I gained from analyzing the Chinese market experience.
How do you foresee the company's growth over the next three to five years?
We anticipate a compound annual growth rate (CAGR) of 10-15%. However, if products like Hawkeye become major successes, I’m confident we could boost profitability to 40-50%. We have high expectations for these items to make a significant impact in the market. Of course, R&D is always challenging, which is why we position ourselves as a market-friendly R&D company. We see ourselves as marathon runners—steadily and strategically moving forward, much like the turtle in the fable, preparing for a long-term race.
You’ve already passed the 40th anniversary of your company. If we were to check in with you in a few years, how would you reflect on the journey—not just for the company, but also for yourself, having built it from scratch with only $2,000? What would you like to have achieved?
Our organization, along with all our employees, endured what we call the "lost decade," a period of 10 years marked by downsizing and workforce reductions. Looking forward, I want to fully establish a future-focused product line that will serve as a key growth driver for the company. That would be the most meaningful achievement—to see our hard work translate into sustainable growth and momentum for the future.
For more details, explore their website at: https://3ctaeyang.com/
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