ArrowArtboardCreated with Sketch.Title ChevronTitle ChevronEye IconIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailPositive ArrowIcon PrintTitle ChevronIcon Twitter
Companies

South Korea's CJ takes its dumplings global

Country's top food maker pursues acquisition deals in U.S. and Asia

CJ CheilJedang’s pot stickers are nearly twice the size of ordinary Japanese gyoza.

SEOUL -- South Korea's biggest food maker, CJ CheilJedang, is pushing overseas sales of frozen dumplings as part of its aggressive expansion drive.

The company has gone on an acquisition spree in the U.S. and Asia, aiming to secure long-term growth by expanding beyond its domestic market of a little more than 50 million people.

In Japan, CJ CheilJedang acquired the food-processing division of Gyozakeikaku, the operator of a pan-fried gyoza pot sticker restaurant chain, in July 2019, obtaining four plants.

The company is now the main supplier to the gyoza chain Naniwa Hitokuchi Gyoza Chao-Chao, which operates about 50 outlets across Japan, including Sapporo in the north and Naha in the southwest, and in some cities elsewhere in Asia.

The chain's hitokuchi gyoza (bite-size gyoza), filled with ground meat and vegetables, go well with beer and are popular in Japan.

CJ CheilJedang also took over Gyozakeikaku's business relations with major food service chains and retailers, including Aeon and Costco, making a full-scale entry into the Japanese market.

In addition to frozen dumplings, CJ CheilJedang sells Korean gukbap rice soup and bibimbap rice bowls, all under the Bibigo brand. The company is also expanding sales of Korean seasonings.

Its Korean-style dumplings weigh 35 grams, nearly twice as much as ordinary Japanese gyoza. They are also popular as a soup ingredient.

Customers are seen in this January 2020 photo at a limited-time-only delicatessen CJ CheilJedang opened inside skyscraping Rockefeller Center in the central part of New York at the end of 2019.

CJ CheilJedang's frozen dumplings have already been widely accepted in the U.S.

New York is a melting pot of foods from around the world. At the end of 2019, CJ CheilJedang opened a delicatessen in Rockefeller Center in midtown Manhattan.

The deli sells light meals such as dumplings and Korean box lunches such as bulgogi grilled beef and bibimbap. It attracts more than 200 customers per day, taking in nearly $5,000.

CJ CheilJedang says its vegetable-rich dumplings have attracted many deli customers who see them as a healthy food, with some buying them for lunch and others buying them for dinner on their way home.

Lying behind CJ CheilJedang's opening of the deli in such a prime high-rent location was its acquisition of major U.S. frozen food producer Schwan's in 2018 for $1.84 billion.

The purchase, its largest ever, gave it 17 food plants and 400 sales footholds across the U.S. plus a sales network to deliver its products to U.S. retail giants such as Walmart and Kroger.

Sales of frozen dumplings, CJ CheilJedang's flagship product, in the U.S. have already exceeded those in South Korea in terms of value. CJ CheilJedang established a foothold in New York to gain notice and thereby further expand its footprint across the U.S. market.

In addition to Japan and the U.S., CJ CheilJedang has also built sales channels in China, Europe and Vietnam through acquisitions or alliances with local companies.

While selling food products under the Bibigo brand everywhere, CJ CheilJedang is promoting their localization by adjusting ingredients and seasonings to local tastes.

It is accelerating its overseas expansion drive through acquisitions as it faces a shrinking domestic market, following the same growth path as Japan's Ajinomoto.

Ajinomoto started as a manufacturer of umami seasoning but has diversified into areas such as processed food, frozen food and supplements and has strove to expand into overseas markets.

In 2014, Ajinomoto established a strong foothold in the U.S. by acquiring major frozen food maker Windsor Quality Holdings.

CJ CheilJedang started as a sugar manufacturer in Samsung Group and has expanded its businesses to include processed food, frozen food and amino acids for livestock feed.

Since becoming independent in 1996, CJ CheilJedang has cultivated markets in the U.S., China and Southeast Asia.

The two Japanese and South Korean food manufacturers resemble each other in both size and areas of business. Furthermore, they have a long intertwined history.

According to Samsung Group's corporate history, CJ CheilJedang learned how to produce monosodium glutamate, the main ingredient in umami seasoning, from Ajinomoto 50 years ago.

Many emerging South Korean companies have sought technological cooperation from advanced Japanese peers.

For example, major South Korean steelmaker Posco built an integrated steel mill with technologies licensed from Fuji Iron & Steel and Yawata Iron & Steel, which later merged to form Nippon Steel.

Samsung Electronics similarly broke into the electronics industry with technological assistance from Sanyo Electric.

As things stand now, CJ CheilJedang may be on a par with Ajinomoto in terms of sales and operating profit but remains far behind its Japanese rival in terms of market capitalization.

To catch up, the South Korean company needs to come up with medium and long-term strategies to reap further benefits from its aggressive acquisitions.

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this monthThis is your last free article this month

Stay ahead with our exclusives on Asia;
the most dynamic market in the world.

Stay ahead with our exclusives on Asia

Get trusted insights from experts within Asia itself.

Get trusted insights from experts
within Asia itself.

Try 1 month for $0.99

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this month

This is your last free article this month

Stay ahead with our exclusives on Asia; the most
dynamic market in the world
.

Get trusted insights from experts
within Asia itself.

Try 3 months for $9

Offer ends January 31st

Your trial period has expired

You need a subscription to...

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers and subscribe

Your full access to Nikkei Asia has expired

You need a subscription to:

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers
NAR on print phone, device, and tablet media

Nikkei Asian Review, now known as Nikkei Asia, will be the voice of the Asian Century.

Celebrate our next chapter
Free access for everyone - Sep. 30

Find out more