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Sonokong head excited to team up with Mattel

Nov 21,2016
Choi Shin-kyu, chairman of Sonokong, explains the reasons for selling his company to Mattel in the company’s animation production office in Mok-dong, southwestern Seoul. [JOONGANG ILBO]
Choi Shin-kyu, chairman of Korea’s top animation and toy company, Sonokong, announced on Oct. 10 that he had sold 11.99 percent of the company’s shares to Mattel, a major toy manufacturing company based in the United States. The shares sold used to belong to Choi, who had previously owned 16.93 percent of the company’s shares. The stock was sold for 13.968 billion won ($11.8 million).

The sale has made Mattel the largest shareholder, with Choi in second place. JoongAng Ilbo had an exclusive interview with the chairman in the company’s animation production lab, the Choi Creative Lab in Mok-dong, after the disposal was made public. “Working together with Mattel,” Choi said, “we will make the next series of Turning Mecard [a transforming toy robot] toys and animation, and then go abroad.”

When the sale was first announced, Choi expected that the top domestic animation company would work hand-in-hand with the world’s top toy manufacturer to start a toy Hallyu (Korean Wave). But the reality was quite different. Choi explained, “I was confused when some media made it sound as though I was selling off a native product to foreign capital. If it was for the money, I would have just sold it to China.”

He added, “But I’m a toy lover. I wanted to learn from the world’s top toy manufacturer’s management system and production.”

Choi explained that there had been numerous offers made by Chinese companies, but that he didn’t take them seriously because he felt the company was doing fine on its own.

But Mattel’s offer was a completely different story. Not only did the U.S. company offer Sonokong a chance to advance in the global market, but the company also offered exclusive sale rights on Mattel products for two years. The president frequently met with officials at Mattel to discuss the deal.

“A waning popularity [for the Thomas and Friends animation] is making progress after being taken over by Mattel,” Choi said, “and Mega Brands [producer of Mega Bloks] is now an attractive investment opportunity after Mattel acquired it.”

He added, “I made Turning Mecard with my own money and managed to make it in the Korean market, but I decided that to succeed in the global market, I’m going to need help.”

Another reason for Choi’s decision was that the company’s exclusive sale contract with the Japanese Takara Tomy had ended in August. Tomy is best known for its Tomica series and for producing Transformers with the American company Hasbro.

In January, Mattel lost its Disney toy production rights to Hasbro. According to Euromonitor, Disney earned profit of 820 billion won ($691.5 million) in 2014 in toy sales alone, which means a significant loss on Mattel’s part. That same year, Mattel sold 6.3 trillion won worth of toys. Having joined hands with Sonokong, Mattel will seek to grow in the Asia’s dynamic market.

“Mattel’s strong point is in girls’ toys, and Sonokong’s is in boys’,” said Kim Young-gak from Hyundai Securities, “and so their joining of power is positive for both companies’ product portfolios. It’s a win-win, since Mattel lacks influence over the Asian market and Sonokong is looking for collaboration with a global toy market to sell abroad.”

Choi also mentioned rumors about the relationship between Sonokong and Choirock Factory. Choirock, owned by Choi Jong-il, Choi Shin-kyu’s son, is a production company of which the all the shares are owned by the Choi family, including Choi Shin-kyu himself. Some have questioned the way Sonokong has apparently paid an overly high production price for lines such as Hello Carbot and Turning Mecard.

Sonokong’s Choi said of the rumors, “our company is the only one listed in the stock market among the toy companies in Korea, so there are so many eyes watching us. We’ve been cleared by the National Tax Service earlier this year, and I’m not the largest shareholder anymore, so it would be great if people would stop making controversies about unfair trade.”

Meanwhile, Sonokong was supposed to have changed its largest shareholder on Oct. 21 but, a company official said, “postponed it to Oct. 30 because the paperwork wasn’t done yet.”


BY YOO BOO-HYEOK [ebusiness@joongang.co.kr]


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