Lihom-Cuchen Resists Temptation to Build More Capacity Despite Rising Orders

SEOUL, KOREA - Lihom-Cuchen Co., Korea's leading rice cooker maker, has seen its share price rise almost 100 percent this year to date. That's largely because of a three-fold rise in orders from China. Some analysts are raising doubts whether the company is capable of fulfilling China-originated orders in time.

 

According to company sources on April 4, the capacity use of Lihom-Cuchen's Cheonan (South Chungcheong Province) plant dedicated to producing rice cookers has reached 94 percent, a virtual full capacity. E-Trade Securities earlier said the company's export volume to China would triple this year from the last year. Kang Tae-yung, head of the living business unit at Lihom-Cuchen, said in January, "We aim to take up to a 5-percent share in China's rice cooker market."

 

The number of rice cookers sold in a year in China is 60 million. Of these, 5 percent represents 3 million rice cookers, which is about three times more than the company's rice cooker output of 910,000 in 2013. On April 3, the company signed an online sales agency agreement with the Midea Group, China's largest home appliance maker.

 

Earlier in July 2012, Lihom-Cuchen set up a sales network in the three Chinese northeastern provinces, followed by Hong Kong and Macau in April last year. It has also strenthened regional distribution channels in Guangdong Province. By January this year, the company has almost established a nationwide sales network encompassing northern China, eastern China, and big cities on the east coast including Beijing and Tianjin.

 

To investors' concerns about whether the company can respond to the rising demand from China, the company responded that they can and there is no need for capacity expansion. A Lihom-Cuchen official said, "Even though our capacity utilization has surpassed the 90-percent level, we still have ample room for more output by lengthening work hours and hiring more workers. We are aware that the Chinese demand will triple soon but we started off with relatively a small number of exports."