Boram Group, the third-largest player in Korea's funeral services (sangjo) industry, runs its funeral business through seven separate corporate entities. This is causing growing confusion among consumers.
The brand is just one, "Boram." But depending on which entity a consumer signs with, the capacity to protect prepaid funds differs. Signing with an entity whose finances have deteriorated considerably could raise the risk of not recovering prepaid funds. Observers say consumers need to be careful.
According to the funeral services industry on the 11th, Boram Group has seven funeral services entities: Boram Sangjo Development, Life, People, Leaders, Siloam, Plus and Anycall. Each entity is legally separate, but they share the Boram Sangjo brand and sales channels and sell similar products.
Management is also largely the same. Boram Sangjo Development, Life and Leaders are jointly led by CEOs Kim Ki-tae and Oh Jun-oh. Boram Sangjo Siloam and Plus are led solely by CEO Oh Jun-oh. Boram Sangjo Anycall has three co-CEOs: Kim Ki-tae, Oh Jun-oh and Lee Hyun-kyung. Only Boram Sangjo People, headed by CEO Kim Chung-hyun, is an exception. The CEOs of the other six overlap, and Oh Jun-oh serves concurrently as CEO of six affiliates.
Even with the same sales system and CEOs, financial conditions differ by entity. Consumers tend to think they are signing up for a Boram Sangjo product. But the actual counterparty to the contract is a specific affiliate. Subscribers choose a product and then pick one of the seven entities to contract with. Without separately checking an entity's finances, they could end up signing with one at high risk of insolvency.
Looking at the affiliates one by one, quite a few have weak financial soundness. At two of them, Boram Sangjo Plus and Boram Sangjo Siloam, total customer refund obligations exceeded funeral-related assets as of the end of last year. Boram Sangjo Plus had assets of minus 720 million won against customer refund obligations of 370 million won. It is in a state where it can hardly cover the money to be returned to existing customers. Boram Sangjo Siloam had assets of 17.4 billion won against customer refund obligations of 30.6 billion won. Boram Sangjo Leaders had assets of 295.1 billion won and customer refund obligations of 291.3 billion won, nearly the same. If cancellations increase, a liquidity crisis is feared.
Some in the industry also suspect that Boram Group is using a strategy of splitting entities to confine insolvency within individual entities. Under the structure of funeral service products, subscribers pay in over many years and then receive funeral services. If they do not use the service, they get a refund at maturity. In principle, the refund obligation lies only with the entity that signed the contract.
It has also been pointed out that the separated structure is used to secure voting rights in the Korea Sangjo Mutual Aid Cooperative. The voting rights held by Boram Group's seven affiliates in the cooperative are known to be about 48%. The Fair Trade Commission determined that although Boram Group is effectively a single company, it secured excessive voting rights through its affiliates. Since 2022, it has issued a corrective order to combine the voting rights and limit them to 20%, and has demanded compliance.
Boram Group explained that it operates through multiple affiliates in order to build different sales networks in each region and differentiate marketing methods. An industry official said, "Funeral services companies usually operate as a single entity when they acquire another one, in order to manage members in an integrated way and cut costs." The official added, "Boram Sangjo's structure of operating separated affiliates likely has some other management purpose."