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Korea
Needs Better Offshore Marketing
By Tom Coyner
Korea Times
Sept. 13, 2006
TOKYO - This week I' m writing from Tokyo, the city where I discovered Asia 35 years ago
as a Waseda University student. Most of my
career I have been better known as a Japan
specialist than as an ``old Korea
hand.'' Majoring in Japanese as an undergrad and then getting my MBA, I
eventually worked in Tokyo
for over a decade in high tech sales and marketing. I started out cold
calling on Japanese firms to sell mainframe computer utilities software,
and in time became a marketing director of an American switching hub
manufacturer.
From this
experience I have been able to look at the Korean market through ``Japanese
eyes.'' Japanese business has been and seems to continue to be a model by
which much of Korean business follows. For example, Korea's chaebol are very
much patterned after the Japanese zaibatsu, written in the same
Chinese characters, although these days the more politically correct term
is zaikai.
The main
difference between the two nations' industrial groupings has been that the
Japanese have historically anchored each of theirs with a bank. But more
significantly, the commonalities shared by the countries' economic
development have been striking. While there is not enough space here to
treat that subject in depth, let's consider where Korea is today and what Japan of the past can offer as an example of
where Korea
may wish to be going.
Both
countries began their international trade with products whose acknowledged
inferior quality was compensated for by low prices. The Japanese, and now
the Koreans in their wake, have been able to evolve to where quality
assurance, if not consistently at the very top, is nonetheless world class.
Back around the 1960s, the Japanese arrived at the same crossroads which
confronts many Korean firms today. That is, whether to continue on the
safe, relatively risk-free course of selling their goods abroad through
trading companies and/or as OEM products of foreign brands -- or to take
the plunge and enter major markets, such as those in Japan, the US and the
EU, under their own names.
Imagine
where Sony would be today if corporate visionary Morita had decided decades
ago that the safest and best course had been simply to sell its goods
through and under the Radio Shack brand. Today many Korean companies are
facing the same kind of export and marketing decisions that Morita-san
faced in the 50's and other Japanese companies confronted a decade later.
Like Sony and Toyota
of the past, Korean companies such as Samsung Electronics and Hyundai
Automobile are pioneering Korean brands today. Most Korean companies,
however, have yet to effectively enter the largest markets under their own
brand. The temptation is to sell through chaebol trading firms or
possibly through some other Korean connection in overseas markets.
To compete
effectively in any major market, however, requires becoming an inside
player. While most if not all Korean companies recognize this, the apparent
barrier is a lack of overseas marketing know-how. That includes how to
promote and to sell products with little or no reliance on personal
contacts. While relationship sales & marketing may be the alpha and
omega in Korea,
it works primarily only within the Korean environment. The next most
comfortable option is to sell through Korean channels. While these Korean
and Korean-American venues have much to offer in terms of ease and
convenience, they cannot be considered part of mainstream marketing and
distribution. The Japanese learned this long ago. Yes, they naturally
gravitated to Japan-centered business associations abroad, but they have
also found that the benefits of competing as if they were American or
European players outweigh the risks.
The
liabilities of where Korea
stands today were illustrated in my discussions with a wide range of people
during my ten-day stay in Tokyo.
I met with individuals ranging from executives of Dentsu and Sumitomo to the
Japanese Quaker community's thrifty spenders, whose less than aggressive
consumption is balanced by their open-minded receptivity to Korean
products, given their ongoing interest in and sympathy for Korea's
economic and political development.
My questions
to these people were as follows:
1. When you
think of Korean products, which brands come to mind and for which products?
2. When
compared to Japanese, American or European products, what kind of Korean
products would you consider buying and why?
3. When you
come across the names of Samsung, LG, Hyundai and Daewoo, which products
come to mind for each brand name?
While I
hardly came up with an empirically correct market sampling, I did discover
some interesting points. In spite of some very visible Samsung billboards
about Tokyo,
Korean brands were not as well recognized as I had supposed. Probably the
most successful brand is LG with its unique human face logo that doesn't
clearly define itself as being Korean.
Samsung was
sometimes correctly identified with consumer electronic products, and LG
with appliances, and some Japanese recognized Hyundai as a carmaker. With a
bit of prodding, some Japanese could recognize major Korean brands –
but those brands were hardly on the tips of their tongues. Furthermore,
very few Japanese whom I interviewed had even an approximate grasp of the
wide array of products and services provided by these chaebol.
Frankly,
beyond pop culture, the Japanese seemed less interested in Korea now
than they were a decade ago – and even the hallyu charm seemed
to have faded from what it was a year ago. China
has replaced Korea as
the primary country on Japanese minds, with Pyongyang's
antics being the only topic of concern when it comes to Korea.
As for
selecting a Korean item over a Japanese or Western product, price was the
first consideration but there was also an element of concern about product
quality, safety and overall value. The most common Korean products
purposely selected by the interviewed Japanese were foodstuffs. For all
other product categories, there was a general inclination to go with tried
and proven Japanese brands rather than taking a risk on a Korean product.
Actually, I had difficulty in finding anyone who had knowingly purchased a
Korean product except for food. Some of the Japanese said they were open
minded towards Korean products if they met their purchasing criteria, but
none had decided on a Korean product simply because of its brand name. One
executive said he considered buying a cheaper Samsung television but
thought the cost savings did not merit the risk. He plans to seriously
consider a Korean television next time he buys one, however – about
five years from now.
All of which
leads to the following conclusion: Korean products and brands are much less
well regarded in the Japanese market than I suspect most Koreans believe
them to be. Even worse, one can almost say that Korean consumer products
are basically ignored unless they happen to stand out as price competitive
at the time of purchase. I could find little correlation between Korean
brands and product reputations. I suspect the Japanese example may be a bit
more severe than what one may encounter in the US and the EU given the high
Japanese standards for product quality. On the other hand, Japanese should
be more familiar with Korean brands than Americans and Europeans.
In any case,
however, Korean companies aspiring to become world class in their markets,
but which are not affiliated with a chaebol group, need to explore new
strategies. Advice and consulting from off-shore marketers could help guide
them into major overseas markets. Actually, chaebol subsidiaries
might be wise to do so as well, but could find it politically problematic.
In any event, while the Japanese business model is less than perfect, it
can serve as a basic roadmap of where to go, and suggest some turns to
avoid. As in all business strategies, standing still is not a viable
option. Korean companies now must decide how best to continue to grow
internationally. Unlike in the past, it is now obvious that further growth
requires world-class marketing, in which effective branding must play a
major role.
Tom Coyner
is a long-term resident in Korea and runs consulting firm, Soft Landing Korea.
Coyner can be reached at www.softlandingkorea.com.
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