If it wasn’t bad enough that Apple is trying to destroy the Korean MP3 industry, Da’ Chosun reports that evil Yankee software companies are price gouging in the Land in the Morning Calm:
U.S. software is up to three times more expensive in Korea than in America, a committee in the Information and Communication Ministry said Friday.
A Program Deliberation and Mediation Committee (PDMC) survey of prices of 18 U.S.-made software programs indicates that U.S. software companies with no local rivals are making unreasonable profits in the Korean market, to the detriment of customers.
It showed that Microsoft’s SQL Server 2000 Ent 25Client is priced at W18 million in Korea, but costs only US$4,790 or W5 million in the U.S., some 3.6 times less than here.
Of course, with business software piracy rates in Korea something like 55 percent, one might be surprised that there are any “customers” to get gouged. After all, it was piracy that almost sank Hangul. I’d be keen to see what U.S. software firms are selling their wares for in China, where piracy of business software runs somewhere around 95 percent.
Back to Reigncom’s war on the iPod for a moment. The thing that amused me the most about listening to Reigncom bitch about Apple’s predatory business practices was this photo of the iRiver in the clutches of Satan himself, taken straight off the iRiver website:
Microsoft Chairman and Chief Software Architect Bill Gates holds an iriver H10 digital music device at the 2005 International Las Vegas, January 5, 2005.
You know who I feel sorry for? Samsung. The first company to actually manufacture MP3 players, the Korean electronics giant just can’t seem to find its groove in that market. Of course, I’ve got a soft spot for Samsung. This guy, however, doesn’t, and he’s got his own blog to explain why.
18 Comments
Why is it always the USA’s fault. Up until recently you could not purchase a foreign car in Korea without paying a 100% duty. Compare the cost of a Korea refrigerator to a US one (made in the USA too), the Korean product is 20 to 40% higher priced. If it’s sold in the US Market the price has to compete with US prices.
Look at the high proice of food in Korea. Rice costs 4 time more than almost anywhere else in the world and Korea defends it’s policy. Korean consumers are getting ripped off by Korean companys. Start fighting for your rights Korean consumers.
the guy with the blog is probably some japanese guy living in america angry that samsung is moving sony aside. either that, or he’s some angry expat like many of y’all.
Well, I’d definitely say he’s angry about something.
The “Samsungsucks” guy has a legitimate point. Having spent much time doing design for different parts of Samsung, it is quite clear that there is no centralized or organized approach to branding and marketing for Samsung products, unless someone has died just recently and changes have been made. That “Samsungsucks” guy should realize that it could be worse: Hyundai management don’t *even* know what an advertising concept is; they probably think it is something Japanese . . .
before samsung there was sony
mp3 player back in ‘98/99
Corea #1
Korea practices some very unfair trade practices. As mentioned above you had to pay some crazy Tariff to buy an American car. Correct me if I am wrong but I believe a few years ago it was actually impossible to buy a Japanese car. As Fred mentions Korean producers rip off their own country far more than foreigners. I can buy the same Korean product in America for 30% cheaper. But since Korea places a 50% tariff on many goods they have no competition in Korea and royally rip off the consumers. The US needs to start playing the same games with South Korea.
In the Korean University I worked at every year they would tell us in advance that someone would be checking to see if the software on the office computer was all legal. So 1 week before they would always take off all the illegal pirated software and then reinstall it a few days after the inspectors left. If Microsoft only knew. Hmmm how many PC bongs have more than 2 copies of windows
Much of it has to do with Korea, and Japan and China too, emphasizing being an export oriented economy. Lending and infrastructure were all geared towrds export and not towards providing a consumer infrastructure. A consumer infrastructure would cause a decrease in savings which would mean less money to finance export oriented industries.
In China they bitch and moan about price discrepancies a bit too, but aome here complain even if the price is the same because ‘China is a poor country’ and should not be expected to pay as much.
Also with regard to buying foreign autos, wasn’t there a practice of tax auditing those who bought foreign autos in korea?
Umm, if Samsung isn’t doing great selling MP3 players - they should stop with the MP3s and sell something else.
yes, there was a practice of auditing people who had bought expensive foreign automobiles, something like ten years ago. at one time there was the same audit for people who bought expensive ‘luxurious’ korean automobiles, too.
i believe that most of the import taxes have been removed. american cars are no longer the super-high-priced vehicles they once were (i think). and now japanese cars are readily available, too, a big step. give credit where credit is due: since the economic crisis korea has been dismantling a lot of the protectionist policies that were once routine.
now, i’m trying to get something clear… are you saying that microsoft is justified in double or triple charging the customers who are FOLLOWING the rules in korea because there are so many who are NOT following them? that doesn’t seem like sound policy if you’re trying to encourage people to buy legitimate copies of software.
oh, and, what do you suppose the piracy rates are for microsoft products in the u.s.? among people i know, it’s considerably more than 50%.
np
No, they were auditing people who bought foreign cars as recently as five years ago, and it was systematically targeted at these people (http://www.acea.be/ACEA/31012000.html) Also, by most international standards, Korea is still one of the most closed markets in the world.
now, i??m trying to get something clear?? are you saying that microsoft is justified in double or triple charging the customers who are FOLLOWING the rules in korea because there are so many who are NOT following them?
No. What I’m saying, however, is that the fact that over 50 percent of users are going to be using pirated versions may be factor in the costs of localizing the software. And the fact that Microsoft is apparently not the only one engaged in the practice would seem to suggest there is more going on than simply Microsoft greed, and I’m willing to bet dollars to donuts the piracy rate plays a big part. Gotta recoup your losses, after all.
oh, and, what do you suppose the piracy rates are for microsoft products in the u.s.? among people i know, it??s considerably more than 50%.
Now, while I’m not particularly sure what the piracy rate for Microsoft products was in the U.S., the software piracy rate as a whole was 22 percent in 2003.
you make a good point, marmot, about companies not being able to recoup their losses, but how i wonder how expensive it really is to retool software in korean. can’t be too expensive when microsoft is offering office in korean as low as it is.
anyway, i still think it’s foolishly counterproductive to expect the law-abiding buyers of software to have to foot the bill for the lawbreakers doing piracy. not only is that patently unfair to the people trying to follow the rules, but it will encourage some to just say ’screw it!’ to the people trying to screw them.
oh, and giant panda, if the audits were going on as little as five years ago, i stand corrected. i must be getting old… 1990s all one big blur. wait a minute, the _five_-year-old article you linked says the audits are ‘no longer an official policy,’ instead citing ‘lingering fear of tax audits’ that can be ‘a powerful deterrent to any consumer in any country.’ so maybe i was right about the audits being from ten years ago. i don’t recall them being around after the imf bail-out, which was my point.
also, on what basis do you say korea still has one of the most closed markets in the world? i’m not saying it’s a picnic for foreign companies, but it has gotten a lot better. even if you are only talking about the _auto_ market, do you have something more recent on which to base this? things seem very different now from even just a year ago. i nearly get run over by bmws or volkswagens on a daily basis now.
np
Nora-
A recent OECD report “…suggested the government open its service market further, complete its restructuring of the financial sector and further ease regulations on foreign investment…remove ownership, procedural and regulatory barriers to foreign direct investment, which is currently relatively low.”
http://times.hankooki.com/lpag.....711860.htm
And, according to a 2004 US gov. report:
Autos
“The combination of relatively high tariffs and value-added taxes continues to render a variety of imported products uncompetitive in Korea. One such product is motor vehicles, which are subject to a tariff rate of 8 percent B more than three times the U.S. tariff B as well as multiple taxes compounded on the tariff, which raises the effective tariff rate to above 12 percent… a Korean study showed would increase foreign auto imports to 12 percent of the total market in 5 years if the tariff were reduced to 2.5 percent - and simplification of the auto tax system would have the most immediate and significant impact.”
“In July 2003, the Korean government modified the Special Consumption Tax from a three-tier to a two- tier system that is still based on engine displacement size. After the modification, vehicles with engine displacement up to 2000 cc were taxed at 5 percent while vehicles with engine size of 2000 cc or greater were levied a 10 percent tax. Even though the U.S. Government continues to urge the Korean government to undertake such changes in a transparent manner which fully involves all stakeholders, this decision was made by the National Assembly with only a few days notice, allowing little time for industry or U.S. Government comments. It is highly unfortunate that such important decisions are being made in a such non-transparent manner.”
Drugs
“Regarding pharmaceuticals, in June 2002, the KFDA implemented Drug Master File (DMF) requirements that oblige manufacturers to submit significant quantities of proprietary manufacturing data to the KFDA as part of the drug approval process. The Korean government says the
requirements are designed to assure product quality. U.S. industry, however, has expressed concern that because the requirements apply only to new drugs they apply almost exclusively to foreign manufacturers
of innovative pharmaceuticals, and not to local generic companies. Industry has raised concerns that the requirements may delay market access and could jeopardize intellectual property protection.
Agriculture
“Of particular concern, the new import inspection program mandates annual maximum residue limit (MRL) testing of agricultural products on a packing-house basis and the associated testing fee of approximately
$1,960 for foreign products. However, Korean domestic agricultural products are only subject to random tests paid for by the Korean government.”
http://www.ustr.gov/assets/Doc.....6_4779.pdf.
I find the implied allegations of cooperative price-fixing to be an interesting turnaround. In American antitrust law, one of the more well-known price fixing cases involved Cheil Jedang, which plead guilty to conspiring with Japanese companies and Archer Daniels Midland to fix the price of the amino acid lysine. (http://www.usdoj.gov/atr/publi.....6/1030.htm) Go figure.
Nora–every country has its protectionism, I didn’t link that to slam Korea, I remember other references to more recent audits, but was too lazy to look for them. And now I have a hangover. I just don’t think the Korean government is doing its citizens any favors by denying consumers a range of options.
a litte off topic, but it was another korean company who first made mp3 players, not samsung.
http://www.mpman.com/sites/english/c_history.asp
Microsoft has to make money in Korea one way or another.