Three articles this past weekend struck a theme in me. As anybody who lives here tells you, one of the priorities in Korea is to promote Korea as a brand. This is a constant source of conversation, especially in the wake of the new Korean National Tourism Office’s slogan “Korea Sparkling”.
First thing to attract my attention is an “award” for LG Electronics:
LG Electronics Inc., South Korea’s electronics giant, said Friday that it has received an award for the high quality of its home appliance products from a U.S. retailing company.
Citing an annual survey by Best Buy, LG Electronics said its home appliance products such as washing machines and refrigerators were chosen as the “Best of Best” brand in the U.S.
On the heels of this laurel to LG came a more general look at Korean Brands in the Korea Times. It starts with a hook specific to Samsung Motors, but continues to go on about the value of Korean brands:
According to its annual audit report released last month, the French automaker paid 16.7 billion in royalties to Samsung last year for using the brand, including the name, font and the famous blue oval logo. Since the company sold 119,088 cars last year in Korea, the license was estimated to cost 139,924 won per unit.
…
Some other conglomerates are also enjoying healthy profits from leasing their brands to affiliates and former affiliates, though the rate is not as high as Samsung’s. LG Corp., the holding company of LG Group, receives 0.2 percent of revenues at its affiliates, such as LG Electronics and LG Chem. The total royalties it garnered last year reached 135 billion won, which is about one quarter of the firm’s total earnings.
…
Daewoo International also receives 0.15 percent of Daewoo Electronics’ global revenue every year. Doosan Heavy Industries also had paid several billions of won every year for using the now-defunct Daewoo brand on its construction equipment sold outside of Korea until last year before it decided to go by its own name earlier this year.
…
Last month, the Financial Times evaluated the Samsung brand at $12.7 billion. It was about one fifth of Google’s and a quarter of Coca Cola’s value.
All this is important, because the KNTO seems to feel that by promoting Korea’s technological competitiveness and learning the lessons from its corresponding famous brands one can promote Korea as a whole. Note the head of the KNTO in a recent newspaper interview:
“We are equipped with the world’s best technologies in mobile handsets, automobiles, shipbuilding and water conversion facilities. A lot of foreigners consider those facts [among others] particularly appealing…We were trying to forge partnerships with large-scale domestic firms, but some of the global companies like Samsung were reluctant because their overseas brand recognition is far higher than the brand image of Korea.”
Or in another example, the new “Korea Sparkling” ad, note the conspicuous placement of the KTX, mobile phone, and WiBro/DMB technology.
There is one slight problem with this though. Do consumers see these technological advances as Korean? This brings me to the third thing that crossed my eyes this weekend. Anderson Analytics released a survey on brand recognition and country of origin among American college students. In the survey about 65% of the respondents identified the “Famous Korean Brands” Samsung and LG as either from Japan or the USA:
Also of note above is the fact that 55% of respondents found Hyundai motor to be Japanese as well.
This leaves me with the last line by the president of the KNTO cited above:
“We were trying to forge partnerships with large-scale domestic firms, but some of the global companies like Samsung were reluctant because their overseas brand recognition is far higher than the brand image of Korea.”
This leads us to the final table in the Anderson Report. A list of respondents who reported that country X makes a quality product in general:
Worse than China? Ouch! No wonder these famous brands are trying to do everything to avoid being recognized as Korean. Got to protect that Brand investment.
Update:
The Hole scoops the Chosun. Today’s website has an article referencing the “Samsung in Japanese and it could be good” effect:
However, when the same respondents were asked about product quality, a mere 39.7 percent said that Korean products were reliable, less than half the 81.8 percent who said the same of Japanese products. That means it is helpful for Korean brands to be thought of as Japanese. We should think about this — Americans buy products from Samsung, LG and Hyundai because they think they come from a third country. We have to enhance the value of Korean brands in order for people around the world to buy Korean products because they actually come from Korea.
I am debating saying something snarky about being objective, but why fight the tide.
24 Comments
Ha ha, funny post.
And 78% believed the US makes products of quality.
Boy, no wonder our crazy education system didn’t make the list.
Instead of churning out half baked ideas, KNTO should be investing more time and money in providing accurate and detailed information about local travel spots, such as how to get there, accomodations, etc, among others.
I mean there are places to go and things to do here, but there is little or no info about them, except for the obvious places, like the JSA.
I really hate to generalize/stereotype whenever possible, but i’d venture to say that koreans are some of the most insecure people i’ve ever met. the korean national pass-time seems to be to scour the news for any article that mentions korea in a statistical sense (eg - GDP, life expectancy, literacy rate, etc) and then to immediately see how they compare to others (usually their immediate neighbors, along with the US). If Korea makes any gains in said statistics over previous surveys, the positive gain is bound to be front page news on every newspaper.
What i found REALLY interesting was the manner in which the national news agency - Yonhap - sent out the story concerning LG being named the top ‘appliance’ brand by US Retailer Best Buy. The headline proclaims:
“LG Electronics chosen as ‘best brand’ in U.S.”
I mean seriously, how misleading can you get?
Haha. Samsung and Hyundai from Japan. Very predictable.
Hmm. Reading the above, what strikes me most is the ignorance of the survey population, not particularly any failure in brand marketing.
Total wank. Smells like VANK.
LG sounds a bit like GE, hence the confusion.
Also, you can’t really take these kinds of polls seriously, particularly among the famously-geographically-incompetent US student population. Most would probably not be able to distinguish between Japan, China and Korea as nationalities or cultures, much less distinguish between products from these nations.
For generic appliances it seems most people go for price over brand, so in a few years Chinese products will eclipse Korean ones.
Also, what mondoo said.
@ #5
Perhaps. It could also be that the consumers don’t actually give shit where the company originally came from.
for anyone truly interested, the KNTO hasn’t been the KNTO for a while now.
it is simply known as the KTO.
@ #3
Then can I say that Americans are one of the most ignorant people who I have ever met? They think whatever they make and whatever they do are the best in the world, not realizing that their manufacturing quality sucks, and that China is the huge creditor of the US. South Koreans have been comparing themselves with the others to outperform them in order to survive. Most Americans think most important things happen in the US soil and do not know what’s going on abroad, purchasing Chinese stuff spending money they borrowed from China. Americans seriously need to learn to compare themselves with the others to SURVIVE. Before you make fun of South Koreans, remind yourself that they are the ones who are willing to go with the US.
French> So let me get this straight since I never quite understood this line of reasoning:
1. The US buys physical goods from China made by Chinese labor with US Dollars
2. The US borrows those same US dollars back from China
3. Repeat
So then we are trading pieces of green paper for real goods? Sounds like a great deal to me!
This is why I never quite understood the trade deficit paranoia. Those dollars will eventualy have to be used to buy US things, or else are just wasted.
london> You do have a point. One thing to remeber is the sample is a narrow demographic with some pecularites that may make it predisposed to such a result (e.g. age, education, income level).
Goat> I am not so sure of that in a way. The secondary poll shows that responants do consider orgin as a possible way to evaluate quality. This would make it in their self-intrest to find such out.
You can’t be serious with your #13 - it’s a joke, right?
There is no such thing as ‘just wasted’. China, Japan and Saudi each have a trillion USD in ‘cash’ (T-bills) sitting around. Add in the other Gulf Coast countries and the smaller Asian tigers and you have another two trillion. At the moment, it can’t be spent; there is nothing to buy. Real estate is at its peak, stock markets are at their peak, fine art, junk bonds, everything, everything…overvalued. Yes, it would be a ‘waste’ to buy into any of these assets now. But that doesn’t mean the money simply disappears with zero net effect. The first central bank to blink and sell of some dollars will crash the USD, making all those holdings drop substantially in value, but the result would (will) be a painful global recession, since America’s gluttonous consumers will have no buying power, and the rest of the world will have no one to sell to. And the US can’t export its way out of trouble, as you imply, because the US simply doesn’t make anything anymore.
The alternative to this is inflation. The world’s central banks are at their limit for dollar accumulation. If they stop buying US treasuries, then all the money the US is printing to will have to flow into the hands of banks and consumers at a very low price (low interest). The feeding of the massive US current account deficit (800 billion per year now) into general consumer markets will cause inflation, which, as we all know, hurts the poorest people the hardest. Inflation is essentially a tax, and the easiest way for a government to dig itself out of a debt hole, at the expense of its citizens who have to use the devalued currency to buy the things they need to live, and to save. The only reason this inflation has been avoided until now is because the central banks have been buying the Treasuries. They absolutely will not continue indefinitely buying up ‘pieces of green paper’ that cannot be exchanged in the future for anything tangible.
#3
Perhaps Koreans are a bit insecure, but they have reason to be. Most of my Korean friends over 35 years old remember when they were kids and Korea was a very poor country, nearly 3rd world. That’s an amazing achievement to develop that quickly in such a short amount of time. It was likely not even possible without a great deal of national pride and emotional investment.
This same national pride and emotional investment is still in strong force today. Hence, the excitement Koreans feel when they are ranked #1 in the world in something and the despair they feel when they slip. Most Koreans I know today regard the recent “meager” 5% annual GDP growth as a failure of not only their economy, but their country and even themselves. Hence, the insecurity.
(The reason for this slowdown in GDP growth is a topic well outside this post, so I won’t digress.)
I would think most people in the world, including most of us on Robert’s blog, would likely have reacted in a similar way if we lived in similar times in a similar country and hence would likely react in a similar way today to similar news (given a similar history, goes the logic). I could be wrong, but I’ll stand by my belief for now.
#15
“And the US can’t export its way out of trouble, as you imply, because the US simply doesn’t make anything anymore.”
+
“They absolutely will not continue indefinitely buying up ‘pieces of green paper’ that cannot be exchanged in the future for anything tangible.”
There’s a good economic reason why the U.S. still had one of the highest per-capita GDPs in the world, despite being a net importer, not making much of anything tangible, and being hobbled by many other liablities, including the world’s likely worst health care system, most expensive war, and a massive budget and national deficit : knowledge creation.
The U.S. is still far and away the center of innovation in the world, perhaps not on a per-capita basis, but definitely overall. Innovation is in tangible, but has a higher value than almost any manufactured good.
The question then becomes how long can the U.S. maintain this leadership ? With more borders going up (physically, legally, and culturally), the U.S. is slipping. As an American myself, I hope the U.S. can reverse this decline before it’s too late. My big fear is that the U.S. will reach a tipping point when the outflow of brain capital triggers an irreversable downward spiral of per-capita GDP, quality of living, and thus attractiveness to investment and innovation.
Yes, a crash of the U.S. dollar may be the straw that breaks the camel’s back, but it is just one straw out of the bundle. The bundle is much bigger than that, I believe, and unfortunately the camel is already showing signs of weakness.
Another big reason for that high per capita GDP is that much of what the US is spending now internally(D is for domestic) is debt, borrowed money. Spending on credit counts the same in GDP. GDP is also denominated in USD, so after the crash, the loss will be relative, not absolute. It will be a loss nonetheless.
Many straws, true.
Dram_man,
I understand what you are saying but I am not sure that I fully agree. I am not sold that the respondents would use country of origin as a measurement of quality if not prodded to do so by the survey.
Pretty much irrelevant anyways as the origin of the company has little to do with where the product is made.
Goat> I can somewhat agree with you in that I do not think that consumers (espeicaly US consumer who are bombarded with imports) are conciously selecting goods based on where their company has its registration papers, nor are they on the whole as absolute as to say “I am never buying a product from North Ostunderlandistan”. Also your point about country of orgin and place of manufacture is well taken.
However, I submit that such information is a proxy in a world where information is costly. To take a some what extreme example, lets say we go bungie jumping of the Golden Gate bridge. I bring two bugie cords. They are both brand new and the same in any visable way. One is marked “Guyana Goodness Bungie” and the other “French Fantasic Bungie”. Considering your life depended on it, honestly which would you pick?
And then if you really had time to find out they are made in the same factory, use the same South American rubber plantations, and even are the same company since Guyana is a French posession, you may very well become more indifrent. However finding all that out, given the situation, would have cost you something in time and effort. This may have been worth it for such a life saving device, but are you really going to same amount of research for radio?
I really hate to generalize/stereotype whenever possible, but i’d venture to say that koreans are some of the most insecure people i’ve ever met. the korean national pass-time seems to be to scour the news for any article that mentions korea in a statistical sense (eg - GDP, life expectancy, literacy rate, etc) and then to immediately see how they compare to others (usually their immediate neighbors, along with the US). If Korea makes any gains in said statistics over previous surveys, the positive gain is bound to be front page news on every newspaper.
That what you call “insecurity”, others may call it “competitive spirit”, which, of course, is a totally different thing. The choice is more revealing of the bias of your own mental interpretive grid.
This constant striving, grim determined effort to push ahead, and measuring of oneself against rivals…is not exactly something that most wandering slackers can relate to, of course…
An excellent and humorous point, NK.
To attenuate it just slightly, though, you will no doubt agree that a measure of the quality of a person’s or group’s competitive spirit is how they handle themselves when they lose a competition.
See tabitha’s comment #33 in the Miss Universe thread, for example.
…you will no doubt agree that a measure of the quality of a person’s or group’s competitive spirit is how they handle themselves when they lose a competition.
It is unfortunate that ugly political sentiment rears its ugly head where there ought to be goodwill and sportsmanship. But, for better or for worse, Japan-bashing/Japan-envy remains a national sport and past-time of Korea. It can be argued, though, that it was (is, still?) a big reason why Korea is the 12th largest economy. But I am sure many Korean males were able to put this historical enmity aside and partake of the universal appreciation of tits, legs, and ass that knows no politics.
#21
Well put, NK. To discount comparisons as purely insecurity while ignoring competitive spirit is a disservice to Koreans and Korean culture.
Also, Koreans are often very gracious losers.
When the Korean lost their World Cup matches, were people from the winning team’s country harrassed ? When Korea lost the final game of the WBC to Japan (after beating them 2 games out of 2 in the same tourney), were Japanese people harrassed ?
What Koreans don’t like are cheaters, including themselves. To cheat and win is worse than losing.