Under Valued? Fairly Valued?

Apparently it has been decided that what Korea needs is brand improvement:

The number one aim of the new committee, tentatively named the Presidential Committee on the National Brand, is to shed the image of what is often referred to as the “Korea Discount,” which conjures images of the cheap or sub-quality products long associated with the country and its exports…

“A product made in Korea that is identical in every aspect to a product made in the U.S. is valued at only 66 to 67 percent of the U.S. product,” Kotra said in the report.

President Lee last week also noted that Korea, as a brand name, is known less than even some of the country’s own private businesses, such as Samsung or Hyundai.

I think the KOTRA report mentioned is featured in this Korea Times piece, wherein they discuss a little about the methodology of the study:

KOTRA asked 457 buyers around the world earlier this month how much they’re willing to pay for a Korean product versus those from the U.S., China, Germany and Japan. Respondents said if a Korean label costs $100, they would pay $149.4 for German, $139.1 for Japanese, $135.6 for American and $69.2 for Chinese equivalents.

How much would you pay for shoes? That’s it? This seems a little silly to me given the fame some countries have in certain products (notice how the shoes study left off Italy and France, home of the couture fashion houses). Imagine if KOTRA asked “How much for a pint of beer?”, something tells me that prices would be higher for the German variety. I am sure with “shoes” there are similar product specific biases.

Such nit-picking aside, I would like to raise something else, is Korea’s “Brand” really “undervalued”, or has the market correctly assessed Korea’s brand value?

President Lee’s observation about the fame of Samsung and Hyundai is telling. The valuation decision to buy these brands are based on the product. For a country however we have no easily definable product to buy, well other than perhaps tourism. So let’s start with Seoul’s Innostel program. “Well there just starting.”, you might say. Think this is a low blow? Almost the same program happened before the World Cup with the “World Inns“, and met a similar result. One would think Seoul City’s “Innostels” project would have learned the lessons from Seoul City’s “World Inn” project.

So perhaps we should not just look at tourism. One could say people by a brand because of the customer service one gets from the company. Foreign companies are always complaining about the red-tape of dealing with Korea. So Korea launched a program to improve by creating special areas that were regulation free, one of them was Songdo. As I observed last month however part of Songdo itself is mired in red-tape. In that same post I also observed another red-tape story about pricing that borders on absurdly.

Well perhaps one should buy “Korea” as a brand because they are at least honest about the product. In fact President Lee gave a speech encouraging honest and legal in business dealings because it hurts Korea’s national brand. Perhaps the would have been more influential if, as I observed then, Lee had not pardoned rouges gallery of the same corrupt businessmen a few months prior.

Maybe that is not the best measure, how about a brand being valued on professionalism of the company. The last month saw riots in the national assembly, and refusal to assist in applying the rule of law to the same. And this is not just an isolated incident. 

How about brand value and loyalty come out of a strategic vision? A great brand does not worry about the pettiness of the day and rumors mongers. A good brand looks long term. Again, in the past month or so we have Korea trying to give the “right” economic ideas to foreigners over some Financial Times piece, and now we are plunged into a drama of some lucky Internet crank. 

I could go on and mention nepotism and competitiveness, but you get the idea. And the funny thing is you can find examples of all these things in just the past month or so. Given this stream of news, people may really have valued Korea fairly, not undervalued it as Korea suggests (which is insulting your consumers, but I digress).

Perhaps there are things Korea can do to improve its image that are more effective and cheaper than some new glossy Korea Dynamic/Sparkling advertisements.