Best Korea Brands: Country Overview
By Ji Hun Moon
Once one of the poorest countries in the world, South Korea is now richer than the average European Union nation, a feat it achieved in a mere half century. With robust investment in its brands over the past two decades, Korea has given birth to powerhouses like Samsung, Hyundai, and Kia that compete side-by-side with the world’s top brands. Its swift and staggering success has made South Korea an exemplary model of growth, but now that it has almost caught up with the developed world, it must keep innovation at the fore to solidify its gains and continue its heroic ascent.
The power of conglomerates
Much of South Korea’s success can be attributed to the work of big family-controlled conglomerates. Originating in the 1960s, in the aftermath of a devastating war, the uniquely Korean business structure created global multinationals with huge international operations. Comprised of a single, large company or several groups of companies, each conglomerate is owned, controlled, or managed by the same family dynasty. Not dissimilar to Carlos Slim’s Group Carso in Mexico or Lee Ka-shing’s holdings in Hong Kong, Korean conglomerates have produced some powerful brands. Not least among these is Korea’s number-one brand, a company that’s making headlines around the world: Samsung.
Samsung Electronics, one of over 80 businesses within the Samsung empire, has become the world’s number-one smartphone maker, now outselling Apple’s iPhone. While Samsung is also dominant in electronics and appliance sales, its rise to the top in the smartphone category has made the brand a household name globally with a sought-after, must-have product that people line up to buy—the Galaxy. As reported in Interbrand’s Best Global Brands 2012, Samsung Electronics’ brand value rose by a whopping 40 percent compared to the previous year, and has held its number-one spot in the American TV market for seven consecutive years. Another conglomerate-led company, Hyundai, has seen great success as well, coming in at number two on the Best Korea Brands list.
Though conglomerates are considered the most influential agents in the Korean economy, and have been surprisingly resilient, there is a downside to Korea’s dominant business structure. For one, the system has proven to be prone to fraud and corruption such as questionable accounting practices and illegal political contributions. Korean conglomerates also tend to be overly dependent on the founding family—which may be fine for a time, but can leave a company vulnerable as leadership passes from one generation to the next. Additionally, there are signs that conglomerates may be impeding the development of small- and medium-sized businesses in the country, creating massive imbalances in the economy and stifling innovation.
However, a system that produces companies like Samsung and Hyundai can hardly be called ineffectual. Korea’s conglomerate-run companies have demonstrably applied and improved existing technology, even very sophisticated technology like touch-screen smartphones. But outside of internet businesses and computer gaming, South Korea has few start-ups or leading-edge technology firms. Nationwide venture-capital businesses are lacking, since each conglomerate has one of its own. Therefore, entrepreneurship is low. The drawbacks of the business structure may not outweigh its benefits, but as South Korea ventures boldly forth into the technological frontier, greater efforts will have to be made to support the level of innovation that will be necessary to maintain the country’s current level of growth.
"Now that Korea has almost caught up with the developed world, it must keep innovation at the fore to solidify its gains and continue its heroic ascent."
Beating foreign competitors at their own game
Fortunately, when a company or country is playing catch-up it can look at what others are doing and figure out how to do things better. Hyundai, for instance, has outcompeted Toyota in the market for reliable, affordable, efficient cars. Now looking to segue from the “value” play to desirable brand, Hyundai has proved it’s bridging the gap when the Elantra was named North American Car of the Year at the 2012 Detroit Auto Show. Announcing its ambitions to the world last year, Hyundai Motors designated 2011 as a year of “New Thinking, New Possibilities,” as it communicated its slogan and experimented with revolutionary changes at various touchpoints to transmit its brand philosophy: “Modern Premium.” Gearing its marketing efforts toward future consumers, Hyundai’s efforts to transcend its more conservative former image have added vitality to the brand.
No stranger to innovation and committed to “challenging every convention out there,” Hyundai’s dedication to improving everything from powertrain efficiency and performance, to driving experience and vehicle testing, has led to a number of achievements. Their engines, for instance, using Gasoline Direct Injection (GDI) technology, push out more power, improve fuel efficiency, and have swept multiple awards. Another innovation, Blue Link, “a concierge, mechanic, and security team all built into your dashboard,” is a hands-free navigator that helps users locate their friends, points of interest, and gas stations with the best prices. Enhanced roadside assistance and a monthly vehicle report help users take care of their cars better, while “Eco-Coach” teaches them how to save money and become more fuel-efficient drivers. Hyundai also boasts some of the most advanced testing facilities ever built. Though Hyundai certainly did not invent GDI and is not the only one integrating technology into its vehicles to improve the driver experience, the company is keeping up with the latest trends and excels at refining existing technology.
Kia Motors, in the number-three spot, is capturing the hearts and minds of millennial and Gen Y consumers with aggressive styling and ambitious plans to bring its flagship K9 model to the world. Making news in 2010 for its in-car infotainment system, Kia UVO, Kia has proven that it understands the wants and needs of younger drivers and can deliver breakthrough new experiences. Developed in cooperation with Microsoft, Kia UVO, short for “Your Voice,” has advanced voice- and touch-activated features that allow Kia drivers to safely and easily make and answer phone calls, receive and respond to text messages, access and play music from a number of media sources, and create personalized in-car communications and entertainment experiences.
Since ramping up its efforts to become a true tier-one automotive brand, Kia has increased sales and market share. In the past year, sales exceeded 500,000 for the first time in America and BRIC sales also increased, making it a record year for the brand. To strengthen international growth, Kia Motors integrated its websites under kia.com and adopted a uniform style with experience-enhancing designs in an effort to unify and better manage its brand communications. Kia also raised brand awareness through its global video-making contest called “Inspired by Kia.” The culmination of these brand activities made it possible for Kia to enter the Best Global Brands list for the first time, ranking at 87.
"Since the late 1990s, the value and importance of brands has become increasingly appreciated in Korea."
Given the stature and accomplishments of these brands, it’s easy to focus on the established global players, but technological innovation and savvy marketing is certainly not limited to automotive brands in Korea. NHN, for instance, a novel portal for search, micro-blogging, gaming, and philanthropy, gives us a glimpse of the web’s future. Similarly, brands like SK Telecom and KT are quietly transforming communication through devices, computing, and broadband.
As the innovator of “customer happiness networks,” SK Telecom adopted SK Group’s philosophy of “customer happiness” in the context of its industry. With this philosophy driving its efforts, SK Telecom has pioneered the Korean telecommunications industry and continues to evolve in the era of LTE 2.0 through innovative changes. Despite the ultra-competitive nature of the telecommunications service market, SK Telecom has ranked at the very top of major customer satisfaction ratings for over ten years, while cultivating an impressive brand presence.
Yet it isn’t just the tech sector that keeps Korea striding ahead. Its backbone infrastructure of heavy industry, joined-up approach to business, and focused and aggressive investment and development strategies, are the keys to Korea’s continuing success. Many observers have already remarked upon China’s interest in Korea’s approach to business and the results speak for themselves—providing the focus and critical mass to create world-leading financial services, retail experiences, and of course, heavy industrials.
Building Brand Korea
Since the late 1990s, the value and importance of brands has become increasingly appreciated in Korea. Beginning with the fundamental discussion of what a brand is and then shifting the conversation to management and growth, many companies began to view brand as a core asset. Brands like Samsung are able to maintain leadership in the market thanks to high-quality products and consistent brand activities that emphasize experience and communication. For its extraordinary efforts, Samsung has garnered global attention and experienced an unstoppable rise in both business performance and brand value. Cultivated over the past two decades, Korean brands have proven to be irresistible to consumers across the planet. Case in point, the phenomenon of Psy, whose ‘Gangnam style’—which captured the imaginations of people the world over, became the most viewed YouTube video ever, and spawned countless imitators and spoofs that fill the pages of the web—may be a sign of what’s to come.
More than teaching us all some new dance steps, Psy signifies Korea’s potential to establish itself as a global cultural influence. This provides greater depth and opportunity for “Brand Korea,” literally opening a new door for brands in a world ever more hungry for entertainment and new cultural references. Given this exciting backdrop, it’s hardly surprising that the world is beginning to recognize the hotbed of innovation that is Korea.