January 15, 2010 07:28
Korean businesses are stepping up their marketing efforts in Asia as the region's markets are emerging as the next land of opportunities in the global economy. They are targeting the Asian middle class, which is seen as a lucrative new consumer group in the wake of the global financial crisis.
The number of middle class consumers in Asian countries has grown more than six-fold from 140 million people in 1990 to 880 million in 2008, according to a study by the Japanese trade ministry. Each Asian middle class household has between US$5,000 to $35,000 in annual disposable income.
Korean companies are positioning themselves to gain a strategic foothold in Asian markets for their key IT, electronics and automobile exports, as well as finding new opportunities in the retail, finance and power generation industries.
◆ Samsung and LG Lead Appliances Markets in Asia
The latest LCD TVs manufactured by Samsung Electronics and LG Electronics stand side by side in Jakarta International Airport in Indonesia, and the scene is virtually the same in the city's electronics stores. In Electronics City, Jakarta's largest household appliances store, and in large retailers such as Carrefour, products made by Samsung and LG are displayed in the best spots.
According to German-based market researcher GfK, Samsung ranked first in sales of LCD TVs during the first 10 months of 2009 in five ASEAN countries -- Malaysia, the Philippines, Singapore, Thailand, and Vietnam. LG is poised to capture a dominant share of the home appliances market in Indonesia, which boasts the world's fourth-largest population of 237.5 million people. Last year the company was the top seller in Indonesia in nine categories, including LCD TVs (32 percent), audio electronics (32 percent), refrigerators (29 percent) and air conditioners (34 percent).
In 2000, Asia accounted for 47 percent of Korea's total exports, and the figure rose to 52.3 percent by last year. In contrast, the share of Korean exports heading to the U.S. dropped from 21.8 percent to just 11 percent over the same period. Asia is increasingly the most important region for Korea's international trade.
◆ Financial Companies Take Localized Approach
Korean financial companies are also stepping up operations in Asian markets. Korean banks used to have just one or two branches in Asian countries to do business with Korean residents, but now the situation has totally changed. Hana Bank, which began operations in Indonesia in 2007, currently has 17 branches there and began posting profits in July of last year, only 20 months after it opened its first branch. Shinhan Bank became the first Korean bank to obtain a license to operate a separate unit in Vietnam in November of last year, and other securities and investment banks are also working to expand business in Asia from their bases in Hong Kong and Singapore.
Shipbuilders and construction companies, which have been hard hit by the global economic slump, have been doing brisk business in Asia. Hanjin Heavy Industries, which has three years worth of projects for Subic Bay in the Philippines, operated its factories all year long in 2009 except for New Year's Day. Korea Electric Power Corporation operates electric power plants in the Malaya, Iligan and Naga regions of the Philippines, producing 2.06 million kW of electricity, or 14 percent of the country's total power supply.
A growing number of mid-sized Korean companies are also making inroads into Asian markets. Plywood and paper manufacturer Korindo ranks among the 20 largest companies in Indonesia and is expanding into natural resources development and automobile assembly and sales. Yongma Electronics, based in Seoul, launched its electric rice cookers in Indonesia in 1995 and now controls 30 percent of the market there. Lock and Lock, which makes plastic containers, generated W230 billion of its W300 billion sales last year from China, Thailand and other Asian markets (US$1=W1,121).
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