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Kim, a 40-year-old man who worked in the U.S., bought an LCD TV made by Sony from Costco and shipped it to Korea before he returned home. The reason was simple: even with the shipping fee, it was cheaper to buy it in the U.S. than in Korea. The same model with the same specifications but under a different model name in Korea is priced at W3.5 million (US$1=W990), compared to US$2,200 in the U.S. The same goes even for products made by Korea¡¯s LG Electronics and Samsung Electronics.
U.S. price comparison site Pricegrabber.com indicates the lowest price for a 32-inch LCD television by LG Electronics (32LB9D) is $599.95. Korean price comparison site Danawa.com puts the lowest price at W990,000. The LN46A550 model, a 46-inch LCD TV made by Samsung Electronics sells for as little as $1,512 in the U.S. market, but the same product (LN46A550P1F) is W2.45 million in Korea.
On average, Korean consumers have to pay 30 to 40 percent more than American consumers to buy the same product. But it is difficult for consumers to find this out because so many items have different model names in the two countries. The companies sell virtually the same products for more to Korean customers by saying that different parts were used and citing different market situations. But in fact they are cutting prices in the U.S. and China.
It is Sony, which fell second to Samsung Electronics in the international TV market, which is leading the price war. Sony started cutting prices at the end of last year. The price of a 42-inch high-definition television by Sony, which sold for $1,400 in October last year, fell to $1,300 in December, and to $1,150 by the end of February. A Samsung TV that was priced at $1,300 in October dropped to $1,000 at the end of last year. Samsung Electronics slightly increased the price to $1,150 at the end of February.
And the price war has just begun. In a recent meeting with reporters, Kim Hyun-suk, vice president of Samsung Electronics Digital Media Business, declared that Samsung is prepared to go into full head-on competition with Sony to expand its market share in the North American television market. Kim hinted that a drastic price cut is on the way, and said this heated competition might damage companies selling low-priced goods, which would get caught in the middle.
But Korean consumers will not benefit. Sony¡¯s KDL-52W3000 and KDL-52W3500 are exactly the same products but labeled differently in the U.S. and Korea. The latter is W1.3 million more expensive. The reason for this, according to the company, is an 8 percent customs duty in Korea, while the price covers the considerable expense of ¡°Koreanizing¡± the product. However, a staffer at Sony said the company is considering lowering the price in Korea in time. Domestic electronics companies like LG and Samsung claim the price gap is inevitable since a two-year quality guarantee is a must under the Korean law, and because the parts used for domestic sale are different.
But the fundamental reason behind the price gap is the difference in the size of the markets. In the U.S., the world¡¯s largest electronics market, numerous companies compete fiercely to secure a foothold. However, the Korean market is well out of the top 10 in the world, and is dominated by the two domestic giants, LG and Samsung. Without threats from other companies, there is thus no reason for the two firms to lower their prices.
(englishnews@chosun.com )
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