"Don't enter another's territory at an unfavorable time?"
Korea-Nokia 2-0
Timo Poropudas
Nordic Wireless Watch - January 12, 2003 at 19:10 GMT
Nokia is leaving South Korea – again.
Nokia Korea Ltd. announced on Friday that it is exiting the Korean handset market on orders from Helsinki. Nokia
did not continue its OEM-agreement with Telson Electronics Co. Nokia also announced that it is closing its research
and development center in Seoul.
The score now is Korea 2, Nokia 0. Korea has driven Nokia of out its market now twice already. Nokia has nothing
to show for its years of work and millions of investments. Well, almost nothing: It managed to gain a one percent
share of the Korean cdma-handset market. while it has close to 40 percent of market share globally.
Nokia is not crying foul publicly, while privately Nokian employees s have expressed an almost fervent desire to
break into Korean market, and utmost frustration in its inability to do so. It is well know that Korea supports its
industries with subsidies. According to Nokia sources Korea has organized its technological regulations and
bureaucracy in a way that ties foreign competition into knots.
Nokia's troubles are not limited to handset market alone. Korean telecom companies have organized two
bidding competitions for 3g-networks. They were both wcdma-networks that are bread and butter to Nokia
and Ericsson. Yet the contracts went to Korean companies, LG Electronics and Samsung Electronics. Out
of nine bidders only the Korean companies and Nortel made it out of the first round.
Korean markets are important and it is not globally meaningless what happens there. Korea and Japan are the
technologically most advanced mobile countries. And Korea is Asia-Pacific's third largest handset market after China
and Japan.
Samsung's and LG's astounding success in the global handset market has been built on their strong domestic results.
It has also been helped by the very generous subsidies that Korean mobile operators have given to consumers to
encourage them to replace their mobile phones with newer models as often as possible. This has speeded up the
mobile development and filled the coffers of domestic phone manufacturers.
The Korean view of this development looks different. "In Korea, the trend of mobile handsets is very fast-changing.
Domestic companies, such as Samsung Electronics or LG Electronics, have been aware of that, and were keen to
cater to the fast-changing tastes of consumers," said Yong Jong-min, an analyst at Daishin Economic Research
Institute in JoongAng Daily.
After Nokia failed to sell the phones that had been created for the American cdma-market, it tailored its handset
specifically for Koreans, but it did not help. Nokia built up a sales organization and invested somewhat into
after-market care. Despite of this, the second Nokia launch into the Korean market in Mach 2001 produced no gains.
Curiously, Nokia seems to be able to take some advantage of the Korean production environment. It has a handset
manufacturing facility in Masan where it makes annually 30 million GSM-handsets for export. And it has no intention
of giving up that facility.
Nokia might launch its third attempt to penetrate Korean mobile phone markets in May when the WCDMA handsets
are ready for shipping. It is possible that the Korean networks will have a feature or two that make the foreign made
phones incompatible. But then again, maybe third time is the charm. …don't hold your breath, though.
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