Korean brands invade India
By Indrajit Basu
atimes.com
KOLKATA - The Japanese threatened to take over the world twice in the last century: first with their military strength and later with their electronic goods. This century, it is the South Koreans' turn - at least so it seems in India.
Three South Korean companies - Hyundai Motor Co, Samsung Corp and LG Electronic Corp - have proved that with their innovative and aggressive strategies, Korean products, which even until the 1990s were considered low-end mass-manufactured stuff, cannot only rule markets in India but can also push multinationals and their Indian competitors behind.
Let's cut to mid-1990s. India had just opened to foreign competition, and consumers were yet to get a taste of relatively high-technology products. The Japanese majors were undecided about India's potential, and other multinationals such as Whirlpool, GE, and Electrolux were yet to get a foothold. Indian brands, which included BPL, Videocon, Kelvinator and Godrej, had the market all to themselves.
It was against this backdrop that the Koreans grabbed the opportunity India's liberalizing economy offered, and they entered the country with a simple message: we mean business and never before have Indian consumers been exposed to the price performance of the products we have to offer.
And seven years down the track, while the cautious Japanese and quite a few foreign brands in the home durables sector are still struggling and some of the Indian brands - such as BPL and Kelvinator - are almost going into oblivion, Korean brands are storming in and taking over the markets in each of their product categories. Korean products are now all-pervasive in Indian homes; they are everywhere from cars, TVs, washing machines and microwave ovens to computer accessories and, ultra high-tech home networking products that can enable a refrigerator to order supplies over the Internet and control room air-conditioners and even record a DVD movie from a TV through a mobile phone.
Their growth rates are stunning. For instance, in five years Hyundai has sold more than 350,000 cars - nudging the 400,000 mark - to become the fastest-growing and second-largest car manufacturer in India. Samsung and LG clocked the second and third positions in the home appliances and electronic products market, and right now they are the fastest growing home appliance companies in the country too. A fourth Korean company, Daewoo Motors, was well on its way to success but was stopped midway by its parent's now-famed failure (but General Motors, which took over Daewoo's assets recently, is mulling reintroduction of Daewoo cars soon owing to its earlier success in the country).
What made the Korean companies the dark horse in the race?
"Speed and flexibility in decision-making," says M B Lee, vice president of Samsung India. Indeed. LG, for instance, got permission from the Indian authorities to set up shop in January 1997 and was up and running full-fledged by May that year. Comparatively, Samsung was a slow starter, but it was behind by just two months.
Marketing gurus in the country say the Koreans didn't have any preconceived notions about Indian consumers and the market potential, and that served them well. For instance, initially, the Indian government was reluctant to allow them local manufacturing in certain low-value fast-moving segments, such as small refrigerators. So they entered at the top end of the respective categories. "Therefore to make their presence felt in the market," said Jairaj Banerjee, an account director in a Mumbai-based advertising and brand management agency, "the Koreans dazzled Indian consumers with products that looked international and had cutting-edge technology."
"Koreans' brands could stand out from the crowd simply because they understood the meaning of effective in-store merchandising and relevance of shopping experience from the consumer's viewpoint," added a Samsung dealer.
Jairaj Banerjee also says that the Koreans continue to thrive and beat others because they constantly bring in the latest in India, be it the latest common rail direct injection (CRDI) engines of a Hyundai car or LG's cutting-edge Internet-enabled home appliances. "I am a Sony fan, but even that Japanese global giant is far behind the Koreans with newer products in the country," he said.
Others say that while the Koreans brought in their best, they perfected the art of selling locally. Hyundai, for instance, while introducing its small car in the country, roped in one of India's hottest movie stars, who made an alien-sounding brand name and a car that many said "looked more like a bug in a sci-fi movie" an instant hit. LG meanwhile took advantage of the health-conscious attitude of Indians, and projected it as the platform for its marketing campaigns. "The health aspect promised a fresh angle to the consumer," said Ganesh Mahalingam, marketing manager of LG India, "which is also a significant consideration for an Indian." Samsung too launched its Bio range of products that promised "to retain the freshness of food" in its refrigerators and "protect viewers' eyes" in its TVs. However, after LG's introduction of Internet-enabled products, Samsung has changed tack and has now moved to a new "digital" campaign to emphasize its technological edge.
Jairaj Banerjee feels that even as Korean companies introduce global products in India, they do it keeping the Indian market in mind. So while Korean products come with the absolute latest technologies, they also undergo some fine-tuning to adapt seamlessly to Indian needs. His favorite instance is a Samsung washing machine that comes with a "unique sari guard" - a sari is a six-meter-long cloth that Indian women drape around as a national dress - and a "memory restart" that is ideally suited for a country plagued with power cuts.
"We think of India not as a country, but as a continent with different regions," said Ruchika Batra, a senior official at Samsung.
"And to win in such an environment, one has to be fast and steady; that's what Koreans are," added Jairaj Banerjee.
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