South Korea's most global brand shines
SAMSUNG CONGLOMERATE SEES IMAGE IMPROVE AS RIVALS FALTER
By Sang-Hun Choe
Associated Press
SEOUL, South Korea - Half of all South Korean consumers sit in front of Samsung television sets, keep food in Samsung refrigerators, chatter on Samsung cell phones and surf the Internet on Samsung computers, eyes glued to monitors bearing the same trademark.
And they probably bought it all with Samsung credit cards.
Samsung, the world's biggest seller of computer memory chips, flat-panel screens, monitors, VCRs and electric ranges, is the only remaining South Korean conglomerate, or chaebol, to stand tall after the Asian currency crisis of the late 1990s.
Daewoo, once South Korea's No. 3 conglomerate, is in pieces. Giant Hyundai has splintered under heavy debt, its motor and shipbuilding units alone retaining their luster.
Now, Samsung's innovative handheld devices and home appliances have boosted its name recognition to levels that rival Nokia, Sony and Philips.
No longer is the company considered merely a cheap alternative to precision Japanese goods.
``Samsung is one of the few Asian companies outside Japan that has succeeded in establishing itself as a global brand,'' said Tim Condon, a Hong Kong-based economist for securities firm ING Barings.
With domestic rivals foundering, Samsung is now the biggest and most lucrative family-run business group in this nation that President Bush is visiting this week.
Honeymooners dream of spending their first night together at ritzy Samsung hotels and thereafter, in modern Samsung apartments. One-fifth of South Korea's 47 million people visited Samsung's amusement park last year.
Samsung-Renault's SM-5 cars, built with Nissan technology, are the most sought-after model. Drivers take out Samsung insurance policies.
``Samsung will soon start rivaling Sony in brand power as a consumer electronics maker, if it hasn't already,'' said Jin Young-hoon, an industry analyst at Seoul's Daishin Securities.
As part of its push into more innovative, higher-quality goods, Samsung recently ditched mass-market discounters such as Wal-Mart as a major retailer of its products.
In China's exploding cell phone market, Samsung now shuns the low-end market. Its latest model sells for $615, more then twice the average monthly pay of a Chinese worker.
In the U.S. market, its DVD players, cell phones, flat-panel screens and digital TV sets are as expensive and well-received as Japanese products.
Last year, Samsung's 35 subsidiaries produced a combined $94.6 billion in sales, an 8.9 percent drop from 2000. Total profits dropped 20 percent to $5.1 billion. Still, it was an impressive performance in a year when painful losses humbled many global giants.
Inside South Korea, Samsung strives for a distinct corporate culture. Unlike more flamboyant counterparts at Hyundai and Daewoo, Samsung Chairman Lee Kun-hee rarely appears in public. His workers are dapper and polite.
Thousands of police officers, railway conductors and bank clerks attend Samsung's ``Service Academy'' to learn to bow and answer customer questions. Samsung's early work shift allows workers to avoid rush-hour traffic jams.
Critics say Samsung would be even stronger -- and more attractive to investors -- if it opened its business practices to public scrutiny. Typical of South Korean conglomerates, Samsung has engaged in its share of questionable dealings and used cozy ties with politicians to its benefit, analysts say.
``Samsung Electronics is the crown jewel of Korea Inc.,'' said Jang Hasung, an economist at Seoul's Korea University. ``But investors question its corporate governance. That's why its shares are so seriously devalued, compared to its U.S. and even Taiwanese competitors, which are not doing nearly as well.''
Samsung Electronics, the conglomerate's most globalized outfit, saw net profits halve to $2.3 billion last year on revenue of $24.8 billion.
Yet with $538 million in profits from semiconductor sales, Samsung Electronics was the only major computer-memory chip maker to earn a profit last year.
In the U.S. market, Samsung has provided Sprint PCS, the fourth-largest U.S. wireless carrier, with 8 million phones since 1997. In January, it signed a new $3 billion deal with Sprint to sell even more phones.
The company is branching out into home networking, promising to unveil new products this fall -- in alliance with Microsoft -- that will merge computers, televisions and other digital home media.
It also began producing ``Nexio'' handheld computers that double as mobile phones.
James Chung, a spokesman for Samsung Electronics, puts it simply:
``We want to lead the way in innovation.''
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