Samsung style or Daewoo dull?
By Arun Studhaman
Media
June 4, 2004

Can Korea drop the chaebol straitjacket to ensure that it build more Samsung-type brands?

As a raft of international agencies fight over Samsung's US$600 million account review, it is worth pointing out that barely a decade ago, the company's global reputation was somewhat dubious a low-end brand which sold shoddy products. It seems difficult to reconcile this history with the Korean powerhouse's current incarnation as a global benchmark of product and brand innovation.

By embracing the mantras of branding, design and product quality, Samsung has redefined itself as a brand that oozes cool. Into the bargain it has also spearheaded a radical shift in how Korean brands are perceived across the world.

Hyundai and LG, for example, have both benefited from this rising tide. Hyundai Motor, after just five years, is now the second largest carmaker in India, while LG Electronics is rapidly becoming the brand of choice in the same country.

Whether the next wave of Korean brands can replicate the success enjoyed by their more illustrious peers will depend on a number of factors, not least their ability to embrace a brand-centric mind set that does not come easily to the chaebols. "Brands don't exist in Korea," states Miles Young, Ogilvy & Mather's Asia-Pacific co-chairman.

A provocative statement, but a salient one nonetheless. Samsung's innovative global identity was invented outside Korea. Inside its home country, it exists as a sober conglomerate, nothing more than a fact of life.

"Samsung Life Insurance vs Anycall," says Young, summing up the disparity in Samsung's branding inside and outside Korea. "There is no Korean word for brand, and they have a different view of branding."

It is a problem that afflicts many of the country's chaebols, which typically boast strengths in virtually every area, except marketing.

"They have huge strengths in every area - except creativity," confirms Young.

Samsung can thank its owners for its success in overriding this problem and reinventing its image outside Korea, as Young points out "It's lucky that the owners of the company profoundly believe in branding."

For many Korean companies, the desire to go global is fueled by nothing more than necessity. With a population of 45 million, Korea is a very small market, as J. Walter Thompson/Adventure managing director Dong-Wook Kim explains. "(The) Korean market is not big enough. Also other foreign/multinational brands are coming because the trading wall has become lower," notes Kim. "If the Korean brand has competitiveness in technology and price, it is very natural to explore foreign markets."

Mark Stevens, managing director of G2 in Korea, believes that any Korean brand looking to go global must not only consider the Samsung effect, but also Daewoo's experience. The Korean carmaker was once one of Korea's top chaebols, but collapsed in the late '90s as it attempted to expand globally.

"One of the things that separates the failures - Daewoo - from the successes - Samsung, and LG - is that the successful guys get out of this narrow-minded chaebol identity and try to build a brand which is relevant to the consumers in the respective markets," says Stevens. "Maybe that opens up issues with global consistency, but if Samsung was the same brand in the US that it here, it would be struggling."

Both Young and Stevens agreed that the key for Korean corporates looking to better engage with the western concept of branding is to begin by making marketing decisions outside the country.

"Family and personal dynamics are much more important than any notions of branding," says Young. "It is an area that Korean chaebols feel very uncomfortable with. There is no concept of a brand being a composite of emotional values."

"I understand all the marketing for Samsung US is controlled by their office there," adds Stevens. "For Daewoo, this wasn't the case, except for some exceptions."

The key, therefore, may be to utilise the expertise of international agencies, something that Samsung has conspicuously attempted to do, despite the presence of its own in-house agency in Cheil.

"It's still too early for Korean clients to decide how they're going to use international agencies," says Young. "A 100 per cent Korean agency would fail to capitalise on opportunities, while a 100 per cent global one would find it very difficult to understand the different motivations of the client."

If a hybrid approach, perhaps in the manner of Samsung, which retains Cheil for local campaigns, is to work, Korean clients are going to have to substantially loosen their purse strings, whatever model they use.

"Marketing budgets have been fairly constrained," admits Young. "There is sometimes a gap in expectations - marketing is lower down the priority list."

In addition, of course, any hybrid strategy can be held hostage to the kind of agency friction that many believe has led Samsung to review its global account, which is currently handled by FCB. BBDO, for example, has already pulled out of the running for the business, reportedly because of concerns overworking with Cheil.

Despite the formidable nature of these obstacles, the consensus appears to be that the next wave of Korean brands are ready to make the leap. Some, like Kia Motors, have already done so with considerable success. And with each Korean brand that takes its place on the world stage, the environment becomes a little bit easier for the next ones to come.

"Historically, Korean brands were fairly low down the list when it came to positive brand equity," says TB WA Asia-Pacific regional chairman Keith Smith. "There could well be a `halo' effect from Samsung that makes it easier for other Korean brands to expand abroad."

Adds Stevens "Korean goods had a poor quality reputation overseas, particularly in cars and electronics, but that is changing rapidly now. I don't think the `made in Korea' tag is an issue anymore, because it is sufficiently hidden by a strong brand, and maybe even the opposite now - that it has improved the image of Korean-made goods."