Asia Times: Japanese IT firms stride ahead in Korea


	December 15, 2001	atimes.com

The Koreas

Japanese IT firms stride ahead in Korea

SEOUL - Globally competitive Japanese information technology (IT) companies are making noticeable gains in Korea's retail market, industry insiders said Friday. Domestic IT market watchers said that after the lifting of Korea's import diversification regime last year, more and more Japanese firms have set up shop here.

The trend was fueled by companies like JVC which had set up direct local operations ahead of the pact and posted sizeable profits. JVC, one of Japan's top three electronic appliance manufacturers, reported sales in excess of 100 billion won (US$78.4 million), since it opened a local corporation in October of 2000. The company said that its revenues grew five-fold compared to when it sold products through a wholesaler.

Taking a cue from JVC, Toshiba said that it would invest 2.7 billion won in capital to create its own branch operations on the peninsula. The company Toshiba Digital Media Network Korea will have a Korean chief executive officer and about 60 local employees.

In the past, the Japanese electronics giant concentrated on notebook computers but will now expand the product line to include digital audio component systems, video equipment, projections TVs and plasma display panel (PDP) TVs. The company also plans to use its position as an official sponsor for the 2002 FIFA World Cup to be co-hosted by Korea and Japan to strengthen its brand image in the country.

In addition, Sony Computer Entertainment, which controls 90 percent of the world home video game market with its runaway success Play Station, will create a subsidiary by February of next year and begin selling its products directly to consumers.

An interesting characteristic of Japanese firms conducting or planning to do business in Korea is that they are staying clear of large household appliances like refrigerators, air conditioners and washing machines, where domestic conglomerates hold sway.

"Moves by JVC and Toshiba to sell expensive items like camcorders, digital video disk [DVD] players and up-end projection TVs, shows that they are using their competitive edge in certain IT fields to appeal to quality and brand conscious local consumers," said an LG official who monitors domestic market trends.

He said that with younger Koreans possessing less animosity towards the former colonial power than their parents, some state-of-the-art products are finding considerable favor. In addition, he said there is plenty of potential for Japanese companies to increase market share in the future.

To take further advantage of the positive mood, marketing experts from Japanese companies are directing their promotional campaigns towards sponsoring cultural events and sports activities to spruce up their image. They are also trying to "dilute" their links to Japan by stressing their multinational character with manufacturing, research and distribution facilities spread throughout the world.

Related to this, a Korea Fujitsu manager said one reason his company has thrived since its 1974 founding was because it became part of the local business landscape. "The main office provides considerable leeway and efforts have been made to give back some of the profits to the Korean community," said a Fujitsu spokesperson.

(Asia Pulse/Yonhap)