We recently covered Chinese enterprises are neither globally competitive nor technically superior and extended our coverage with another article titledConsumer electronics : china way behind.I just landed this morning at Incheon airport,South Korea and just was thinking about the article that I read few hours back about Samsung that appeared in the current issue of Economist. Excerpts with edits and my comments added:
By the way , I compiled this article while travelling inside a wifi enabled vehicle moving from the airport towards the hotel!! Thats Korea.
IT HAS been a remarkable year for Samsung Electronics.Last weekend,the company was one of the stars at the giant consumer-electronics show in Las Vegas, where it unveiled a glittering array of new products. Among them was a notable first: a mobile phone that uses voice-recognition technology to convert speech into text messages, offering respite to people who find typing messages on their mobile's tiny keyboard frustrating.
Yet as Samsung was closing the books on a triumphant 2004, its future was looking less certain. The Korean won soared to a seven0year high against the dollar, reducing the value of much of its overseas earnings. While electronic gadgets such as digital cameras, mobile phones and flat-screen televisions remain as popular as ever, prices are falling. That cuts Samsung's profit margins.Samsung tends to make most of its own components or buy them from within group companies. Samsung is part of a Chabeol, one of the giant family controlled conglomerate – Samsung firms do everything from running hotels to providing insurance, building apartments and are held together by a complex web of cross shareholdings. Today most manufacturers take a different route,preferring to buy components and services from outside suppliers But Samsung executives argue that being more vertically integrated ,supplying its own needs or buying from close associate group firms has become enormously useful as digital convergence has blurred product categories.
Samsung electronics is investing heavily... Research and development accounted for $2.9bn in 2003, around 8% of revenue. and more money will be spent on brand-building. A decade ago, Samsung was mostly seen as a producer of cheap televisions and microwave ovens. Today Samsung dominates in most of the areas it operates in: Memory chips- DRAM (Mkt share -31.4%), Memory chips –flash(Mkt share 21%),Flat panels (TFT-LCD)(Mkt share23.3%) and in mobiles next only to Nokia (Mkt share -13.8%) Samsung is among the most widely held emerging market shares, with a market cap of 62 billion USD; by that measure it is already worth far more than Sony.
And all this despite its low cut image as, well, a cheap alternative to Sony and the other big players. The technology market is no longer a reserved niche market , and if Samsung continues to build on its strengths and repeats past success , the downcast image shall be gone .. forever.
Businessweek has published this story about LG, another rising korean star. South Korean story itself is very inspiring. Like most other modern cities in Asia, I had been to Seoul and Busan several times and only find the Koreans becoming more and more competitive - at the moment the Korean economy is a little dull, but shall pick up shortly. For those who think that the chinese would dominate all sorts of manufaturing, my answer is a BIG NO..Korean enteprises amidst others shall be the key players that china should be wary off.