Why Some Korean Companies Successful In China

Since the official Korea-China diplomatic ties in 1992, many Korean corporations hav e invested heavily in China. Some have succeeded while others failed. Samsung Elect ronics has been one of the most successful companies advancing into China. Samsung introduced 4G (fourth generation) to the China smartphone market in the fourth quar ter of 2013, and since then it has implemented market plans centering on LTE (long term evolution). Data communication speed of LTE is ten times faster than that of th e previous generation models. The Galaxy models attract premium Chinese consumers because of its unique design and functions, and it is no wonder they are conducive to Samsung’s predominant market share in China. The Galaxy models, LTE functions combined, will have a more competitive consumer group.The paper aims to study how Samsung has maintained its supremacy as opposed to o ther competitors in China and successfully fulfilled the strategies to raise its brand im age and awareness in the target market. It mainly adopts literature research, most of whose sources are available at the Samsung Electronics website and other related sites.Though going through many difficulties in its first step into the Chinese market, it ha s gained a great success through systematic marketing strategies. As for the cell phon e market, it is not easy to compete with both local makers and foreign makers at the same time. But Samsung has an impact on international market through its ceaseless efforts. Some reasons why Samsung could survive in the Chinese market are as in t he following:First, regarding the local growth pole strategy, Samsung Electronics has mainly investe d in constructing bases for the Chinese market expansion. For the purpose of each ba se establishment, Samsung Electronics has achieved synergy effect through the systemi c management of regional production and distribution as well as its financing. Besides, surrounding areas, as economic development regions, are expected to develop further into the future.Second, when first entering the Chinese cell phone market, Samsung Electronics aime d for premium consumers to adopt the initial high-price strategy. The initial high-price strategy is a way to infiltrate a target market by setting the highest possible price fo r those willing to purchase products at even high prices. After it first gains much ben efit from selling those products, it subsequently moves onto the lower income consum ers. When Samsung Electronics entered the Chinese cell phone market, it made a thro ugh market research. The high pricing strategy was based on the market research in t he Chinese cell phone market, and it turns out that Samsung successfully took advant age of this marketing strategy.Third, about the distribution strategy, Samsung Electronics successfully took hold of th e distribution network through agency unification strategies. Meanwhile, it also guarant eed high profits for the agencies from its high pricing policy and thus attracted loyalt y from them. Moreover, it faithfully provided the warranty service at reasonable fees by lowering prices of the components.Fourth, as of the product strategy, Samsung Electronics established a research institute in Beijing in October 2000, and for better custom-tailored production, it built up a d esign center in Tianjin that delves into the Chinese taste for products as well as deve loping unique models. In other words, Samsung Electronics investigates not only into the country of China and its local culture but it also expects exact demands for prod ucts to reflect them in production. This is the result of the customer-centered marketi ng that has made possible success of Samsung Electronics in China.Fifth, in the quality control strategy, Samsung Electronics launched the "New manage ment movement" to give the Chinese an impression that Samsung is the best when it comes to quality. The initial management philosophy "to put quantity over quality" t urned out be a failure. In 1993, Chairman Lee adopted the "New management move ment," thereby turning to the improvement of quality as opposed to quantity. He insis ts that the ratio of product quality to quantity has to go down to 9:1—even ultimatel y to 100:0. Since this point in time, Samsung has begun to produce high quality pro ducts, not merely mass-producing items.Sixth, from the brand strategy perspective, Samsung Electronics, based on its Choice and Concentration manifesto, aims at the top five percent target. It may be safely sai d that this is a differentiation strategy. It is literally targeting at the upper 5% of the high income groups, not the entire 13 billion people in China. They largely live in t he ten big cities such as Beijing, Shanghai, and Tianjin, and have equal consumption power with those in advanced countries and their number reaches 65 million. Samsun g could evade fierce price competitions with those Chinese producers because it sold global-standard products to target premium consumers. This also helped reinforce its h igh value brand image of Samsung. This great value requires a prerequisite of produc t marketability.Seventh, concerning the publicity strategy, Samsung raised its brand value with a slog an saying "Let’s make the corporation that the Chinese love" and it could actually eli cit the heart of the Chinese. Besides, releasing flawless products could appeal to the Chinese consumers. Moreover, it waged more aggressive promotions in the 2008 Beiji ng Olympics than the Chinese corporations. Samsung’s efforts on publicity put the Ch inese together regardless of their age, tribes, and gender.Chinese customers are sensitive to product quality. Product design is also as important as its quality. To make profits in China, it is desirable to be emphatic with the Chi nese consumers. In addition, companies in China value quality as a core competition factor. Samsung Electronics, despite many hardships, has been undaunted to stay highl y competitive in China. Samsung has been well aware of what customers really want as much as to produce consumer-tailored electronic items, not simply imitating other foreign competitors’market strategies.Samsung prioritized attracting Chinese customers’hearts before selling its products and took initiatives to appeal to them through volunteer work and its brand image manag ement which enabled a closer relationship with Chinese customers. Samsung brand ca n be often shown in major international athlete matches such as the world champions hip events. Incidentally, the reason why Anycall cell phones succeeded in the world was a good management strategy of advertisement in international athlete matches.In the Chinese market, Samsung has become a luxurious image icon, constantly devel oped new products, set the marketing strategies to produce high-quality and highly pri ced items, and thus carried out these strategies faithfully and carefully. Furthermore, it promoted the image effect through continuous technical developments, established the head office in China to develop, produce, sell, and manage all its products. These ef forts placed Samsung on to the leading company position in today’s Chinese society. On the basis of Samsung Electronics’successful story, several strategies may be sugge sted in regards to Korean companies’entry into the Chinese market.First, it is ultimately required to strengthen research and studies on the Chinese mark et. The Chinese market has a lot of risks as well as chances. That is, reinforcing res earch and studies on the market is considered a dependable manner to avoid risky in vestment and to grasp market opportunities.Second, the Chinese policy studies should be absolutely needed. Even though China a dopts capitalism, there still exist governmental interventions in the market. Therefore, it is necessary to study the Chinese government’s policies and to avoid the risk as m uch as possible.Third, localization of company culture is needed. Due to a long trade history between Korea and China, their individual culture has a lot in common. Yet, strictly speaking, there are many differences in company cultures of the two countries. For example, Korean economy is operated by the invisible hand which mostly excludes the govern ment’s interventions.