By Mariko Yasu and Maki Shiraki - Jul 26, 2011 12:01 AM GMT+0900
Yuko Ishii, a 53-year-old factory worker in central Japan, used to feel reluctant about buying products made in neighboring South Korea. That changed after she became a fan of pop stars such as boy band TVXQ.
“I used to rule out Korean products, but now I have no problem with them,” said Ishii, whose purchases include a washer made by LG Electronics Inc. “If my favorite star was advertising a South Korean TV, I would definitely buy it. I want to feel closer to them by buying the same products they use.”
Ishii and other fans of so-called K-pop may help Korean electronics makers expand in the world’s third-largest economy, where consumers have traditionally preferred domestic brands. Last month, Samsung Electronics Co.’s Galaxy S II smartphone was the best-selling mobile phone in Japan, according to research company BCN Inc. That helped South Korean exports to the nation jump 50 percent in the first six months of 2011.
“The Korean boom is a tailwind for made-in-Korea products,” said Hidetomi Tanaka, an economics professor at Jobu University in Isesaki, Japan. Starting with middle-aged women who watched Korean soap operas on TV, it has grown to include young men and women listening to K-pop, Tanaka said.
Samsung, the world’s second-largest mobile phone maker, and LG are working to gain a foothold in Japan after both companies previously scaled back their ambitions in the country.
Galaxy Smartphone
“Most of Samsung’s customers in Japan are young people in their 20s and 30s,” said James Chung, a spokesman for Samsung in Seoul. “Their interest in Korean stars seems to be reflected in their purchases of our products.”
Suwon, South Korea-based Samsung stopped selling electronics through retail channels in Japan in 2007, narrowing its distribution to corporate clients such as NTT DoCoMo Inc., Japan’s largest mobile-phone carrier.
Last month, the Galaxy S II, which was introduced in Japan on June 23, outsold Apple Inc.’s iPhone 4 and Sharp Corp.’s Aquos to claim the local No. 1 sales ranking.
Samsung tied with Panasonic Corp., Japan’s biggest home appliance maker, as the third-biggest handset vendor in Japan with an 11 percent market share in the quarter ended March 31, according to Strategy Analytics. No South Korean maker had previously ranked higher than sixth, the Boston-based research company estimated.
‘Difficult Market’
LG resumed television sales in Japan in November after a two-year absence. The Seoul-based company now aims to win a 5 percent share of shipment volumes within five years, said Kyuhong Lee, president of LG’s Japan unit.
“Japan is a more difficult market than anywhere else because of high customer demands,” Lee said at a Tokyo press conference in June. “There are certainly customers here who recognize the quality of our products, and the number is growing.”
South Korean exports to Japan jumped 50 percent to $17.75 billion in the first six months this year, according to the Ministry of Knowledge Economy in Seoul. The growth rate accelerated from a 31 percent expansion a year earlier.
South Korean actors seized the attention of middle-aged Japanese housewives in 2003 when public broadcaster NHK aired a drama series titled “Winter Sonata,” a soap opera starring Bae Young Joon, known in Japan by his nickname Yon-sama.
Live performances by pop stars such as Girls’ Generation may help broaden the appeal of Korean culture in Japan as in the rest of the region, said Kazuko Takatsuki, a director at Hakuhodo Inc., Japan’s second-largest advertising company.
LG Advertisements
LG hired KARA, a female Korean dance and music group, to appear in advertisements in Japan for its Optimus smartphones. The group topped Japan’s weekly DVD sales in February, according to Oricon Inc. Only five other foreign artists have done so previously, including Led Zeppelin, The Beatles and Michael Jackson.
“We hired KARA because they are popular among young women, whom we are targeting,” said Donggun Kim, general manager at LG’s Japan unit.
The Korean manufacturers have yet to win over some Japanese customers. In a survey in November, 52 percent of consumers in the country said they considered Korean products “cheap,” while 25 percent said they didn’t trust the quality of the goods, according to Tokyo-based My Voice Communications Inc.
‘Room to Grow’
The Japanese market remains challenging for overseas manufacturers, Samsung’s Chung said. The company still has no plan to sell televisions in the country.
“Japan’s distribution channels favor Japanese brands, and they have a structure that’s difficult for foreign companies to break into,” Chung said.
Still, the success of the Galaxy S II is boosting Samsung’s brand image, said Michito Kimura, a senior analyst in Tokyo at research company IDC.
“Samsung is a brand in the Japanese market with the strongest growth momentum,” Kimura said. “Samsung has a room to grow, especially with young consumers.”
To contact the reporters on this story: Mariko Yasu in Tokyo at myasu@bloomberg.net; Maki Shiraki in Tokyo at mshiraki1@bloomberg.net
To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net
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