Interbrand has released its annual ranking of the Best Brands in Korea –a list that reveals brands on the peninsula exceeding the pace of global growth with an increase of 6% on the previous year while globally that number grew by only 4.6%.
And, to no one’s surprise, Samsung Electronics sits firmly atop of this year’s roundup.
Well, actually, there is some measure of surprise –at least where conventional wisdom holds sway– when considering that Korea’s most powerful Chaebol member suffered a highly-publicized recall of their flammable phone, followed by the company’s president and hereditary heir apparent, Lee Jae Yong, being arrested on bribery and corruption charges as part of an ongoing scandal that dethroned the president of South Korea.
Meh. No matter.
Samsung shrugged it all off like a boss, garnering an impressive 14.4% growth in brand value while maintaining its lead over #2 Hyundai Motors by a near-astronomical margin of 58,099,806 KRW vs. 13,831,161)
All of this, of course, a further testament to the company’s dominance in Korea –which is often referred to, only half jokingly, as the “Republic of Samsung.”
We caught up with, Interbrand Korea Senior Manager, Michael W.J. Kim, to get his take on this year’s ranking, including Samsung’s resilience, how the “little guys” are faring in Chaebol central where names like “Samsung”, “SK” and “LG” are all over the best brand list, and more.
What are some of the more notable trends in this year’s ranking compared to last year?
Technology brands, represented by Naver and Kakao are showing the highest growth rate. A.I, IoT, is enabling technology brands to take a greater portion of our life-share, making them even more influential.
The advancements in technology are also bringing about change in the Finance sector as market leaders compete to gain ownership in the area of ‘Fintech’ such as Shinhancard.
Highlights in Technology industry commercializing future technology, expansion of IP business based contents, and the establishment of ecosystems through the use of open platform strategies.
It is undeniably true that the Chaebols and their subsidiaries still dominate much of Korea’s economy. However, compared to the past, non-chaebol brands such as Naver, Kakao, Amore Pacific are growing at a faster pace than ever before…there are clear opportunities for SMEs and start-ups if they can provide a truly differentiating product/service.
As proven at CES2017, Artificial Intelligence (AI) technology is becoming a hot topic in a diverse industry and IT companies are playing a leading role in terms of the AI technology advancement.
Naver enabled the commercialization of highly advanced technology through the launch of AI voice assistant platform ‘AMICA’ and AI translation service ‘Papago’.
Furthermore, Kakao revealed its ambition of developing an AI personal assistant service by establishing ‘Kakao Brain’.
As for Highlights in the Financial industry, 2016 has been a year of change as it seeks to break through the age of low-interest rates and low growth. Many brands escaped from traditional ways of doing business and utilized technology to bring about the era of Fin-tech.
Especially in the banking sector, diverse customer experiences were made possible through mobile platforms which evolved from existing loyalty programs.
KB Kookmin Bank evolved into a lifestyle O2O service platform by launching Liiv Mate which features everything from Dutch-pay to media contents. Shinhan Bank’s FAN club enabled customers to withdraw their loyalty points from the ATM or turn them into cash.
The use of big data and AI by credit card companies was noticeable as well.
Shinhan Card released ‘FAN Pay Bot’, a secretarial service which provides customized advice tailored to consumption patterns. Hyundai Card enhanced the ease of use and maximized security through services such as ‘Lock & Limit’ and virtual card number generation service called ‘PayShot’.
The report notes that Korean brand value grew 6% from 2016. That’s higher than the global average of 4.6%. What’s behind the gap?
This goes to show the increasing influence of Korean brands in the global market as the three representative brands, Samsung, Hyundai, and Kia continue to gain market presence.
The higher increase rate also speaks to the influence of Korean brands in the Asian region represented by brands such as Amore Pacific and LG Household & Healthcare.
As usual, there are several of the same brand names from different divisions, such as Samsung, which has 4 of its branded divisions ranked in the top 20. How does it affect brand strategy when vastly different products have the same name?
It is undeniably true that the Chaebols and their subsidiaries still dominate much of Korea’s economy. However, compared to the past, non-Chaebol brands such as Naver, Kakao and Amore Pacific are growing at a faster pace than ever before.
This means that while Korean consumers still turn to ‘trust’, the level of credibility guaranteed by the size of the Chaebols, when it comes to making most of their purchase decisions, there are clear opportunities for SMEs and start-ups if they can provide a truly differentiating product/service.
What’s happening with the smaller non-Chaebol brands? How are they trending?
There is definitely a shift taking place in terms of the constituents of the Best Korea Brands. Five years ago(BKB was launched in 2013) it was difficult to imagine Naver and Kakao growing at the rate they have.
Furthermore, it was unlikely that a game developer (NC SOFT) or entertainment companies (SM entertainment & Loen entertainment) would enter into the Best Korean Brand rankings.
However, today they have taken their rightful seat as some of Korea’s most representative brands. Thus it is becoming less and less important whether or not a brand is of Chaebol origin, but rather how much time we spend with each of these brands and the products/services.
Regarding number one Samsung Electronics. It has seen its recent share of troubles including the Galaxy Note battery disaster and the company’s president Lee Jay Yong currently sitting in a jail cell. Yet, they sit completely dominant at the top of the list. Your thoughts?
Every brand is subject to a potential crisis at one point or another. Some examples would include Toyota during their massive recall and VW more recently. However, it is not the crisis itself which impacts the overall value, but rather the actions the brand takes in response to the crisis.
In sum, the arrest of Lee, Jae Yong obviously did not impact the Samsung brand positively, but it is up to Samsung to restore the faith of the consumers through even more innovative products and services such as the Galaxy S8, Samsung Pay, Samsung Health, et cetera.
A prolonged absence of leadership such as Lee Jae Yong is a potential long-term risk for Samsung, but if it can manage to grow market leadership during his absence, this can be testimony to Samsung’s systematic management and its ability to provide breakthrough products & services which meet the needs of the consumers.