South Korean Brands Could Lose up to 11% of Brand Value Due to COVID-19

Samsung remains the country's most valuable brand followed by Hyundai at number two and Kepco, which rose three places to the third spot.

By Robert Cameron - Aug 6, 2020

As the COVID-19 pandemic continues to adversely affect global and national economies, South Korea’s top 50 most valuable brands could lose up to 11% of brand value cumulatively, a drop of over ₩27 billion ($22 million) compared to the original valuation date at the start of the year according to the latest Brand Finance South Korea 50 2020 ranking.

Samsung Remains Most Valuable Brand

Increasing in brand value by 8% to ₩90.0 billion, Samsung remains the most valuable brand in South Korea, also claiming the title of the most valuable B2C brand in Asia and the fifth most valuable brand in the Brand Finance Global 500 2020 ranking.

The tech giant managed to beat its predicted earnings this year, largely due to the popularity of its 5G phones – as of November 2019, the company owns 54% of the global 5G market. The success of Samsung Electronics was further spurred during the global COVID-19 pandemic, with increased demand for home working and schooling support boosting its earnings by 23% during the second quarter of 2020.

This has reinforced the brand’s positive trajectory for the rest of the year as it looks to develop cutting-edge technologies, including the new foldable Samsung Galaxy Bloom phone and SelfieType invisible virtual keyboard.

“Despite the coronavirus pandemic causing a decline in smartphone sales, Samsung has experienced a greater recovery than predicted at the onset of the global lockdown,” said David Haigh, CEO, Brand Finance.

“With the expanding capacity of Samsung data centers to meet the increased demand for computer chips, the brand is in a good position to continue delivering what it knows best – innovative and high-quality technology.”

Coupang Brand Value Rises 69%

With an impressive brand value growth of 69% to ₩2.8 billion, Coupang is the fastest growing brand on the Brand Finance South Korea 50 2020 ranking for the second consecutive year. Despite being a newly established brand, Coupang has expanded rapidly over the last 10 years, beating Amazon to become the biggest online retailer in South Korea.

Climbing 21 spots on the ranking this year, Coupang’s growth is due to strong revenues and forecasts. However, a word of warning may be in order, as Brand Finance has estimated a heavy impact on the retail sector due to COVID-19, which could cause a 20% drop in brand value in next year’s ranking.

Source: Brand Finance

KEPCO is South Korea’s Strongest

In addition to measuring overall brand value, Brand Finance also evaluates the relative strength of brands, based on factors such as marketing investment, customer familiarity, staff satisfaction, and corporate reputation. Alongside revenue forecasts, brand strength is a crucial driver of brand value.

According to these criteria, KEPCO (up 15% to ₩8.6 billion) is the strongest brand in South Korea with a Brand Strength Index (BSI) score of 87.4 out of 100 and a corresponding AAA brand strength rating.

“KEPCO prides itself on being one of the world’s leading brands spearheading the shift and expansion towards the use of safe and clean energy, in its bid to reduce carbon emissions and tackle the global climate change issue,” said Brand Finance. “The South Korean brand has strived towards its CSR initiatives as part of its wider goal to become a sustainable global utility brand and has been recognized internationally for its efforts.”

In the coming year, KEPCO is likely to suffer a limited impact as a result of the COVID-19 pandemic, in line with the utilities sector, which Brand Finance predicts will undergo a 0% brand value change. The sector is largely sheltered as a result of the very nature of its operations and regulated structure of longer-term contracts, ensuring that utilities brands have access to adequate supplies and equipment to continue operations.

Source: Brand Finance

Global Brand Effects

Looking beyond South Korea, the value of the 500 most valuable brands in the world, ranked in the Brand Finance Global 500 2020 league table, the Brand Finance report found they could fall by an estimated $1 trillion as a result of the Coronavirus outbreak.

Brand Finance has assessed the impact of COVID-19 based on the effect of the outbreak on enterprise value, compared to what it was on January 1st of this year.

Based on this impact on enterprise value, they estimated the likely impact on brand value for each sector. The industries have been classified into three categories – limited impact (minimal brand value loss or potential brand value growth), moderate impact (up to 10% brand value loss), and heavy impact (up to 20% brand value loss) – based on the level of brand value loss observed for each sector in the first quarter of 2020.