The Land of Kimchi and Samsung
South Korea is known as the home of addictive gamers which can cause riots in front of a Blizzard building, Kim Ki-duk, G20 membership, Psy (Gangnam Style), Leader Ramen, Kimchi and Samsung. Their culture is colorful and they are very much engaged with the internet and technology. South Korea has a very stable economy when looked at the times of global crisis. The country had a growth rate of 6.2 percent in 2010. Also the unemployment rate remained low. Despite South Korean economy’s potential in economical fields with its stability performance, the credit rating in the stock market suffers. The reason is the unpredictable aggressiveness and military issues of North Korea. The instability of North Korea harms South Korea’s stability in the financial markets.
South Korea with Its Many Properties
Main facts about South Korea can be summed up like this:
- South Korea is a country with 50.2M population with a $1.76T economy.
- The $18.5B is only the ecommerce market by itself. Its growth is %9 and the average spending of a user online is $1,050.
- The middle aged population consists of %73 of the overall population.
- South Korea has the world’s fastest internet connection speed.
- South Korea has the 12th rank in internet penetration with %84 of the population.
- It has the 4th rank in the mobile penetration rank with %106 penetration rate.
Science and Technology in Korea
In 2005 South Korea has developed world’s second walking humanoid robot called HUBO. Robotics is in the main list of R&D projects of Korea since 2003. Also there are plans of creating English-teaching robot assistants to compensate for the lack of educational labor. Robotics is also a part of the entertainment sector. Every year since 2004 the Korean Robot Game Festival is held to promote science and robot technology. Biotechnology is also supported and cloning technology is one of the areas too. The medical sector is also a big part of the economy.
The cyber attacks on the internet are taken seriously. The government is training cyber security experts to handle these attacks more efficiently. North Korea is a suspect for the online attacks but it does not accept any of the accusations.
The companies Samsung and LG were ranked 1st and 3rd largest mobile phone companies in 2012. About 90 percent of the Koreans own a mobile phone. Their culture is adapted to technology very much. In the year 2000, South Korea had 1,896 online shopping malls in operation and had reached 8,000 households (over 50 percent) in the overall country. A Korean phenomenon of gaming and rise of the PC Bangs or gaming rooms contributed the online consumerism, too. PC Bangs were filling the gap between online and offline world by providing a socializing place.
The Korean Wave Surrounds The World
The South Korean culture has gained popularity all over the world. The film industry has worldwide known directors such as Kim Ki-duk and Chan-wook Park. The movie “My Sassy Girl” for example was shot again in America and more Korean movies were adapted too. The mini-series or TV series of South Korea are very popular and called K-Drama such as “Boys over Flowers” or “The Emperor of the Seas”. K-Dramas are televised in almost every side of Asia. K-Pop on the other hand has gone global. The most known K-Pop artist nowadays is Psy with his song “Gangnam Style”.
The Korean culture is spreading through technological advancements too. Smartphones and automobiles are big elements of Korea, which are visible in every country these days thanks to Samsung, LG and Hyundai’s high quality.
In terms of cultural food Korean cuisine has also became very popular. Leader Ramen is a popular brand for noodle lovers all over the world. Kimchi is another favored food of the Korean cuisine. The twitter account of Michelle Obama has revealed her getting Napa Cabbage to make Kimchi.
E-commerce in South Korea
Some e-commerce businesses in South Korea:
- Coupang: Coupang is the Amazon of South Korea. If the South Koreans need it Coupang sells it. The founder of the company is Bom Kim who is a Harvard University dropout. The total funding for the company is $480 million. Similar to Amazon, Coupang sells products directly but also allows other merchants to sell their products on their website, too. Coupang understands the higher demand in South Korea due to the fast and improved technology. To meet people’s demand for faster service, fulfillment centers and delivery systems were established.
- We Make Price: We Make Price is an online shopping website and one of the best in South Korea. The company offers vouchers and coupons for the most popular trend-setting items such as Sennheiser headsets, Lotte World free passes etc. It also introduced 5 percent mileage for all purchases and payback policies to guarantee the lowest prices to increase the customer satisfaction. The company has also caught the attention of the industry by introducing “offer the best deal” concept. When the company first launched in 2010 it sold 100,000 Everland All-Day Passes and recorded $1.4 million in one day through sales. This event established the concept of “Super Deal” which means offering great products at a great value.
- G Market: G Market is a company of eBay Korea which was founded in 2000 but it was acquired by eBay in 2009. It functions as an online shopping mall as well as an online auction website. The actual domain was supposed to be “Green Market” but since it was taken the new domain became G Market. This market has users that will buy anything and sell anything. There has been a controversy about ethical standards. A user tried to sell his one of kidneys by auction on the G Market attempting to profit from the market of transplantable human organs. On other occasions people or towns have been listed, too but often as a joke.
South Korea government has two aims:
- Active role in e-business globalization,
- Promoting e-commerce to realize structural innovation and for Korean companies to gain competitiveness.
South Korea has an ideal of a knowledge and information based economy broadened through e-commerce and the developments are planned in detail to apply a two phased plan towards that goal. They had a 5 key policy established in 2002. The main objectives were:
- To prepare a regulatory framework for e-trade, e-notarization and so on,
- To expand the operational base for e-commerce by expanding e-commerce standardization, network enhancement and access, establishing a graduate school for e-business etc.,
- Promoting e-commerce in the public sector by building an integrated e-procurement system for the government and introducing e-business to insolvent companies receiving public funds,
- Building an e-business network for all industries by supporting B2B network implementation, digitalization of major industrial complexes,
- Globalization of e-commerce by focusing on international e-trade networks with other countries like Japan or countries from Asia or Europe and building an online Silk Road.
The two phased plan of South Korea is building a knowledge and information based society which is integrated with the online field in every aspect of the country. The plan focuses on those aspects such as building an advanced government, land, economy, society and life through e-businesses, robots, environmental technologies.
The detailed plan and strategic development of South Korea is bringing a long term success on a global scale. The e-commerce strategy is an important part of this plan and as long as it can create a cycle in the “blue ocean” it will continue being successful. Korea is the 6th largest e-commerce market in the world and it has a very strong and well integrated R&D base.
Korea has great potential in terms of its plans and the execution of the plans. South Korea has the chance to become an e-business hub and the Silk Road of e-commerce business. The country’s advanced vision and forward thinking policies separates it from the other countries.
Unfortunately, the weaknesses of South Korea may create a threat to these plans also. These weaknesses are mainly:
- Limited marketing capability
- Limited brand management
- Limited alliance building capability
- Problematic language and cultural differences such as risk aversion
- Too overtly commercial
- The adjustment of red ocean towards the blue ocean strategy
- Acting as a pioneer, lack of entrepreneurial energy
These weaknesses may emerge as strategic and positional problems in the future. The fact that late e-traders from other countries can have a better marketing strategy than South Korea, other Asian competitors’ (like China or Singapore) blue ocean market success. Korea’s advantage in the industrial fields can emerge from its low production costs and give an edge to its position in the upcoming industries.
South Korea is on the way to become a technology integrated information and knowledge based country. The detailed planning and execution of the plan is promising. The cultural prejudice’s may threat the future of these plans but the richness of this culture might overcome these difficulties.
Nil Erden – Marketing Executive – email@example.com – Prisync.com
We, as Prisync team, will be covering e-commerce markets of different countries from all around the world and will focus on the insights that are specific to each respective market.