[The guys at Seoul Space asked me to write a series of guest posts for this blog and, because I don’t really like to sleep, I added it to my to-do list. I’ve been working and networking in Korea for six years, previously as the Digital Strategist for global PR firm Burson-Marsteller’s Korean office and now as the International Marketing Manager for Daumsoft, a company that’s taken consumer analysis to crazy new levels. (Daumsoft has been mentioned on the Seoul Space blog HERE before.) Working at Daumsoft gives me access to information no one else has and I’ll use it as often as possible to spice up and lend credibility to my otherwise off-the-cuff posts. Let’s get started.]
I’ll just come right out and say it. Korea is a difficult market. The consumers are demanding, the regulations are often opaque and fads come and go faster than Silvio Berlusconi’s girlfriends. For foreign companies it’s even harder. After all, Korea is the country that has held off Google in favor of local search providers Naver and Daum. It proved a difficult market for Facebook because of the widespread popularity of Cyworld. And until recently Korea was the country where only a brave (or silly) few carried handsets made by companies other than Samsung, LG or Pantech.
Let’s take a break from all the tech talk for a while and look at another company Korea defeated… Wal-Mart. That’s right, the retailer that’s made it big pretty much everywhere else came to Korea and FAILED.
This blog usually deals with tech business but I want to kick off my guest posts with something less sexy but illustrative of how companies succeed and fail in Korea. I’m putting together a series of articles detailing the lessons we can learn from big box stores in Korea that got it right and those that got it wrong.
In 1996, Wal-Mart and Carrefour set up shop in Korea. A decade later, both were gone, defeated by local players who adapted their foreign competitors’ business models to better meet the demands of Korean consumers. The reasons for the failure of the American and French big box stores have mostly to do with overemphasis of dry goods and boring stores that failed to capture the attention of Koreans, who were more accustomed to a bazaar-like shopping experience.
At the same time these two companies were shuttering their doors (actually they sold off local assets and might have made a bit of money thanks significant appreciation in the value of the won against the dollar and the euro after the Asian financial crisis), British retail giant Tesco was partnering with Samsung to create the Newspeak-sounding HomePlus, which has become one of the most successful chain stores in the country. E-Mart, which bought up a good portion of the failed foreign firms’ assets, is a home-grown big box store and has surpassed HomePlus, emerging as the biggest player.
In the coming weeks I’ll follow this introduction up with more in-depth info on Koreans’ perceptions of big box stores. I’ll look at the competition in the overall market, what stores are doing to stand out and what they can do better. I’ll also lean heavily on a study conducted by Daumsoft, analyzing 29 million blog posts on Naver and Daum, Korea’s top two portal websites, as well as five million posts on the 15 most popular food-related forums operated by the same two companies from March 2008 to June 2010.
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Can’t wait until next week for more on Korean business? Check out this NY Times article about how companies like L’Oreal and Phillips are leveraging Korea’s notoriously demanding consumers to help refine products ahead of launches in other markets.