By Cho Jin-seo
Staff Reporter
What's the value of Samsung brand that causes it to hold so much sway on South Koreans' lives from mobile phones to TVs and from credit cards to theme parks?
It would be little less than 1 percent of the goods' total price, or close to 140,000 won if it is used on a passenger car, a report from Renault Samsung Motors showed.
According to its annual audit report released last month, the French automaker paid 16.7 billion in royalties to Samsung last year for using the brand, including the name, font and the famous blue oval logo. Since the company sold 119,088 cars last year in Korea, the license was estimated to cost 139,924 won per unit.
Renault Samsung said that it pays the royalty to Samsung commensurate with its revenue, though the rate is classified.
``I guess it would be around 0.6 to 0.8 percent of our total revenue, but there can be some other conditions affecting the payment,'' a public relations official said.
The brand license contract began in 2000 when Samsung sold the car company to Renault. The French automaker had decided to keep the name and merge with its own since the conglomerate has a strong identity with local consumers. The contract is good through 2010.
Some other conglomerates are also enjoying healthy profits from leasing their brands to affiliates and former affiliates, though the rate is not as high as Samsung's. LG Corp., the holding company of LG Group, receives 0.2 percent of revenues at its affiliates, such as LG Electronics and LG Chem. The total royalties it garnered last year reached 135 billion won, which is about one quarter of the firm's total earnings.
The amount is expected to soar from this year. LG Corp. is currently under negotiation with Shinhan Financial Group about raising the royalty fee on LG Card, which was sold to the banking giant last year.
Daewoo International also receives 0.15 percent of Daewoo Electronics' global revenue every year. Doosan Heavy Industries also had paid several billions of won every year for using the now-defunct Daewoo brand on its construction equipment sold outside of Korea until last year before it decided to go by its own name earlier this year.
There is one ambiguous part remaining in Samsung's name business. The group is built on a web of complicated cross-shareholding among its affiliates and there is no holding company that claims the copyright of the name. In the Renault Samsung case, the royalty is divided between Samsung Electronics and Samsung Card, the two main arms of the group, but none of the firms involved in the deal could explain why those two were selected as recipients.
``I'm not sure about the details, but the money should go to firms that are financially accountable,'' a public relations official at Samsung Restructuring Office, the de facto control tower of the group. ``We can't (get it), because we are an incorporeal organization.''
Last month, the Financial Times evaluated the Samsung brand at $12.7 billion. It was about one fifth of Google's and a quarter of Coca Cola's value.