Yee In-chan
Coway Senior Vice President |
Korean Company Strives to Lead Era of `Green Goods'
By Kim Tae-gyu
Staff Reporter
Korea has created two established global brands in the high-tech area, Samsung Electronics and LG Electronics, which are now leading the world in brown and white goods.
Coway, the country's primary company for eco-friendly home appliances, hopes to be the third major brand to establish itself in the world market in the not-so-distant future, with its ``green goods.''
``In the past, home appliances have been all about convenience ― quickly freezing foods or washing clothes clean. Now the paradigm is shifting toward wellness,'' Coway Senior Vice President Lee In-chan told The Korea Times in a recent interview.
``Now an increasing number of people are putting wellness and safety on the front burner rather than convenience. In the new era, green goods will stand out ahead of brown or white goods,'' he said.
White goods allude to major home appliances, which used to be finished in white enamel more often than not, such as refrigerators, washing machines and stoves.
Brown goods refer to electric household products used for entertainment purposes, such as televisions and audio sets, which, in the past, were conventionally brown.
In comparison, the green home appliances Lee refers to have something to do with health and wellbeing, and include water purifiers, air filtration systems, electric bidets, food waste treatment devices and water softeners.
These are the products manufactured by Coway, which was established in 1989 and has made inroads into the global market lately under the stewardship of Lee.
``Green goods are aligned with the daily lives of people ― from eating, drinking, and bathing to excreting. Safety- and wellness-conscious people pay more attention to these products. Hence, the market will explode soon,'' Lee said.
First-Mover Advantage
In boosting Coway as a globally recognized brand, Lee said the green goods market offers many more opportunities compared to competing already-competitive industries.
``The rivalry in white goods is too fierce, with so many international powerhouses competing head to head. Obviously, we do not want to step in there,'' said Lee who worked for Samsung Electronics 20 years before joining Coway.
``By contrast, few players have waded into the green goods market. Samsung, LG, Siemens and Whirlpool have yet to take the fledgling market seriously. We are looking to make a noise with a `blue ocean' strategy,'' he said, referring to the strategy of creating new market space.
In other words, Lee said Coway strives to stand out by capitalizing on the world electronics market's paradigm shift toward environmental-friendly products.
``When the potential of green goods becomes full-fledged, we will be able to savor a first-mover advantage on the strength of our competitiveness in technologies, designs and global sales networks,'' Lee said.
``In particular, our cornerstone asset of cutting-edge technology in filtration will continue to offer sustainable competitive advantages to us,'' he said.
The eye-catching designs of Coway products, such as their super-slim air purifiers and water filtration systems, have gained wide recognition and won a host of prestigious honors including the Red Dot Design Award.
It has also set up a global network with affiliates in the United States, China, Japan, Thailand and Malaysia as well as a big European warehouse in the Netherlands.
Notable Achievements
Under the leadership of Lee, who joined Coway midway through 2006, the Seoul-based outfit has already chalked up impressive growth in its global initiative over the past few years.
Lee and his more than 85 top lieutenants have doubled profits in the global market every year since 2006, from 6.5 billion won to 19.2 billion won in 2007 and 44.6 billion won last year.
This year, Coway hopes to keep the growth formula going by racking up more than 80 billion won in offshore sales.
The potential of Coway was amply demonstrated during the IFA 2009, one of the world's leading trade shows, which took place early last month in Berlin.
``Approximately 223,000 visited the show and up to 10 percent of them checked out our products in person at our booth,'' Lee said.
``Many big buyers showed great interest in us and a set of negotiations are ongoing at the moment to seal contracts with them,'' he said.
Lee said that European consumers especially loved its food waste treatment equipment as people there usually keep food waste at home for about three days, longer than elsewhere.
``Our products break food waste down to pieces, thus reducing its size to one-tenth of the original bulk. They are expected to gain great popularity through the IFA. In fact, we already export the machines to Switzerland and Italy,'' Lee said.
Subcontracting
Currently, a substantial proportion of Coway products are on sale via the so-called original equipment manufacturer (OEM) contract. Under this subcontractor deal, Coway products are sold by other brands.
Typically, an OEM deal provides a thin margin while restricting the brand awareness of the original makers, but Lee said things are different for Coway.
``Basically, we are the sole provider of high-quality green goods. Accordingly, we do not have to offer our products at low margins even under OEM contracts,'' Lee said.
``Plus, the OEM deals have a great strategic importance ― our OEM partners, well-established electronic makers, will create the markets for the green goods. We are leveraging their sales network and brand awareness,'' he said.
Lee added that Samsung Electronics employed OEM tactics in the 1980s and 1990s when the world's top maker of memory chips and flat-panel displays was a minnow.
``Currently, a great majority of Samsung products are on the market under its own brand. We will also continue to reduce the proportion of OEM products down the road,'' Lee said.
``It took a few decades for Samsung and LG to emerge out of nowhere to become global players. For us, about five years will be enough. I think by 2015, we will be in the ranks of Samsung and LG in the global market,'' he said.
voc200@koreatimes.co.kr
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