By Won Jung-hoon
The Korean Wave once initiated and dominated by the popularity of K-pop, with renowned artist Psy and a number of idol groups becoming global household names, is now expanding its reach with Korean food at the epicenter.
A case in point is the popular Korean drama "My Love From the Star" ― simultaneously aired in China ― in which a single line recited by the show's main character (played by actress Jeon Ji-hyun), opened a new door of possibility for "K-Food" when it introduced that country to "chimaek," a portmanteau of chicken and the Korean word for beer.
With this momentum as a backdrop, Korean restaurant companies are aggressively pushing to expand overseas. In particular, the use of the "master franchise" method is on the rise, in which a restaurant company provides operational rights to a local partner in exchange for royalties. Experts say that the method reduces risk and enables the brand to secure its presence in a stable manner.
The expansion of Korean brands into overseas markets is not a movement detected solely in the restaurant industry. Samsung and Hyundai Motors have already cemented themselves as global brands. Likewise, Lotte Shopping, an affiliate of Lotte Group Corporation, is spearheading its overseas business as it announced plans to launch an additional 20 department stores in global markets over the next five years in order to find a new growth engine. Furthermore, many small and medium-sized companies are trying to expand their businesses by making inroads into global markets.
It has long been a truism that entering foreign markets is essential to generate sustainable growth for domestic companies.
This can also be seen when we look at the overseas business status of food distribution companies. For example, Chung Jung Won's Soonchang Hot Pepper Paste recorded overseas sales of $12 million last year, putting it firmly in place as a representative domestic export. It is expected that the product will post record sales of $25 million this year as the company is aggressively trying to expand its presence in the global market.
The efforts of the food distribution industry can been seen in the results of a survey conducted by the Korean corporate performance evaluation company CEO Score on overseas sales for the top 30 domestic food and beverage companies in terms of sales. Out of the total figure of more than 42 trillion won, overseas sales recorded about 8 trillion won, up 5.9 percent year-on-year.
In order for Korean companies to be successful in foreign markets and accomplish sustainable growth, they need to develop flexible strategies to swiftly respond to the market based on sufficient local market research that can help them build "local" consensus. An overseas project by Mad for Garlic, the first of its kind garlic-themed Italian restaurant in Korea, is a notable example as its success is attributed to its local-focused business strategies.
In 2010, Mad for Garlic opened its first overseas branch in Suntec City Mall, the most active commercial district in the Asian-Pacific financial hub of Singapore, followed by other branch openings in Jakarta in Indonesia, Clark Quay in Singapore and Manila in the Philippines.
In particular, the branches located in Singapore are appraised as successes as 70 percent of their customers are non-Korean and include employees of global companies from the U.S., Europe and Japan. The biggest contributing factor to this success lies in the business strategies that focus on the needs of the local community while maintaining a strong brand identity.
In other words, the restaurant maintains its brand characteristic of providing "Koreanized-Italian dishes" with garlic at their core, while tailoring dishes to optimize the ingredients and tasted commensurate to religious and cultural differences. As a result of this flexible business strategy, Mad for Garlic's overseas projects have been well-received.
Thanks to the popularity of the Korean wave or Hallyu, the world's eyes are focused on Korean brands more than ever. Korean companies need to take this opportunity to aggressively enter foreign markets and strengthen their position as global brands.
Up until now, Hallyu has depended on just a few celebrities, just as exports from Korea are centered on a few companies. However, given that the Korean wave is not eternal, there is a need to develop locally customized strategies and systems to attract foreign consumers so that more Korean brands attract global attention and realize the so-called "economic Hallyu" in the near future.
The writer is an executive managing director of Sun at Food Sales and Marketing.
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A case in point is the popular Korean drama "My Love From the Star" ― simultaneously aired in China ― in which a single line recited by the show's main character (played by actress Jeon Ji-hyun), opened a new door of possibility for "K-Food" when it introduced that country to "chimaek," a portmanteau of chicken and the Korean word for beer.
With this momentum as a backdrop, Korean restaurant companies are aggressively pushing to expand overseas. In particular, the use of the "master franchise" method is on the rise, in which a restaurant company provides operational rights to a local partner in exchange for royalties. Experts say that the method reduces risk and enables the brand to secure its presence in a stable manner.
The expansion of Korean brands into overseas markets is not a movement detected solely in the restaurant industry. Samsung and Hyundai Motors have already cemented themselves as global brands. Likewise, Lotte Shopping, an affiliate of Lotte Group Corporation, is spearheading its overseas business as it announced plans to launch an additional 20 department stores in global markets over the next five years in order to find a new growth engine. Furthermore, many small and medium-sized companies are trying to expand their businesses by making inroads into global markets.
It has long been a truism that entering foreign markets is essential to generate sustainable growth for domestic companies.
This can also be seen when we look at the overseas business status of food distribution companies. For example, Chung Jung Won's Soonchang Hot Pepper Paste recorded overseas sales of $12 million last year, putting it firmly in place as a representative domestic export. It is expected that the product will post record sales of $25 million this year as the company is aggressively trying to expand its presence in the global market.
The efforts of the food distribution industry can been seen in the results of a survey conducted by the Korean corporate performance evaluation company CEO Score on overseas sales for the top 30 domestic food and beverage companies in terms of sales. Out of the total figure of more than 42 trillion won, overseas sales recorded about 8 trillion won, up 5.9 percent year-on-year.
In order for Korean companies to be successful in foreign markets and accomplish sustainable growth, they need to develop flexible strategies to swiftly respond to the market based on sufficient local market research that can help them build "local" consensus. An overseas project by Mad for Garlic, the first of its kind garlic-themed Italian restaurant in Korea, is a notable example as its success is attributed to its local-focused business strategies.
In 2010, Mad for Garlic opened its first overseas branch in Suntec City Mall, the most active commercial district in the Asian-Pacific financial hub of Singapore, followed by other branch openings in Jakarta in Indonesia, Clark Quay in Singapore and Manila in the Philippines.
In particular, the branches located in Singapore are appraised as successes as 70 percent of their customers are non-Korean and include employees of global companies from the U.S., Europe and Japan. The biggest contributing factor to this success lies in the business strategies that focus on the needs of the local community while maintaining a strong brand identity.
In other words, the restaurant maintains its brand characteristic of providing "Koreanized-Italian dishes" with garlic at their core, while tailoring dishes to optimize the ingredients and tasted commensurate to religious and cultural differences. As a result of this flexible business strategy, Mad for Garlic's overseas projects have been well-received.
Thanks to the popularity of the Korean wave or Hallyu, the world's eyes are focused on Korean brands more than ever. Korean companies need to take this opportunity to aggressively enter foreign markets and strengthen their position as global brands.
Up until now, Hallyu has depended on just a few celebrities, just as exports from Korea are centered on a few companies. However, given that the Korean wave is not eternal, there is a need to develop locally customized strategies and systems to attract foreign consumers so that more Korean brands attract global attention and realize the so-called "economic Hallyu" in the near future.
The writer is an executive managing director of Sun at Food Sales and Marketing.
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