Eco-friendly becomes major corporate agenda

Companies crank out ‘green’ products for consumers concerned about environment

By Bahk Eun-ji

Vicky Kim, a working mom who has an 18-month-old son, paused for a moment in front of a counter to lay out various packs of disposable diapers at a local discount store. She had two options ― one with an “eco-friendly” label at a relatively expensive price and the other regular one, priced more affordably.

After consideration, she chose the one with the eco-friendly label, because she believed that the product is better for her baby’s skin.

A few days ago Jang Tae-hyun, a 38-year-old office worker in Seoul, bought a new car. Among many new fancy motors available, he originally considered buying a vehicle with a top-grade fuel efficiency rating, certified by the Korean government.

“Those vehicles with the highest grade certification are slightly more expensive than others, but they are more cost-efficient in the long run because they offer better gas mileage,” said Jang.

An increasing number of consumers are becoming concerned about the environment and climate change, which prompts companies to churn out eco-friendly or green goods not solely for the benefit of the world but also to boost their bottom lines.

“The term eco-friendly has become a buzzword for companies and marketers because more than 80 percent of national consumers are found to be strongly concerned about the environment,” says Kim Ki-jeong, a director at Korea Electronic Association (KEA).

Kim pointed out that many consumers are willing to pay more money for green products, provided that these don’t lag behind in terms of functionality compared to regular items.

In line with the fresh trend, many different green products, ranging from household items to home appliances such as detergent-free washing machines and vacuum cleaners using energy saving motors, are unleashed onto the domestic market.

In the past, the commercial viability of such products was regarded with a degree of skepticism in spite of their popularity, but they have emerged as items with significant commercial value for multiple reasons among Korean companies, in addition to their rising popularity in the local market,“eco-friendliness” and “energy-efficiency” have become essential product selling points for exporters.

Major importers of made-in-Korea products including within North America and Europe have regulations which require imported products to be designed for high energy efficiency and eco-friendliness.

In consideration of the fact that the vast majority of Korean conglomerates heavily depend on exports, such changes cannot be ignored.

For example, the European Parliament enlarged its legal framework, the Ecodesign Directive, to include all energy related products in 2009. The directive stipulates compulsory eco-design requirements for various merchandises and the European Union has its own labeling systems for food and consumer products, called Ecolabels and Green Stickers.

Tall tasks

Therefore, businesses have an active but challenging interest in eco-products because they play a vital role in sustainable growth but do not automatically generate commercial success.

In particular, when green products fail to match the quality and functionality of regular items, users simply shun the former.

Researcher Ha Joo-hyun at Samsung Economic Research Institute (SERI) analyzed the various difficulties that companies have to deal with in her report, “successful strategies for eco-products.” Ha highlighted three primary challenges that firms face namely: high production costs; difficulty in providing differentiated services and products; and limited market demand.

“Usually, materials that are used for eco-products are more expensive than regular ones. For instance, regenerated fiber is around two times more expensive than polyester fiber and plastic materials that have biodegradability is 2.5 times expensive than petroleum plastics,” Ha said.

Furthermore, experts point out that the actual purchase rate rises somewhat slowly compared to the soaring consumer environmental awareness.

According to “mainstream green: moving sustainability from niche to normal,” a study released by OgilvyEarth, a sustainability consultancy in the United States, 77 percent of Americans believe that buying eco-friendly detergent is important for environmental protection, but only 45 percent of those questioned have actually snapped it up.

Researcher Ha suggested companies have to put top priority on tangible benefits because consumers care most about quality and performance and it is no wonder that those products that do not meet requirements are destined to disappear from the market. For one, electronic cars show sluggish sales, mainly because their mileage is relatively short and it is difficult to charge their batteries. On the other hand, an eco-pedal system invented by Nissan Motors which limits excess pressure on car accelerators was well received in the market.

In other words, companies must achieve the double objective of improving quality in an eco-friendly manner to gain commercial success, a tough job that can be attained only through innovative technological advancement as Ha explained.

“Streamlining, reducing energy consumption and recycling requires continual technological innovation and advancement. Hence, research and development is very significant,” she said.