Kang Seung-woo is the Business Desk editor at The Korea Times. Prior to this position, he covered politics, national affairs, finance and sports.
Korea Inc. shows improved competitiveness
By Kang Seung-woo
By Kang Seung-woo
The competitiveness of the Korean business sector has improved this year, according to a recent survey by the Korea Productivity Center (KPC), which gave improved grades to 33 out of 48 local industries.
According to the KPC’s national brand competiveness index (NBCI), Korean industries collectively scored 66.9 points for this year, up 1.3 points from 2010’s 65.6 points.
Kimchi refrigerators, which are specialized to preserve the staple Korean side-dish of pickled cabbage, two-door refrigerators, air conditioners and milk were picked among the products with strong competitiveness.
In the services sector, department stores, discount retailers, educational materials and mobile-phone services got high marks. The intensifying competition between companies on developing new products and services and advancing technologies are helping them improve their brand value, which are crucial in times of economic uncertainty, the KPC said.
A company’s success increasingly relies on the ability to convince customers to take a leap of faith on new products, and on developing a reputation for innovation in technology.
For instance, digital television as a product saw its brand competitiveness rise 4.7 percent from last year helped by the emerging popularity for ``smart’’ Internet enabled televisions and three dimensional (3D) flat screens.
Smartphones are also a buzz product, thanks to the public’s love affair with Apple’s iPhones and rival devices powered by the Google-backed Android mobile operating system.
The KPC also pointed out that fiercer competition between firms is improving the brand awareness of products and services. Internet book retail services saw their competitiveness improve by 6.6 percentage points, thanks to the cut-throat competition between companies. The competitiveness index of 24-hour convenience stores also improved by 2 points, KPC said.
The KPC researches and announces the NBCI to spread the management mind-set that is centered on brand value, thus, stimulating goodwill competition and providing the correct purchase standard for consumers
The NBCI is an index produced as a sum of brand awareness formed through marketing, brand image and relationship on a scale of 100. It indicates that the area to be invested by each company to identify the level of brand competitiveness in the concerned industry and furthermore to improve brand competitiveness.
This year’s survey covered 48 groups and 176 brands and targeted 94,920 users and non-users in 5 metropolitan cities ― Seoul, Busan, Daegu, Daejoen and Gwangju.
Risers and fallers
In the survey, 29 industries out of 48 or 60.4 percent posted growth from a year ago.
Internet bookstores saw the biggest growth with 6.6 percent ― from 61 points in 2010 to 65 in 2011.
Shopping online for books, which boasts easier accessibility and lower prices than their offline counterpart, has rapidly gained footing. Broader investment in e-books, e-learning, search engines and a quick delivery system has paid off, the KPC said.
Convenience stores came in second at 6.3 percent in growth. The stores have seen its range of customers diversifying by luring 40- and 50-something people and housewives. They are transforming to a supermarket-style that sells fruits and side dishes. In addition, a variety of events also contribute to their increased brand competitiveness.
Home-schooling materials, cigarettes and digital TVs rounded out the top five.
Amid soaring private education expenses and changes in education policy and industry, business diversification of home-study materials is becoming a new growth engine.
Cigarette and digital TV experienced increases from the release of new products and the prospective shift from an analogue system to a digital one, respectively.
Electric pressure cookers, Internet shopping malls, mobile services and two-door fridges also made the top 10 in the table.
On the other hand, while more than half of the local industries feasted on the growth in brand competitiveness, nine, or 18.8 percent, suffered decreases.
Gas boilers posted the sharpest drop of 4.2 percent.
Despite an unprecedented cold wave and rising demands for replacement of old boilers, the slumping housing market and a high proportion of large buildings’ central heating system negatively affected the gas-fired boiler’s brand competitiveness.
Feature phones and high-speed Internet, which tied for second, fell by 2.9 percent from a year earlier due to the rise of smartphones and a high penetration rate, respectively.
The emergence of small-sized cars that offer improved engines and spacious interiors hit hard mid-size vehicles, while life insurance saw its competitiveness index drop, with non-life insurers’ invasion of its territory.
Forecast for 2012
The KPC said in its forecast for 2012 in terms of products that home appliances will not be able to maintain their continuous edge.
Among digital appliances, smartphones and tablet PCs are estimated to stand out, while feature phones, MP3 players and desktop PCs are likely to go down.
It also said that dominance in the portion of mid-sized vehicles will assure the hegemony of the auto industry, with Hyundai Motor expected to maintain an upper hand.
By service, the financial industry will see much fiercer competitions given that it is difficult to diversify products and services, and multiple institutions can deal with similar goods.
In communication services, how to take advantage of the commercialization of the 4G network and the increased use of smartphone and tablet PC use will decide the winner of the market, where SK Telecom and KT share dominance.
The distribution industry is likely to be affected by inflation, the unstable financial market and global economic fluctuations.