Samsung Reducing Sponsorships
By Kim Yoo-chul
Staff Reporter
Samsung Electronics is also tightening its purse strings on its sports marketing.
The company has dropped its sponsorship of a torch relay in the Vancouver Winter Olympics next year and is considering trimming its association with the 2012 Summer Games in London.
Samsung officials didn't say for certain how they would rearrange its sponsorships with the English Premier League team Chelsea. Samsung has a multi-million dollar deal with the club that will expire May 2010.
"This is an important moment for us," an official from Samsung Electronics told The Korea Times, pointing out that a sizable cut in its marketing and advertisement expenses for this year reflects its dismal performance since the fourth quarter of last year attributable to the ongoing global crisis.
Samsung spokesman Cho Shin-hyung didn't go as far as to talk about cutting deals or reducing its footprint, but added that his company will wait and see its performance before deciding.
Samsung apparently believes it can do without spending as much as it did during the Beijing Games in future Olympics.
Specifically, Samsung's share of China's mobile phone market rose to over 20 percent last year, from some 14 percent the previous year, mainly because of its decision to be a major sponsor of the Beijing Olympics.
Earlier, Samsung's head of worldwide sports marketing, Kwon Gye-hyun, said the company spent over 80 percent of its 2008 Olympics sponsorship budget in China, which accounted for about 25 percent of the company's global sales, last year.
Signs of thrift are on the wall as it is set to reduce its support for local sports.
"Sponsorships in some events that don't guarantee an immediate return are currently out of focus," a company official said about its decision not to sponsor the Vancouver torch relay.
Despite spokesman Cho declining to comment further, officials say the deal's size _ even though the company decided to continue sponsorship _ will shrink. In 2005, Samsung struck a five-year, 100 billion won deal with Chelsea.
Meanwhile, whether Samsung's virtual owner, Lee Kun-hee, will keep his International Olympic Committee (IOC) seat will be determined soon.
If he is stripped of the honor, it could affect the company's generous sports sponsorships, according to industry watchers.
Lee has served as a Korean IOC member since 1996, and played a leading role in promoting the Olympic movement.
The IOC has applied a strict ethics code to its members in recent years.
As such, Korea's largest business tycoon may face grave consequences to his international career, such as disqualification from the post, if convicted of tax evasion and breach of trust.
"This is a totally separate matter. But we understand times change, companies change and they change strategy," another Samsung official said.