Korean firms lag behind in branding

By Reiji Ohtaki, Ph.D.

The easiest way to ascertain whether or not a company is competitive is to see if excellent talent is interested in joining the company. It is not even necessary to study its financial statements or market share. No talent would choose to join a useless company and go through difficult processes intentionally.

Top talents are eager to join a good company to learn from excellent colleagues. This logic means great companies attract excellent talents, which further improves their corporate results as well as the popularity of the companies. The same logic applies to poor companies ― they cannot attract talent, so their results never improve. In fact, many Asian companies in developing nations are caught in this common vicious circle.

In September 2008, JobStreet.com, the biggest job-search website in Southeast Asia, and Aon Consulting (now Aon Hewitt) conducted an online survey of white-collar workers, aged 21 to 40, in ASEAN countries and India to study the popularity of MNC’s (multinational companies), based on their country of origin. The result from 28,679 survey participants is shown in Figure 1.

As you see, American companies attracted the highest number of votes, European companies were second, Japanese third, local companies fourth and Korean companies last. American companies are firmly established in each market. Europe, the second favorite, has deeply penetrated into everyday lives, with companies such as Nestle, Philips, Unilever and NOKIA.

The gap between second and third is minimal. Japanese manufacturers have been actively expanding their production sites in Southeast Asia since the late ’80s, and brand names of vehicles and electric appliances, specifically Toyota, Honda, Panasonic and Canon, are all widely known in the region ― this is the reason Japanese companies are putting up a good fight among competitors.

Local companies are positioned far behind American, European and Japanese companies at the time of the survey, September 2008. This goes some way to explaining why domestic corporations have not been growing from an historic point of view. Even in Singapore, where the GDP per capita has already surpassed that of Japan, not many Singaporean global companies are known to the rest of the world yet. For Asian talents who are aiming for global careers, domestic companies were not an option in 2008.

Korean companies were somehow not very popular in ASEAN nations and India. Company names such as Samsung, LG, Hyundai and KIA are widely known, and the products of these companies are quite popular in these countries. However, the impression of the quality of their products may not be very favorable yet. In addition, many Asian white-collar workers have the impression that Korean companies are not interested in human resource development (unlike Japanese companies), and don’t take good care of the local staff. It seems that Korean companies have not yet been identified with a certain image of their own _ this also contributes to their low popularity. Surprisingly, this survey revealed that more than a few Asian white-collar workers mistook Samsung and Hyundai for Japanese companies.

Two years later, in June 2010, JobStreet.com conducted a similar survey on a smaller scale covering five countries in Asia, as shown in Figure 2. By considering the significant economical growth of Asian countries during the last few years, local companies were divided into two groups, namely the large local companies and the small- and medium-sized companies. In addition, in view of the aggressive internationalization of Chinese companies, Chinese MNCs were included in the survey to ask young Asian talent for their preference.

Despite the significant improvement of the brand recognition and market penetration of Korean companies in Asian markets since 2008 ― the time of the last survey ― not much improvement was observed in terms of the popularity ranking for Korean companies. They do not appear to be seen as a preferred place to work by Asian talent.

What does this mean to Korean companies? What message do they have to receive from these surveys?

Here are three suggestions to Korean companies from the author based on his experience helping global companies enhance their “employer branding” in Asia:

Understand the characteristics of Asian talent

Global strategy cannot be implemented without top-notch local talent. Therefore, knowing Asian talent is the first step for Korean MNCs. With this knowledge, Korean companies can design and develop an organization which attracts top talent in Asian countries. Korean companies should first study and identify the core values, motives and priorities of Asian talent, they should then define the target talent they hire, the jobs they design, the work processes they adopt, etc. The philosophy and vision of the head office must be maintained globally, but Korean companies should be flexible in strategy implementation for their overseas businesses. Forcing the Korean way of doing things to local people overseas will simply disperse top talent.

Develop Korean managers as global business leaders

Many Korean managers dispatched overseas are traditional expatriates with the mindset of a privileged manager from headquarters. They are not well trained to effectively communicate with local people so a clear divide exists between Korean expats and the locals. As many expats have difficulty in effectively leading, motivating and inspiring local people, they are not seen by local talent as role models. It is urgent for Korean companies to revise training and development programs for Korean managers and implement the programs to develop global leaders who are seen as true leaders by local people.

Reform HR programs for Asian talent

Human resources management programs for local people, in particular a career development program, should be reviewed and revised so that local people can visualize their career progression within the company. Asian talents tend to hop jobs frequently because they are self-reliant in developing their own career. They change jobs not so much because of the salary, but when they see there are no advancement opportunities within the company, they quit easily. Designing HR programs that help local people foresee their future career is the most effective way to retain top Asian talent. Logical and transparent HR programs work well as a talent magnet.

For readers who are interested in learning more about talent management in Asia, please refer to “Fundamental of Human Capital Management for Asian Global Companies” by Reiji Ohtaki, Hiroyoshi Umezu, Masakazu Sugiura ― 2010 Marshall Cavendish Business

Reiji Ohtaki is a professor at Waseda Business School. He is also honorary chairman of Aon Hewitt Japan.