Until Samsung and LG overtake Sony and Panasonic

In the beginning of the 1990s, Japan’s competitive power was considered to be the world’s best. There was even the prospect that Japan could overtake the United States. Korea, on the contrary, was no more than a peripheral country in Asia.

The situation has changed, however. From April, 2011 to March, 2012, Sony, Sharp, and Panasonic recorded $20 billion deficit for three companies together. Currently, their aggregate market value in total is no more than $29 billion. In contrast, Samsung electronics keeps its highest sales, and its market capitalization is 4 times higher than the total amount of the Japan’s three companies. Samsung remains No. 1 in market share in the field of TV and Smart phones. LG electronics also has a good record in the field of TV and white goods.

 

What is interesting is that Samsung has grown imitating Sony. Let’s take a look at the advertisement in the 1980s. The picture on the right shows Sony’s Walkman and the one on the left shows Samsung’s mymy, an imitation of the Sony product.

 

Unlike Apple, however, Sony never made a lawsuit against Samsung. It is probably because, while Sony was one of the most leading groups worldwide, Samsung or LG was such a small company. In the middle of the 1960s, LG travelled to Hitachi for training to make TVs, while Samsung, in the beginning of the 1970s, learned technology from NEC.

Eventually, however, as the symbol of a leader in the electronics industry, Sony’s Walkman gave its place to Samsung’s cellular phones. Sony showed a big gap with not only with Samsung but also with LG, giving the market for cellular phones and TVs to its competitors. Unlike in the past, when Korean companies made great efforts to learn about Japan, now Japan is trying to learn about Korea.

For this phenomenon, Japan’s aging society is pointed out as the most important reason. While Japan was satisfied with its domestic demands, Korea quickly pioneered markets abroad and improved its corporate structures. In contrast, in Japan, the management still consists mostly of older people. As the 21th century sets in, they could not adapt themselves to the fast-pace changes, and meanwhile, Korean companies, with their fast developments, became global corporations. Samsung already occupies the 17th place in market capitalization worldwide. .

Still, it is hard to say that Korean manufactures are in a safe place. Korea is under the threat of China as China is chasing Korea in a remarkable speed. Even if no Chinese brand is occupying the position of No.1-5 in the global TV market, China is taking four places from No. 6 to No. 10. Besides, No. 4-6 in the smart phone market is taken by ZTE, HTC, and Hwawei, all of which are Chinese companies. Moreover, Taiwan has taken the lead in the field of laptop since earlier and Lenovo took over IBM long time ago.

Furthermore, even though Samsung and LG are doing well, it does not mean that Korea is doing much better than Japan in general. Most Korean manufacturers including Samsung and LG still depend on the Japanese materials industry. There also exists an analysis that, with recent depreciation of Japanese Yen and appreciation of Korean Won, exports of Japanese manufacturers will revive again.

Trivia : This way, Korean industries always feel a sense of crisis between China and Japan, and this is called ‘Sandwich Crisis theory’.

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