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Title: South Korea ousts Japan in electronics market batt
Time: 3/6/2010 7:09:17 PM

South Korea is the new Japan when it comes to consumer electronics in East Africa. The shift in power has taken the best part of the last decade as Samsung and LG brands have gradually replaced traditional Japanese brands like Sony and Panasonic.

Despite Japanese brands having held a vice-like grip on the region, the South Koreans’ aggressive marketing tactics seem to have borne rich fruit. And experts say unless there is a dramatic shake-up in the way Japanese brands conduct business, their best days may well be behind them.

LG Electronics, founded in 1956 as two firms, Lucky and Goldstar, is one of the brands giving the Japanese sleepless nights. Prior to 1995, LG was known for manufacturing low quality, budget electronics. Come 1995, Goldstar revamped its brand, becoming LG Electronics, and acquired Zenith.

Since then it has poured significant capital into research and development, producing some of the most advanced technology for televisions. LG Electronics marketing manager for East Africa George Mudhune said the home appliances division is its flagship portfolio but the other segments -- home entertainment, IT, and mobile phones-- also have a substantial market share in the region.

Why the success of South Koreans? Mr Mudhune says it is due to product diversification. “While our competitors from Japan have narrowed their portfolio to a few products, we have a range of products that support each other,” he said.

“We carry out aggressive marketing, and that’s why we have offices in Kenya, South Africa, Egypt, Morocco and Algeria to support our growth, especially in emerging markets where the future for growth lies,” he says. Latest figures from a quarterly market analysis, Display Search’s Global TV Shipment and Forecast report, shows that Samsung late last year achieved its highest revenue share ever, reaching a record 23.6 per cent of global televison revenues in quarter four.

Samsung has led worldwide every quarter in television sales for more than three years now, achieving a 22.6 per cent share of 2009’s full year revenues. LG Electronics was the number two brand worldwide in TV revenues and demonstrated the strongest annual growth among the top five brands, an indicator of the aggressive market share growth campaign the brand undertook in 2009.

The result is that it improved its total 2009 TV revenue share by a full 2 percentage points to 13.2 per cent, a larger increase than any other brand in 2009. LG’s fourth quarter ’09 revenue share rose slightly, to 13.0 per cent. Japan’s Sony placed third during the same quarter at 11.5 per cent, up sharply from 9.9 per cent in quarter four 2009 as sales surged during the holidays, typically a strong quarter for the company.

Sony’s full year 2009 total television units revenue share was down almost 2 percentage points from 2008, to 11.5 per cent -- the lowest level since 2005 when it last led the overall TV market. Much of Sony’s share went to the two surging Korean brands.

Sony had enjoyed unparallel brand equity and loyalty for a very long time before the Koreans moved in. However, over the last couple of years, it has been gradually slipping from its ivory tower and has failed to keep up with many of its competitors like Samsung and LG.

What did Sony do wrong? How could such an iconic brand get into trouble? Sony Electronics, like many other companies in the global economy experienced a downturn in the 1990s, in which competition from Korea, Taiwan, China and other Southeast Asian firms intensified. 

Attempts to get Kenyan market share figures from Sony’s Gulf office in Westlands which serves the region were not successful with the relevant official said to be out of office. In 2007, sensing trouble, electronics maker, Panasonic, opened a branch in Kenya to position its products in the Kenyan market and the region.

Most of the other electronics firms access this market through appointed distributorships, which do not give products full support especially in marketing and branding. Dinesh Dixit, Samsung manager for Home Appliance Division, said in Kenya this segment has a market share of about 32-25 per cent depending on the product, while in Tanzania and Uganda it is about 25 per cent.

Profited from

For Samsung, Mr Dixit foresees a great potential in the African market in general and anticipates a minimum growth rate of 35 per cent over the next year. “We plan to establish Samsung as a firm leader in this category. In Kenya we hope to achieve leadership in the over the next year or so,” he said.

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