By Don Southerton, KoreaLegal.org Editor
This fascinating article showed up in Korea Times. It provides some additional dimensions to the Samsung–Apple relationship– and how Samsung sees the clash as part of its Destiny.
BERLIN – Samsung Electronics is in a transition game with Apple and regards the ongoing patent disputes with Apple as “destiny’’ before the next progress in corporate growth.
Samsung, South Korea-based tech giant, is aiming to become the world’s top-tier software firm by the end of 2013, at the earliest and its chief executive said it will heavily boost its spending on software.
“Samsung regards court battles with Apple as destiny. We are clashing with Apple in certain areas. Current situations will make us stronger,’’ said the company CEO Choi Gee-sung in a dinner meeting with Korean reporters, Friday.
“There had been heavy doubts about Samsung whether we can pass over Sony of Japan and even Nokia. But the results are telling everything,’’ said the top company executive.
Such remarks are very rare considering Samsung’s long tight-lipped policies about its key clients. Apple is Samsung’s biggest overseas client, followed by Hewlett-Packard (HP) and Sony.
Choi came to Berlin to participate in the IFA technology fair.
The most critical 19 litigation cases between Samsung and Apple will get rolling in U.S. district courts in California.
Preliminary rulings there could affect Samsung’s ability to sell products in the United States _ Samsung’s biggest market.
Another senior Samsung executive, who participated in the meeting, simply ruled out the possibility that Samsung will come to a licensing deal with Apple, dismissing earlier predictions that the two companies will ultimately enter a comprehensive licensing deal.
“Samsung has no reason to send a `goodwill gesture’ to Apple first and therefore it is highly unlikely that Samsung will come to a licensing deal with Apple,’’ said Hong Chang-wan, the head of the company’s home appliances division.
Samsung apparently has no interests about the acquisition of HP’s webOS patent portfolios as it won’t follow any “cyclical fashion trend’’ just to respond to market changes.
“One thing clear is that Samsung will never buy HP’s webOS patent portfolios and I think that’s not important. We have over 20,000 software experts and Samsung prepares beyond normal imaginations. We are open to strike small M&A deals, though,’’ said the chief executive.
Samsung in recent weeks has taken pains to show that it understands the need to focus more on software to increase its margins.
Samsung’s public relations office leaked word that Chairman Lee Kun-hee told top executives last month, “We must pay attention to the fact that power is moving away from hardware companies such as Samsung to software companies.’’
And the chief executive Choi said, it will invest heavily to follow up with the trend, though the chief executive declined to elaborate further.
“Samsung is not an unorganized firm. In long-term evolution (LTE) service, which regarded as the next-generation telecom tech, Samsung will become the leader just within the next few years,’’ Choi told reporters.
Bullish sales target
Samsung plans to reap $150 billion in total revenue by the end of this year and the CEO Choi said the tech giant will continue a “double-digit growth pattern, annually.’’
Also, the South Korean firm is aiming to create $70 billion in total revenues only in Europe by the end of 2015 as it is more than positive for further external growths in Europe.
“Before coming to Berlin for the IFA exhibition, I visited Copenhagen of Denmark and Zurich in Switzerland, where we’ve been struggling. But even these markets, calls are high for Samsung’s premium-branded products,’’ Choi said.
“By the end of next year, the number of top-ranking items will be increased to 12 and we are aiming to get $23.7 billion in sales just from finished-goods business,’’ according to Choi.
Additionally, its home appliances chief Hong said Samsung is considering the possibility to build a new home appliances product line in Brazil and added Samsung will be safe in any litigation troubles with the market leader Electrolux of Sweden and Whirlpool of the United States.
Meanwhile, Samsung also plans to become the world’s third-biggest notebook manufacturer by the end of 2015.
“We are internally targeting to sell 40 million notebooks by 2015 and Samsung is also eyeing for printer sector dominated by Japanese companies,’’ said Nam Seoung-woo, who handles Samsung’s printer and notebook business.
2012 Trends and Expectations—A Korea-facing Commentary
Sunday, January 1st, 2012By Don Southerton
Each new year, I share thoughts for the upcoming months in an executive-level commentary. Looking back at 2011, South Korea’s export economy saw a robust year—familiar names like Samsung, Hyundai, and Kia continuing to grow global market shares—demand driven by a mix of product quality, value, and design appeal, along with Japanese brands suffering set-backs from the devastation of the tsunami and threat of catastrophic nuclear meltdown.
Tempering the demand for top Korean cars, electronics, and consumer goods were deep concerns over the EU fiscal crisis—worries that still linger.
On a positive note following an amended agreement for the Korea-U.S. Free Trade Agreement (KORUS FTA) and ratification both by the U.S. Congress and Korean Assembly expectations are that the treaty will be implemented in the first quarter of 2012. Advocates and critics alike see the FTA boosting annual commerce between the two nations into the billions of Dollars.
Looking forward to 2012, first, the succession in North Korea will continue to be a concern. Issues include the stability of the Kim regime, threats of more border clashes, and an unchecked nuclear arms program. I’ll continue to monitor and share news as it unfolds.
Next, building on the momentum of the past 3 years, expect Korea’s export-driven firms to push their organizations to carve out greater global market shares. Look for even bolder announcements and sales targets than in the past. For example, Hyundai Motor Company, along with their sister firm Kia Motors, announced their global goals for 2012—targeting sales of seven million units. This is a significant increase from estimated sales of between 6.5 and 6.6 million the group expects for 2011.
Not to be outdone, Samsung Electronics, with record 2011 cell phone sales, intends to increase their total by as much as 15%. This translates to approximately 374 million phones, including 150 million smartphones for 2012.
One change from the past 2 years…., I expect few new foreign brands to enter the Korean market in 2012—part saturation, part concerns by the major Groups over the euro-zone fiscal crisis and a stalling U.S. economy undercutting global demand that in turn has an impact on the domestic economy. Two exceptions. One will be services benefitting from KORUS FTA such as U.S-based international law firms wishing to expand into Korea. The second are highly successful brands and products that bring with them strong appeal and a ready market—for example, Chipotle.
For those foreign businesses and brands that do plan to enter the Korean market or partner with Korean firms, I suggest they take efforts to understand not only the culture, but also business norms and expectations. For example, your key management needs access to coaching and someone to answer their questions on topics ranging from strategy to the impact of routine management changes within their Korean partner’s organization. It’s a small upfront investment and less costly than the consequences, which can include lawsuits, local and expat employee turnover, and months of missed goals and low productivity—not to mention tensions between you and the client over expectations. I know this area well—most recently handling the negotiations for a major brand launch in Korea.
Finally, expect further growth in Korean Green technology (wind power, solar, eCars, batteries), along with Korean overseas acquisition of energy related firms. With regard to Green, most of Korea’s major Groups have boldly entered the renewable and sustainable side of the market with plans to expand sales and distribution globally. This includes state of the art manufacturing facilities for wind turbines, solar cells, next generation batteries, and electric power trains. In particular, Hyundai and Kia introduced hybrid models in 2011, with the group aiming to launch a variety of eco-friendly models in 2012.
To conclude, understanding the dynamics of Korea’s economy, markets, and major business groups is vital. It is critical to take into consideration Korea’s past and current trends. Culture, global influences, and a 24-hour virtual workday add to this complexity. I’m dedicated to providing much needed research, analysis, and critical thinking to provide you with answers and insights 24-7-365.
Please feel free to share this commentary across your organization and teams.
If needed, I can also provide more details on specific market sectors, etc.
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