South Korean brand shines in troubled times

South Korean brand shines in troubled times

Sang-Hun Choe, Associated Press, Seoul

Half of all South Korean consumers sit in front of Samsung
television sets, keep food in Samsung refrigerators, chatter on
Samsung cellphones and surf the Internet on Samsung computers,
eyes glued to monitors bearing the same trademark.

And they probably bought it all with Samsung credit cards.

Samsung, the world's biggest seller of computer memory chips,
flat panel screens, monitors, VCRs and electric ranges, is the
only remaining South Korean conglomerate, or chaebol, to stand
tall after the Asian currency crisis of the late 1990s.

Daewoo, once South Korea's No. 3 conglomerate, is in pieces.
Giant Hyundai has splintered under heavy debt, its motor and
shipbuilding units alone retaining their luster.

Now, Samsung 's innovative handheld devices and home
appliances have boosted its name recognition to levels that rival
Nokia, Sony, and Philips.

No longer is the company considered merely a cheap alternative
to precision Japanese goods.

"Samsung is one of the few Asian companies outside Japan that
has succeeded in establishing itself as a global brand," said Tim
Condon, a Hong Kong-based economist for securities firm ING
Barings.

With domestic rivals foundering, Samsung is now biggest and
most lucrative family run business group in this nation that
President George W. Bush is visiting this week.

Honeymooners dream of spending their first night together at
ritzy Samsung hotels and thereafter, in modern Samsung
apartments. One-fifth of South Korea's 47 million people visited
Samsung's amusement park last year.

Samsung-Renault's SM-5 cars, built with Nissan technology, are
the most sought-after model. Drivers take out Samsung insurance
policies.

"Samsung will soon start rivaling Sony in brand power as a
consumer electronics maker, if it hasn't already," said Jin
Young-hoon, an industry analyst at Seoul's Daishin Securities Co.

As part of its push into more innovative, higher-quality
goods, Samsung recently ditched mass-market discounters such as
Wal-Mart as a major retailer of its products.

In China's exploding cell phone market, Samsung now shuns the
low-end market. Its latest model sells for US$615, more then
twice the average monthly pay of a Chinese worker.

In the U.S. market, its DVD players, cell phones, flat panel
screens and digital TV sets are as expensive and well-received as
Japanese products.

Last year, Samsung's 35 subsidiaries produced a combined $94.6
billion in sales, an 8.9 percent drop from 2000. Total profits
dropped 20 percent to $5.1 billion. Still, it was an impressive
performance in a year when painful losses humbled many global
giants.

Inside South Korea, Samsung strives for a distinct corporate
culture. Unlike more flamboyant counterparts at Hyundai and
Daewoo, Samsung chairman Lee Kun-hee rarely appears in public.
His workers are dapper and polite.

Thousands of police officers, railway conductors and bank
clerks attend Samsung's "Service Academy" to learn to bow and
answer customer questions. Samsung's early work shift allows
workers to avoid rush-hour traffic jams.

Critics say Samsung would be even stronger - and more
attractive to investors - if it opened its business practices to
public scrutiny. Typical of South Korean conglomerates, or
chaebol, analysts say Samsung has engaged in its share of
questionable dealings and used cozy ties with politicians to its
benefit.

"Samsung Electronics is the crown jewel of Korea Inc.," said
Jang Hasung, an economist at Seoul's Korea University. "But
investors question its corporate governance. That's why its
shares are so seriously devalued, compared to its U.S. and even
Taiwanese competitors, which are not doing nearly as well."

Samsung Electronics, the conglomerate's most globalized
outfit, saw net profits halve to $2.3 billion last year on
revenues of $24.8 billion.

Yet with $538 million in profits from semiconductor sales,
Samsung Electronics was the only major computer-memory chip maker
to earn a profit last year.

Plunging chip prices pushed competitors like Micron
Technology, Hynix and Infineon into the red.

Last year, the company lowered its dependence on lower-end
computer memory, which has plummeted in price, focusing more on
Rambus and DDR memory chips for newer, faster computers.

At the same time, Samsung Electronics' telecommunications
division overtook the semiconductor arm in revenue, selling 29
million handsets worth $5.4 billion.

"It was with cell phones that Samsung could finally cast off
its consumer image as a mass producer of cheap goods," said
Michael Min of Seoul's Korea Investment Trust Management &
Securities.

Samsung now is a distant fourth in the cellular phone market
dominated by Nokia and Motorola.

But its share is creeping up. The company makes some of the
world's slimmest phones. Some feature video-capable color
screens, others double as MP3 players.

In the U.S. market, Samsung has provided Sprint PCS, the
fourth-largest U.S. wireless carrier, with 8 million phones since
1997. In January, it signed a new $3 billion deal with Sprint to
sell even more phones.