The Korean Mobile Phone Industry: SMEs’ Strategy (Part I)

When Korean SMEs did not have any technical foundation, they started as an OEM company, taking the order from MNCs in technology leaders. As they accumulated the product design skill, they became ODM company since they did not have the brand identity and distribution channels. Once they established the base of the competition with the innovative product design capability and marketing skill, they could migrate from that base toward more sophisticated customers and applications in global markets, becoming OBM maker.

Korean mobile phone cases show that although SMEs do not own the proprietary technology, they can still disrupt the established leaders with fresh product features and sophisticated design quality. They need to build on the acquired strengths and momentum and move on to the next level of economic value chain.

When serving as ODM providers, the Korean mobile phone SMEs needed the simpler marketing strategy since they depended on the buyer company for marketing activities using their brand recognition and distribution networks. When they moved on to become an OBM maker, branding became a determining factor since building brand recognition was absolutely critical for business success at this stage. A Korean mobile phone SME was able to beef up the brand identity by acquiring the financially troubled firm that had been known to the market.

Note: The rest of the analysis won’t be shared due to the proprietary nature of the content.