Korean Mobile Phone Companies' Stellar Performance

Two Korean mobile phone companies, Samsung and LG have sustained double-digit growth both in North America and Europe, the world’s premium cell phone markets amid the global recession. Their performance is impressive, given that other global contenders’ performance such as Nokia and Motorola has been sluggish.

In North America, Samsung and LG took up almost half of market share, 47.3%: Samsung’s market share was 24.7% in Q2; LG 22.6% in Q2. They have done so well while Motorola’s market share has declined: 18% in Q1, 17.3% in Q2. Samsung is the number one player in this region, LG the number two. The world’s number one mobile phone company, Nokia accounts for the meager market share of 6.8% in Q2 in the same market.

Two Korean firms are doing well in Europe as well. In Western Europe, Samsung and LG occupy 35 % of the total market share: Samsung’s market share has increased 4 % to 25 % and LG 6 % to 10 % from 2008. Samsung is catching up with Nokia, only 2% percent behind in this region.

Samsung has secured the number two position in the worldwide handset market. LG’s performance in terms of sales, sales volume and operating profit has been even more impressive. Their operating profit is up 62% from 2007. LG has risen from fifth to third spot , leapfrogging Motorola and Sony-Ericsson.

I have argued that their success in the mobile phone business represents a confluence of many factors including fancy design, product features targeted at the specific customers, appropriate product mix, aggressive marketing strategy, and their cost-efficient manufacturing practice. Although it is true that the weak Won has been favorable for two Korean electronic giants, their robust performance is based on their solid strategy.

As I have pointed out several times, I wouldn’t be too rosy about the Korea’s economic outlook in general and am concerned about the future performance of Korean companies since the external market conditions (e.g., dwindling purchasing power both in the U.S. and Europe) and global macroeconomic outlook (e.g., growing U.S. deficits) still remain grim. There is a long way to go in this difficult time around the globe. That’s why I find two Korean companies’ performance outstanding and wish them well in their future endeavors.