The Case of ReignCom in MP3 players

ReignCom, a Korean venture firm, started as an ODM provider to Santa Clara-based Sonic Blue. It now sells its own iRiver-branded flash memory-based MP3 player…

Their success in MP3 players symbolizes a proactive design approach by leading what market wants. ReignCom knew it had to differentiate products by design because MP3 player itself was not a technologically demanding product. They outsourced its branded MP3 player, iRiver to Palo Alto-based design firm, Innodesign led by a Korean-American, emphasizing the importance of emotion and passion in great design…

ReignCom’s success also stemmed from a unique marketing approach in designing and developing MP3 players…

Note: A detailed analysis on this topic won’t be shared due to the proprietary nature of the content.

The Korean MP3 Player Industry

Korea has exercised the fast follower strategy in the electronics industries such as TFT-LCDs and mobile phones, there was one field in which they made the world’s first product, MP3 Player. The Korean often lament their high royalty payments to the U.S. companies for their products in semiconductors and mobile phones. The MP3 player case is unique in that Korea had a patent and made the world’s first product, yet they blew a golden opportunity in establishing them as innovators big time. Furthermore, the MP3 player represents how Korean SMEs can compete against chaebols by taking an early lead in the new growth market with compelling products of fresh ideas…

Note: A detailed analysis on this topic won’t be shared due to the proprietary nature of the content.

Refuting Some of Michael Pettis's Contention

Articles by Michael Pettis who is considered to be a Chinese financial market expert and maintains a popular blog listed on my blogroll seem to appear on the global media outlets including Financial Times and BusinessWeek. I’d like to point out some concern over his arguments. I’ll make a few points and hope to elaborate on them later on (some of them have been discussed in the previous posts, though).

-As for the transition from export-dependent Asian development model to domestic-oriented one, which Pettis seem to be strongly in favor of, his contention seems to lack the understanding of the dynamics of complex factors involved in this issue. It’s like to tell American corporations to bring all the overseas manufacturing jobs to the States to be self-sufficient (the same logic goes for the Korean or Japanese corporations since they have been outsourced a lot). Unless a domestic consumption is based on income generated through increased earning and job growth, any undertaking would be the detriment to a country’s economy. With the global economy tanking in a synchronized fashion, boosting a domestic consumption is hard for any country around the globe. He must know by now (he has lived in China since 2002, I believe) that policies toward boosting domestic consumption would impose the social and financial burdens on the large population of East Asia. Moreover, he doesn’t seem to grasp the historical aspects of the economic development in East Asia. One should keep in mind that the East Asian countries have overcome hardships to make an economic miracle, which other countries in the third world have not.

-In my view, one of the most urgent matters for the East Asian countries is how to decouple from the ailing Western economies and gain global competitiveness in the midst of this recession, not switching the development model, which seems to be a rather different matter.

-In terms of his argument on the trade thing, let’s just say it’s nothing new for now (trade deficit problem doesn’t suddenly become matter). Again other advanced countries are facing the similar issues and his solution seems to be limited.

-Yes, the East Asian economies have been hampered by the financial problems due to excessive borrowing and bad loans as much as the Western economies have. Yet their production side of economy has been solid and the private sector seems to be poised to steer their business through this difficult time. Consequently, I wouldn’t dare to say “Future historians will mark 2008 as the year that the development model that has driven much of Asia’s rapid growth for the past two decades went bankrupt”, as Pettis claims.

-What I’ve been frustrated by reading the so-called popular econ blogs is that most of them have financial expertise and tend to discuss the financial side of the economy too much. We all know by now what caused this global recession and of course, the financial problem is at the epicenter of the conundrum. And yet, with jobs disappearing at an alarming rate, we need to discuss more about how to bring innovation and production back to the economy.