The "iPod nano," the latest from Apple, the American company that has swept the market for MP3 players, have gone on sale in Korea. The low price makes it hard for Korean mid-sized companies to compete. They say mid-sized companies feel they are in a state of crisis for fear they are going to wither up and die.
Reportedly the reason Apple is able to go on the offensive with low prices is because it is purchasing the flash memory that goes into the iPod nano from Samsung Electronics at about 40 percent less the market price. Samsung says that it is an industry practice to give cheaper prices to companies that make stable purchases in large quantities. While it would be one thing if it had given something of a discount, the exorbitant price cut in this case is suspicious. The industry seems to think that it is a strategic maneuver. The view is that Samsung's motive is to expand its share of the market for flash memory on the one hand, and then also to get rid of competing Korean producers of MP3 players using Apple to help it do so.
Companies are supposed to pursue profit to the greatest degree possible but there are limits. It is sad and even regrettable that small Korean companies are at risk of dying off because of one company's self-centered strategy. The MP3 market was built through the hard work of small producers and venture companies. Samsung Electronics arrived late on the scene and is overtaking the market. The MP3 industry is a typical example of an area that gave Korean venture companies the vision that they can expand overseas. The loss to the national economy will be too significant if the future of those companies gets eaten up by a massive foreign company with Samsung's help. If it can't support small Korean producers and venture companies it should at least not be discriminating against them with a foreign company, as that is not right for one of Korea's most representative companies.
Domestic companies need to be given the opportunity to engage in fair competition. Unless they have that, Samsung could easily look like it is trying to slice up the market with Apple by killing off its competitors, whether or not that is its intention. The Korean people feel both love and hate for Samsung Electronics, and its executives need to meditate on why.
The Hankyoreh, 23 September 2005.
[Translations by Seoul Selection (PMS)]
[Editorial] Samsung Electronics is a 'Korean' Global Company |
