1 week Ago By Korea IT Times
To celebrate its 20th anniversary, Korea IT Times is presenting special contributions that share the profound insights of opinion leaders from Korea and abroad. Following the notable experts who authored articles in July and August , we introduce the contributors for September : By Alex Haigh, Managing Director, Brand Finance Asia Pacific In the ever-changing global marketplace, where cultural identity and economic stability are key to brand success, South Korea stands as a powerful example of how "soft power" can be harnessed to create and sustain some of the world's most resilient brands. These brands have successfully blended innovation with heritage, enabling them to maintain a strong global presence.
Soft Power: The Bedrock of South Korea’s Brand Success Soft power, defined as a nation’s ability to influence others through attraction and persuasion rather than coercion, is a vital component of South Korea's brand strategy. It plays a significant role in shaping the global perception of South Korean brands. In 2024, South Korea ranked 15th globally in soft power, highlighting its influence across culture, economy, and international relations.
According to Brand Finance’s Global Soft Power 2024 report, one major driver of South Korea's soft power is its "Strong & Stable Economy" pillar. The nation's global perception has improved, leading to a higher ranking due to robust economic foundations bolstered by global trade relationships and innovative industries. Gains in attributes related to "Business & Trade", specifically in "Products and Brands the World Loves" and "Future Growth Potential," have further enhanced the country's global standing.
Additionally, South Korea's rich cultural heritage and its influential arts and entertainment sectors have significantly contributed to its soft power. There has been an increase in global perception driven by South Korea's "rich heritage" and influence in arts and entertainment. Sustainability efforts, particularly in environmental protection and climate change, have also improved South Korea's global ranking.
Innovation: The Catalyst for Economic Growth South Korea's remarkable economic transformation from a post-war nation in the 1950s to a global technological powerhouse is rooted in its commitment to innovation. The government played a crucial role in this transformation by implementing policies that fostered research and development, leading to the growth of industries that now dominate the global market. One of the key foundations for South Korea's rise as a global leader in electronics, automobiles, and digital technology began in the early 1960s with the initiation of the Five-Year Economic Development Plans.
These plans, which evolved over seven iterations until 1996, transitioned South Korea from a primarily agrarian economy to a dynamic, industrial powerhouse. Initially focused on building basic industries and infrastructure while increasing exports, the plans evolved to emphasize high technology and knowledge-intensive industries, boosting South Korea’s competitiveness on the world stage. Major South Korean brands like Samsung, Hyundai, Naver, SK Hynix, KIA, and LG Electronics have been at the forefront of this innovation-driven growth.
These companies embody the successful long-term strategy of economic planning combined with industrial innovation, showcasing the profound impact of the Five-Year Economic Development Plans on South Korea’s economic landscape. Cultural Influence and Global Reach South Korean culture, epitomized by the "Korean Wave" or "Hallyu," has become a global phenomenon, significantly boosting the international profile of South Korean brands. The global popularity of K-pop, K-dramas, and movies has created a positive perception of South Korean culture, allowing brands to enter and thrive in international markets.
This cultural influence has opened doors for top South Korean brands like Samsung, Hyundai, Naver, SK Hynix, Kia, and LG Electronics, enabling them to leverage their cultural identity to build stronger connections with global consumers. According to Brand Finance’s research data, Samsung’s familiarity scores are notably high in regions like India, Mexico, Italy, and Türkiye, while Hyundai is particularly popular in India and Vietnam. These connections are further enhanced through collaborations with global entertainment figures and franchises, boosting the brands' appeal worldwide.
Sustainability Efforts by Leading Brands Sustainability has become a core focus for many South Korean brands, aligning with global trends toward environmentally responsible business practices. Samsung, Hyundai, and Naver have each made significant strides in this area, reflecting their commitment to sustainability. Brand Finance’s Sustainability Perceptions Value (SPV) quantifies the financial impact of a brand’s reputation for sustainability based on consumer perceptions.
In 2024, Samsung, with a Sustainability Perceptions Value of USD6.7 billion, has been at the forefront of reducing carbon emissions and creating eco-friendly products. The company's efforts include developing energy-efficient appliances and promoting recycling initiatives.
Hyundai has made substantial investments in electric vehicles and hydrogen fuel cell technology, positioning itself as a leader in sustainable transportation. Meanwhile, Naver has embraced green technology, implementing sustainable practices in its digital operations, and promoting environmental awareness. Samsung, Hyundai, and Naver: Icons of South Korean Innovation South Korea’s leading brands, Samsung, Hyundai, and Naver, have each carved out unique paths to global prominence while staying rooted in the country’s rich cultural and industrial heritage.
Impressively, Brand Finance's data reveals that 47% of the brand value for South Korean companies comes from international markets. This positions South Korea comfortably in the middle, ahead of countries like the United States (43%) and Japan (44%), demonstrating strong global engagement, albeit slightly behind the United Kingdom (63%) and France (73%). Samsung began its journey in 1938 as a modest trading company dealing in dried fish and groceries.
From humble beginnings, it has transformed into a global technology titan, epitomizing South Korea's rapid industrial growth. Over the decades, Samsung evolved from producing home appliances to dominating the android smartphone market, becoming a symbol of innovation and resilience. Despite a slight 1% dip in its brand value to USD82.
2 billion in 2024, Samsung’s commitment to quality and innovation remains evident. Notably, in the 18 markets studied, Brand Finance’s research highlights its top scores for 'innovation' in Türkiye, India, Mexico, and Malaysia. This recognition has contributed to Samsung’s Brand Strength Index (BSI) rank rising by six spots, highlighting its enduring appeal in the face of global competition.
Hyundai tells a parallel story of growth and adaptation. Founded in 1967 as a construction company, Hyundai quickly expanded into the automotive industry, reflecting South Korea's broader economic ambitions. Today, Hyundai stands among the world’s largest car manufacturers with a reputation for quality and innovation.
The brand’s forward-looking approach, particularly its focus on electric vehicles and sustainable practices, has resonated globally. This is evident in 2024, when Hyundai's brand value surged by 45% to USD22.9 billion, driven by robust financial performances, including a 21.
2% increase in actual revenue in 2022 and a 14.4% boost in 2023. These impressive results reflect Hyundai's ability to adapt to changing consumer preferences and economic landscapes, underpinning its substantial growth in brand value.
Meanwhile, Naver, which started as South Korea's first web portal in 1999, has grown into a digital powerhouse. The brand’s journey from a search engine to a multifaceted technology company offering services across e-commerce, fintech, and more, showcases its agility in a rapidly evolving digital landscape. Despite a challenging year where Naver witnessed a 27% decline in brand value to USD3.
3 billion, it remains a key player in the domestic market. This situation highlights both challenges and resilience. While it has not matched the global expansion success of giants like Google and Facebook, Naver's steadfast focus on its core South Korean market underlines its position as the strongest South Korean brand in the rankings, with a BSI of 90.
7 out of 100 and an AAA+ rating. Challenges and Adaptation in a Changing Global Market Despite their success, South Korean brands face significant challenges in the global market, including intense competition, economic downturns, and shifting consumer behaviors. Their ability to adapt, however, has been crucial in maintaining their positions.
For instance, global competition from other tech giants and car manufacturers has pressured Samsung and Hyundai to continuously innovate. The COVID-19 pandemic also tested these brands, but their quick pivot to digital strategies and focus on health and safety helped them weather the storm. Brands like Naver, with its digital-first approach, capitalized on the accelerated digital transformation, further solidifying its market position.
The Future of South Korean Brands To achieve the kind of growth seen in global brands, South Korean brands need to expand beyond technological excellence to form deep emotional connections with consumers. This strategic shift could mirror the success of United States giants like Apple and Microsoft—whose brand values surged by 74% and 78%, respectively, according to Brand Finance Technology 100. By contrast, Samsung experienced a slight decrease of 0.
6% in brand value, while Hyundai saw a remarkable increase of 45%. Similar fluctuations are evident in Japan and Germany, with varied performances among leading brands. However, embracing strategies that resonate emotionally with consumers, akin to those employed by Nike and Apple, is crucial for South Korean brands to sustain relevance and maintain a competitive edge in the global market.
As this global narrative unfolds, South Korean brands are poised to redefine what it means to be a leader on the world stage. Their journey forward is not just about market share but about becoming integral, beloved parts of consumers' lives worldwide..
