Sunday, September 30, 2012

Why Korea Beats Japan

I was at my son's school the other day and got into a conversation with a friend who is a very high ranking executive at Samsung corporation. His son and my son are in the same class again this year and so it was very nice to see him again. He is chief of their Japan operations and we had a interesting talk. During that talk, we came to the subject of how Samsung is dominating the market in flat screen TVs and moving that direction in hand held computers and cellphones.

In August of this year, the Wall Street Journal ran this article entitled, "How Japan Lost its Electronics Crown"

Sony, Sharp and Panasonic combined to lose about $20 billion in the past fiscal year. That is a contrast with the glory days of the late 1970s and early 1980s, when Japan started to dominate the world of consumer electronics. As the Japanese economy surged, the electronics conglomerates ruled the market for memory chips, color TVs, and videocassette recorders, while their research labs gave birth to gadgets that would define an era: the Walkman, CD and DVD players.

Now, Japan's device makers are an afterthought to Apple Inc., Google Inc. and South Korea's Samsung Electronics Co. 

Or how about this interesting tidbit from Marmot Hole a blog about Korea:

Samsung Now Bigger Than Nine of Japan’s Major Electronics Companies

And you thought Samsung was big enough already since it accounted for more than a fifth of Korea’s GDP.

The Wall Street Journal reports that Samsung Electronics’ operating profit, at $3.14 billion, is more than two times larger than the combined operating profit of nine of Japan’s largest consumer electronic companies.  Samsung now has a $7.4 billion war chest to spend on growth and R&D where many of the Japanese companies are at an operating loss (Sony) or in huge debt (Hitachi).

These articles touch on some very important points, like value of yen and style issues, but both my Samsung friend and I agree that the biggest problem for Japanese companies versus Korean companies in manufacturing may not be simply issues with design and ease of use, but it has a lot to do with corporate culture in Japan.

Frankly speaking, from what I've seen, Korean companies will continue to beat Japanese companies for the long foreseeable future. There's no way out. Why? Because inside a Korean company, there are no factions fighting for position like what goes on at a Japanese company. Also, Japan doesn't have the leadership it once had; there are no more good leaders, definitely in politics and there is a terrible shortage in business in Japan too.

My Samsung friend put it this way, 

"At a Korean company everyone is on the same bus and we are all going the same way. At a Japanese company, the leaders have a very difficult time getting everyone pointed in the same direction."

He's absolutely right. 

At a Japanese company groups are struggling within, and against each other, to gain power. At Korean companies, I think they feel it is "Korea versus the world!"

When I worked as an executive at a major Japanese TV station subsidiary, I saw a consistent in-fighting between three or four factions for power. When faction "A" would come to power, the other factions seemed to not put in their best effort. In fact, I saw times when the other factions would actually drag their feet and become a hindrance to the efforts of the group in power.

It was infuriating to me as a foreigner who wasn't inside of any group to see people protecting their friends and their position as the number one work priority rather than the success of the company business or the project. 

It seems to me that the success of the project would automatically protect one's position. But no! These folks wanted success for sure, but only if their group was the one in power when that success occurred.

I saw this same problem at a Sony subsidiary, another TV network I worked at in the mid 80s ~ early 90s; and you can readily see this same problem in Japanese politics anytime anywhere.

I was, and am still to this day, astounded at the immaturity of some of these people. 

As an aside, at my son's school festival, the Korean families always run their "Korea booth" featuring delicacies from their home. It's a wonderful time for all. I was chairman of the PTA committee one year and was able to witness first hand how the Korean team worked. It surprised me that the ladies worked in the exact same pecking order as their husbands had at work; the wife of the highest ranking executive was the boss of the Korean booth; wives of second tier executives were second in-charge, and so on. There seemed to be no friction; just total teamwork. Everyone was certainly facing the same way and the boss of the Korea Booth proudly told me, "We are striving to sell the most food and give the biggest donation of any country to the school and charity!" She was dead serious about it too.

There goes that "Korea against the world!" again.

Several weeks ago, well before it had "only" 100 million views, I posted the video about Korean sensation PSY on a video countdown well before it exploded on the consciousness of Americans and the Japanese. At that time the video had about three times more views than the entire population of South Korea! I was astounded!

Nevertheless, after posting the video, some small minded people came out and made silly comments like, "Oh, he's just copying the Japanese." Or, a week ago or so, after the song because popular in the USA, I saw an article on Yahoo (America) that said, "Will PSY be a one-hit wonder?"

Yeah, I wish I could be even a 1/100th of a one-hit hit wonder. 
My video would then still have over 3 million views!

What the heck! The guy sings in Korean! Probably he will be a one-hit wonder in the USA. But so what? The guy's video, "Gangnam Style" has, as of this moment, 319,052,309 views! That's the most viewed video in history! That more than twice the views of Justin Beiber's "Boyfriend." PSY might possibly be one of the biggest stars in Korea, possibly Asia, in all of history.

Not bad for a guy who "copies" stuff or is a "one hit wonder," eh?

Why are people so jealous of these Korean success stories? I am happy and pleased to see guys like PSY and companies like Samsung doing so well. Competition is healthy and competition makes us all up the quality of our game. Those who chatter and grouse only show their immaturity and lack of self-reflection and professionalism.... We need to learn from them because, well, as they say, "the best revenge is success" and it seems the Koreans are doing quite nicely thank you.

I really hate to say this because I am half-Japanese, but, sometimes I think MacArthur was right when he said, "Japan is a nation of twelve-year-olds."

If the Japanese don't snap out of it and get with the program and start all dedicating their efforts to the success of the project, rather than protection of their position, they're going to become a nation of very poor twelve-year-olds.   

Related post: Korean Artists Really Are Getting Popular in Japan and It's a Good Thing!


Ed-BR said...

Well, Japan´s corporations used to have the very same spirit. Or even better, because they were much more inovative than the Korean corporations are today.
Remember the Japan Inc.?
Remember how Sony or Honda used to be? But when the founders died, they became this mess...
Japanese corps. really need a stronger leadership. Like Nissan, which was almost broke and became profitable again, under Mr. Ghosn (the french-brazilian guy).He said "I´m the shachou, period", fired a lot of people (an offense in Japan), but they´re not drowning anymore.Better hurt than dead.
Unlike Sony, where nobody respected Mr. Stringer.That guy was lame...

But, more than the lack of leadership, I think the Japanese society, in general, is now into the survival mode, not the dream/create mode of the 60´s ~80´s.
Like Europe.As one can see, nothing inovative comes from Europe anymore, a century after the belle-epoque boom.
If the sick companies can overcome that letargy, they will be ok.If not, they die, that´s the game.
I think the people with the oldest active companies in the world can find a way!
-Hope so, as a brazilian-japanese who loves to visit this wonderful country.

Andrew Joseph said...

Interesting read, Mike. I had believed that maybe 30-years ago Japan had that mentality of 'Japan versus the world'. Your insider view implies that is no longer the case (if it ever was).
I have a top-of-the-line Toshiba TV.. bought not because it was Japanese, but because it was the best damn TV available at the store (at that time). Electronics is a very fast-changing technology - and Japan's ability to create is something I have always wondered about. I had always thought Japan would take an existing product and make it smaller and faster... but that technologic advantage seems to have been realized and expanded on by the rest of the world (in this case South Korea).
Good article... BUT, do you have any thoughts on what Japan can do to 'catch up'?

Boo said...

This is second-hand knowledge on my part, but I have two close friends who worked for Samsung in Seoul. One has Korean background, one doesn't, but both speak, read and write Korean fluently. They both have hair-raising stories of what goes on in Samsung, both in terms of sheer waste, and vicious in-fighting. Both find Japanese companies relaxing places to work in comparison. So I think you're way off track here.

mikeintokyorogers said...

This is first hand knowledge on my part... A VERY high ranking executive at a Sony subsidiary wrote to me after reading this article and said, " i'm in a same shit hall and almost throw up my carrier now!"

I think it is pretty obvious what he means... The infighting is out of control.

My article is not about waste (Samsung's profit line deals with that question, no?) My article is about why Samsung beat all 9 of Japan's top electronics companies.

Boo said...

Fair enough. But
a) An email from an unnamed Sony exec is by definition second-hand. Unless you are secretly a high-level Sony exec writing incomprehensible gibberish to yourself (I have no idea what a "same shit hall" is supposed to be).
b) Causation versus correlation: even if in-fighting at Sony is bad, that doesn't mean the in-fighting is responsible for Sony's not putting out great products recently, and it doesn't mean there wasn't in-fighting was any better when Sony was producing great products, and it doesn't mean the in-fighting isn't worse at Samsung.

mikeintokyorogers said...

Thanks Boo,

Good points. I was working closely with Sony when they came out with the MP3 "Walkman" that was their answer to the iPod... I saw lots of fighting about that.... Even over stuff like the naming...

Anyone else have a rebuttal?

Anonymous said...

"At a Japanese company, the leaders have a very difficult time getting everyone pointed in the same direction."

Yeah, that *was* a real surprise to read. So unlike the stereotype.

From my perspective much of the descriptions of Japanese in-fighting and them being 12 yr. olds seems to describe American companies and Peoples too.

I am beginning to doubt Anything can reverse courses.

Full replacement only?

Also, another bit about the demise of television:

As I said on this thread,

not only are the Goodwill and Salvation Army Thrift stores in the unitedstate adopting a policy of no TV's, I saw an ad in a local paper's classified section from a junk-haul'er-away-for-free Person. He listed all the items he would accept, washing machines, old bicycles, etc... but at the bottom of the add, "Sorry, no TV's"

Not even the junk guys want free TV's. The ones with tubes nor L.E.D.s.

- clark

Jonny said...

I think a lot of the difference you perceive and write about -- the unity and drive to succeed -- is a universal thing, not specific to certain nationalities or ethnic groups. I suspect something like it existed in the U.S. during WWII, and in Japan and Korea when it felt like their people were fighting against all odds for their country's success.
Trouble is, just like people in successful corporations, people in successful countries often get complacent after reaching the top. I have lived in Korea since 1995 and while I don't work for Samsung, I know a few who do, and more who would like to. I think their duccess has more to do with company culture than national culture.
As for Psy, that's a great satirical video in any language.

Mr. Nobody said...

Hello Mike,

I enjoyed the article. It raised a number of questions in my mind. Japan vs. Korea, the value of the yen, price versus quality, electronics versus other companies, the business behemoths versus other smaller companies and so on...

It seems when companies get to be a certain size, they tend to get like dinosaurs, sure they can crush smaller rivals, but they also are quite slow to change direction too. The infighting and bickering seem to be from what I've heard, fairly universal.

Sure, these mega companies employ a lot of people, and command a lot of power, but conversely, they tend to be rather inefficient, bend the politicians and through collusion, cartelization, and end up bending markets to their will. Plus they aren't that profitable compared to many small and medium sized businesses. Shouldn't most countries follow the lead of say Germany, and promote smaller businesses instead of giants like these?

Why should a country want a Sony, Hitachi, or even Samsung? My mind boggles why the politicians and public, in Asian countries in particular, are fascinated with these companies, and want electronic and automotive behemoths of their own. The industries generally aren't very profitable, and swing wildly in sales depending on discretionary spending. Why not focus on segments to supply needs that people have on a consistent basis, like food, or even razors? Look at the profits companies like Schick, Gillette, Nestle, compared to the "success" of say Sony, Hitachi, or Samsung... Plus for every electronic/automotive success, how many large failures have their been?

Although from anecdotal stories Korea has many things going for it, I'm a bit wary of the whole nationalistic "Korea #1" crowd, along with the anti-Japanese feelings many Koreans seem to possess. Will these feelings end once the last Japanese who fought in WWII has passed away, or will they continue to feel that way, hundreds of years after the ending of hostilities? Hopefully this is cause for some optimism:

"On January 1, 2004, all Japanese films were allowed to be shown in theaters, and physical copies of music were allowed to be sold by retailers."

All the best!

Mr. Nobody said...

Hello Clark,

Some reasons why people don't want old TVs.

1. Many areas consider a TV hazardous waste. It can cost $20-100 to dispose of one. Imagine charities, or even junk haulers, getting TVs that they can't sell, and instead of making money, losing money to dispose of them.

2. Most of the digital convertor boxes for and old TV are $60-70. Add in sales tax, batteries, and cables, and it can easily hit $100. A new LCD TV can be had for $125-150.

3. Older TVs have become so unfashionable, it's like possessing old technology like a VCR or a record player.

4. Why have a TV when you can watch whatever you want with a computer, tablet or cellphone? Plus you can watch it anywhere you want.

Anonymous said...

Yup, it's The End for TV, Mr. Nobody.

Also, I meant to type LCD above and not LED.

The charity stores and junk guys aren't taking the LCD TV's either, so I don't think it's about using old technology.

Grab a brand new TV off the shelf and a charity or junk guy won't touch it.

It's kind of surreal after so many decades of TV's having high value.

Yeah, People are still selling used LCD TV's on Craigslist, yet it's still The End for TV.

- clark

Edie Jams said...

yes than the lack of leadership, I think the Japanese society, in general, is now into the survival mode it could be real impact between them.

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