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South Korean Kimchi Refrigerator Industry Facing Overhaul
Oct 7, 2003
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South Korea's struggling kimchi refrigerator industry is set to undergo a sweeping restructuring phase after market leader WiniaMando's recent victory in a key patent lawsuit, industry watchers said.

South Korea's Patent Court recently ruled that WiniaMando is entitled to a patent for its two-compartment system, ripening functions, and top-mounted doors, which have become standard for kimchi refrigerators.

Domestic industry rivals, which lodged the lawsuit, immediately vowed to appeal the case to the Supreme Court.

The Supreme Court's final ruling is expected to restructure the nation's kimchi refrigerator market, which is currently plagued by stagnant sales amid a protracted economic slump. The niche market is expected to undergo a major overhaul after the ruling and will have a far-reaching impact on the so-called Big Three and Small Six players in the sector, the industry observers said.

A Supreme Court ruling in favor of WiniaMando would force rivals to pay hefty royalties to the market leader, thereby possibly squeezing the six smaller players out of the market and turning the industry into a three-way competition among WiniaMando, Samsung Electronics, and LG Electronics, they predicted.

The initial lawsuit was launched by Century Corp., Shinil Industrial Co., and Wit, three of the sector's six smaller firms. The plaintiffs called for the nullification of WiniaMando's patents for two-compartment kimchi refrigerators, top-mounted doors, and unique ripening functions.

However, the Patent Court dismissed the lawsuit and instructed all domestic rivals to pay royalties to WiniaMando for use of the three systems' technologies. About 30 to 40 percent of kimchi refrigerators now available in South Korea are built on the basis of WiniaMando's three patented technologies.

However, while a final ruling in favor of WiniaMando would deal a devastating blow to the six smaller players, Samsung and LG would likely avoid the royalty payments through swapping their own refrigerator technologies with WiniaMando, said the industry observers.

WiniaMando, formerly Mando Climate Control Corporation, is now controlled by an investor consortium led by UBS Capital.

Since its debut in 1995, the kimchi refrigerator has become a common household appliance with a nationwide penetration rate approaching 40 percent.

However, faced with a rapidly saturating market, meager overseas demand and a prolonged slump in consumption, kimchi refrigerators are now facing declining sales. Market analysts forecast this year's sales would fall slightly from the 1.6 million units posted for 2002.

During July and August, kimchi refrigerator makers reported year-on-year sales declines of between 5 to 20 per cent. The market had grown from 250,000 units in 1998 to 600,000 in 1999, 900,000 in 2000 and 1.2 million in 2001. (Asia Pulse, Yonhap)

South Korea's struggling kimchi refrigerator industry is set to undergo a sweeping restructuring phase after market leader WiniaMando's recent victory in a key patent lawsuit, industry watchers said Monday.

South Korea's Patent Court recently ruled that WiniaMando is entitled to a patent for its two-compartment system, ripening functions, and top-mounted doors, which have become standard for kimchi refrigerators.

Domestic industry rivals, which lodged the lawsuit, immediately vowed to appeal the case to the Supreme Court.

The Supreme Court's final ruling is expected to restructure the nation's kimchi refrigerator market, which is currently plagued by stagnant sales amid a protracted economic slump. The niche market is expected to undergo a major overhaul after the ruling and will have a far-reaching impact on the so-called Big Three and Small Six players in the sector, the industry observers said.

A Supreme Court ruling in favor of WiniaMando would force rivals to pay hefty royalties to the market leader, thereby possibly squeezing the six smaller players out of the market and turning the industry into a three-way competition among WiniaMando, Samsung Electronics, and LG Electronics, they predicted.

The initial lawsuit was launched by Century Corp., Shinil Industrial Co. and Wit, three of the sector's six smaller firms. The plaintiffs called for the nullification of WiniaMando's patents for two-compartment kimchi refrigerators, top-mounted doors, and unique ripening functions.

However, the Patent Court dismissed the lawsuit and instructed all domestic rivals to pay royalties to WiniaMando for use of the three systems' technologies. About 30 to 40 percent of kimchi refrigerators now available in South Korea are built on the basis of WiniaMando's three patented technologies.

However, while a final ruling in favor of WiniaMando would deal a devastating blow to the six smaller players, Samsung and LG would likely avoid the royalty payments through swapping their own refrigerator technologies with WiniaMando, said the industry observers.

WiniaMando, formerly Mando Climate Control Corporation, is now controlled by an investor consortium led by UBS Capital.

Since its debut in 1995, the kimchi refrigerator has become a common household appliance in Korea with a nationwide penetration rate approaching 40 percent.

However, faced with a rapidly saturating market, meager overseas demand and a prolonged slump in consumption, kimchi refrigerators are now facing declining sales. Market analysts forecast this year's sales would fall slightly from the 1.6 million units posted for 2002.

During July and August, kimchi refrigerator makers reported year-on-year sales declines of between 5 to 20 per cent. The market had grown from 250,000 units in 1998 to 600,000 in 1999, 900,000 in 2000 and 1.2 million in 2001. (Asia Pulse, Yonhap)

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