Haier Faces Hurdles in South Korean Expansion Plan
Oct 25, 2004
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Haier's plan to boost its presence in South Korea reached a stalemate since no progress has been made in year-long discussions to sell its goods to Himart Co., the country's biggest electronics store chain, industry sources said.
The Chinese appliance maker is anxious to strengthen its position in South Korea, but analysts said Haier Group CEO Zhang Ruimin may need more time to make Haier a household name among Korean buyers.
Aside from the stalled negotiations with Himart, low brand recognition for Korean consumers, stiff competition with local giants Samsung Electronics Co. and LG Electronics Inc., and poor after-sales service networks make it harder to expand into the South Korean market, analysts said.
"For a year, we have been in talks with Haier for product supply, but it seemed like a deal wasn't within reach," said Yang Dong-chul, a spokesman for Himart, which has 260 outlets nationwide.
Moreover, many Korean customers still look at Chinese electronics goods as cheap and of poor quality, Mr. Yang added.
"It's also a risk for us to sell Haier products such as air-conditioners and refrigerators that have poor after-sales service capability," he said.
If the talks fail, it would be a setback for Haier, which has 26 outlets in South Korea as of the end of September, according to the company's Web site.
In another blow against Haier, LG Home Shopping, one of the country's largest and best-known home shopping channels, recently shelved a plan to sell Haier products because of their uncertain marketability.
Haier, partially owned by the government of the northern Chinese city of Qingdao, where it is based, set up a South Korean subsidiary in June with a paid-in capital of 300 million won (approx. U.S. $262,500), which was seen as a step toward the company's goal of making serious inroads into the Korean market. (Yonhap)
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