Rules of the road: South Korea
South Korea is much more than Psy’s pop single “Gangnam Style” or the TV series “M*A*S*H,” which lasted three times longer than the actual Korean conflict. It’s one of the most remarkable modern economic success stories. The Eighth United States Army, about 29,000 strong, has long had a front row seat, but most Americans have not. Starting with the ’88 Olympics coming out party, South Korea has arrived. For U.S. OTC brand owners, it’s inevitably an A-list market.
A few rules of the road:
- South Korea has more than 50 million people, and more than 60% live in the metro-Seoul or Pusan areas. Aside from the city-countries, such as Hong Kong and Singapore, purchasing power is among the most concentrated anywhere. Winning in Seoul is key.
- Sales channels are well developed. Local e-commerce is well run and fully integrated logistically. EBay failed to break through. Infomercial sales are significant. The traditional trade from regional powerhouse Watson’s to local ones, such as Olive Young or Lotte to Costco, will all “welcome” you with challenging entry and trade promotion costs.
- A disciplined global pricing strategy is not optional. The Korean consumer is adept at e-commerce shopping. Expect to quickly see your online price, usually on i-Herb, in the first 30 minutes. The tea will still be too hot to drink.
- There is a huge generational gap. The country’s rapid post-war development led to per capita income growth from $1100 in 1960 to more than $25,000 today. Seoul was captured/recaptured four times and destroyed during the Korean conflict of 1950-1953. South Korea’s role in the Vietnam War is only now being examined. It’s cathartic. Many things simply weren’t discussed. Today, the Miracle on the Han has 27 bridges, a cutting-edge urban landscape and massive traffic jams. Millennials did not live through this change and only know a modern vibrant economy. Older Koreans don’t understand them. Know your consumer; age really counts.
- There is a love/hate relationship between the United States, Japan and China. Koreans are global citizens, but there’s some important baggage. Such multinationals as Samsung, LG, etc. provide a deep world understanding. Unfortunately, the U.S. military presence has sometimes not shown our best side. The main Seoul military base, occupying valuable real estate, will be moved outside the city. South Koreans don’t consider North Korea a conventional military threat anymore, but appreciate our willingness to stand with them. A nuclear North is another matter. An amusement park at Infiltration Tunnel Museum at the DMZ, only 40 miles north of Seoul, seems out of place. Japan is admired and loathed at the same time. Korea was occupied by Japan from 1910 until World War II. The Japanese actually tried at one point to ban the Korean language. China, North Korea’s key supporter, sent thousands of troops against UN Forces, but the two countries have more recently opened up closer trade relations.
- The KFDA is for real. The rules are tough, and product claims in particular need to be confirmed.
- Expect direct and aggressive negotiating. Face-to-face is key. Autopilot doesn’t work.
- There are economic headwinds. Organized around conglomerates called Chaebols, a few companies provided industry focus in steel, shipping building, construction, etc. Once wildly successful, this system no longer works as well. Consequently, “real” millennial unemployment has exploded to perhaps 20%.
Hawkeye and M*A*S*H are long gone, but the Korean market opportunity is real and now. Gangnam style.
Ed Rowland, founder/owner of Rowland Global LLC (www.rowland-global.com ) is providing Drug Store News a series of 2016 blogs focusing on non-U.S. markets. Rowland Global assists companies with global growth strategies, tactics and execution.
Ideas I haven’t thought of…
These wise words were often shared by my late father. (The greatest mentor I could have ever asked for!) In fact, one of my favorite stories was based on this very premise.
Dad shared that he was participating in a key supplier meeting – my father was the president of a regional pharmaceutical distributor at the time – and the meeting had all but stalled. Dad was there to support the business relationship, yet he sensed that the supplier was not on board with the advantages that his firm could deliver. And the salesperson assigned to manage the account was fumbling for words and continually restating “standard” talking points which were simply not impressing the client.
So, what did my father do? He slowly leaned forward and said, “What my esteemed manager has been talking about are excellent reasons to do business with us. And frankly, they are the precise capabilities that many of your competitors have recognized as advantages.”
What he did next caused everyone in the room to lean in and pay attention.
“But that’s not enough,” dad said. “What I believe you want is a partnership that brings you fresh ideas and innovation. Something that will help us both achieve the next level in this relationship.”
My father said the salesperson was aghast and visibly shaken.
Dad continued,”Instead of the kind of standard relationship we would bring to any supplier, I have an idea. Imagine if we accepted your product into inventory, at no cost to you, and distributed it to all of the other pharmaceutical distributors, getting you out of logistics management and back into innovative product development?”
After a brief silence, the supplier spoke up, “Now that’s an innovative idea. If you can make that work, I think we’d be interested in partnering with you.”
My dad calmly replied, “I must admit that’s just one idea that came off the top of my head. I actually have ideas I haven’t even thought of yet, and if you’re willing to position us as your exclusive partner, I’ll bring future ideas to you first.”
This was the start of what transformed into a deep and trusting relationship – the kind of business partnership that we all strive to achieve. And it began when my dad offered to share creative ideas that he hadn’t thought of yet.
In future posts I’m going to endeavor to stretch your mind a bit. I also want to challenge you to think differently. Only then will you discover the kind of creativity necessary to move relationships to the next level.
Bounty launches ‘messy’ campaign with Kristin Cavallari
CINCINNATI — Bounty paper towels has teamed up with mother, designer and author Kristin Cavallari to share some fuss-free ways to clean up life's inevitable messes.
Kristin, whose daughter Saylor turns 1 this November, will join Bounty in hosting a first birthday bash in New York City complete with the popular, and messy, cake smash. At the event, she will share tips for themed party ideas, kid-friendly snack recipes and DIY crafts. Guests will be invited to decorate their own smash cakes and because Bounty absorbs messes quickly, they can focus on enjoying the moment, rather than the mess that comes with it.
“At Bounty, we understand the significance of life's ‘first’ moments. From a first home to a first birthday, we want to help people spend more time enjoying the moment and less time worrying about messes,” said Jacques Hagopian, Bounty brand director, Procter & Gamble. “Because Bounty is a more absorbent paper towel that tackles messes quickly, people can enjoy more firsts with every roll.”
With two boys and one girl under the age of 5, Kristin knows just how messy those milestone moments and everyday firsts can be when raising kids.
“I’m a mom to three amazing little kids so life is messy, especially when the kids are trying something new for the first time,” said Cavallari. “Our house is stocked with Bounty because it is the only paper towel I rely on to quickly clean up the food splats, water spills and messy fingerprints that come with having kids. This way I can enjoy the moment and not fixate on the mess.”
Bounty paper towels are sold at retailers nationwide.