South Korean IT sector clicks onto undervalued Africa
By Cho Ji-hyun, The Korea Herald/Asia News NetworkAfrica, one of the least tapped markets in the world, has become the target of South Korean IT companies that are eagerly eyeing the continent for business opportunities.
January 21, 2013, 12:27 am TWN
In particular, electronics firms such as Samsung and LG Electronics, along with telecom KT, are actively moving to grab a larger share in Africa where the customer base for electronic products is growing at a fast pace.
Until now, electronics makers have prioritized mostly the U.S. and European markets, but market saturation, not to mention the financial woes these advanced countries currently face, have forced the firms to turn their eyes to a different land of opportunity, industry insiders said.
According to a report published by the African Development Bank, the middle class in the African region has sharply increased about three times to a total of 313 million people over the past 30 years.
The larger figure indicates that the number of potential customers has jumped, pushing South Korean firms to expand their presence in the area.
As an exemplary case, the portion of liquid crystal display televisions has reportedly jumped to 90 percent in local home appliance stores last year, a rise from 70 percent in 2011.
In a related effort, LG Electronics is planning to hire employees for some of its African offices such as those in Morocco and Angola.
The company is recruiting workers for product manager level positions as well as financial planning in a bid to reorganize the regional sales network.
Samsung Electronics, another well-known brand in the industry, has been practicing the “Built for Africa” strategy.
Samsung's research and development teams visited the homes of African consumers to find the exact needs for the products designed exclusively for the group.
While pointing out that Africa is the final emerging market, the world top smartphone and TV maker has establish an additional head office in South Africa for improved product localization.
It has also set its 2015 sales target in Africa at US$10 billion, which is four times the most recent performance for the company.
One of its most popular electronics goods in the region is the “Surge Safe TV,” which has high tolerance to instant voltage changes.
Statistics said Samsung has recently taken up to 38 percent of market share in the African TV industry.
KT, the nation's No. 2 mobile carrier, is also getting ready to launch businesses in Africa by possibly acquiring a big stake in Maroc Telecom, which is Morocco's top telecom operator.
The firm has so far expressed its interest in the takeover of 53 percent of Maroc Telecom's stake by submitting a letter of intent. The 53-percent share is estimated to cost about 8 trillion won and 2-3 other firms like France Telecom are known to have shown willingness to participate in the takeover competition.
This is the company's second attempt to make a breakthrough in the African market.
KT, together with the Korea Internet and Security Agency, announced last month that the firm has won the order for an information security project worth about 20 billion won in Rwanda.
It also agreed to build a backbone network nationwide in Rwanda in January 2010, which was worth about US$56.52 million.