Yahoo Failed in Korea because of Cranky Korean Consumers?

Having worked in Korea market entry in one capacity or another for the past 15 years, I can assure you that making it in Korea can be more difficult than in many other countries. One can easily – and often correctly – blame foreign companies for giving the market short shrift when Korea needs to be taken as seriously as, say, Japan and China – the two neighbors that consistently, if not always fairly, outshine Korea.

 At the same time, there is a complacency among Koreans with that what they see on the peninsula as being probably as good as it gets and there is no real need to change their ways – unless, of course, other Koreans are making changes. While the marketplace is remarkably less xenophobic than thirty years ago, there remains a strong desire to buy Korean. Part of that feeling is based on nationalism, but part of that attitude is premised on the insecurity that there will not be adequate post sales support when buying foreign products and services.

Remarkably excellent post-sales support is key to being successful in Korea. In the past, until Korean products’ QA required massive post-sales support to be credible values. But now, after Korean QA levels have risen, the consumers and corporate buyers have become accustomed to world leading after sales support. And those expectations have become hidden trade barriers for offshore companies which are hard pressed to provide that kind of support infrastructure on their own.

For that reason as well as efficient market penetration, most successful foreign companies in Korea end up partnering with established Korean companies rather than going it alone – at least at the foreseeable short term.

A good article in the WSJ on the issue may be found at: Cranky Consumers Force Yahoo out of Korea?

by Tom Coyner
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Sean Hayes may be contacted at: SeanHayes@ipglegal.com. Sean Hayes is co-chair of the Korea Practice Team at IPG Legal. He is the only non-Korean to have worked as an attorney for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty.

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