Wednesday, March 30, 2011

New Market Strategy Give a New Brith : New SK in China

As one of the biggest companies in Korea, SK was the first one entered China market. SK built a joint videotape production plant two year before China and Korea renewed diplomatic. With this plant success, they decide bring their core business to China which are energy, chemical and telecommunication. And they wanted make a full-scale enter the China market for new development. After a few years’ efforts, they did not achieve their goal. What 's the problem? Is their techonolgy and product not good? China is a policy-oriented market. All the core businesses of SK are the key national industries, like energy, telecommunication and chemical. They have a barrier to enter these key industries. And China government restricted investment by foreign companies. The stated owned enterprises can develop these industries with national development policy. What SK learned from this period failure? First, it is unrealistic for SK to adapt the conventional business model in China with the investment restriction policy of foreign company. Second, localization is essential in this policy drive market. Although both Korea and China are in Asia area, the business culture and the stage of economic development are different. The special new market development strategy is necessary for SK in the beginning period. What Changes after the failure? First, SK adopts the totally new localization strategy, using the motto”Of the Chinese, by the Chinese, for the Chinese”. Second, they chose to enter the non- key national industry but have inherent advantage, like internet which can take the technology advantages of their telecommunication and network. reference: http://www.sk.com/introduce/performance/performance.asp,visited by 3/30/11 , CHOI Chang-hee, China Strategies of Korea’s Winning Companies, page 7

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