The top two brands on this year's list of the top 100 brands in Korea (see list; see analysis) are also the top two brands consumers mentioned when asked to name the "strongest local brands".
Samsung and LG's dominance is no surprise, nor are the rest of the brands people named as the strongest brands with local roots.
Korea's strongest local brands
Campaign Asia-Pacific asked: "What do you think is the strongest local brand in Korea? By ‘strongest local brand’ we mean a brand that originates from Korea, has the best reputation and resonates most strongly with those living in this market."
In-market experts point out several reasons this group excels—beyond simple historical inertia.
"Brands that combine unique experiences and have the ability to innovate at speed typically have an edge over others," said Mali Wuestenhagen, senior media director at Essence Korea.
She points to Samsung’s collaboration with Korean pop group BTS as an example. "Samsung worked with BTS on a global contemporary art initiative, ‘Connect, BTS’, spearheaded in collaboration with curators from five major cities—London, Berlin, Buenos Aires, Seoul and New York—to connect people from across the world through art," Wuestenhagen said. "Besides BTS-branded products and the pop group’s appearance at Samsung’s virtual events, Samsung supported an augmented-reality 'docent' service for the project, where BTS members appeared and explained art pieces in a virtual system. These are exceptional examples of consumer insights used to strategically create unique audience experiences."
The most important factor in the competitiveness of major Korean brands comes from the quality of products and services, said Taehee Lee, CEO of Cue Korea.
And in the face of an influx of Chinese and Southeast Asian-made products, local brands have received a boost, according to Myongah Sung, executive planning director and Publicis Group Korea. "‘Made in Korea’ is a symbol that guarantees the high quality of the product regardless of the business category, including F&B, clothes and electronics."
Korea's strongest local brands also responded well to the changing realities of the pandemic.
"The first noticeable shift in consumer expectation was responsiveness," said Michael W.J. Kim, executive director of business development and client services at Interbrand Korea. "Consumers wanted to know how each brand can help them cope with the changes caused by Covid. Platform brands such as Kakao and Naver quickly offered to integrate daily Covid status reports into their website/app. They also created a vaccination availability map to help consumers find the nearest vaccine available."
The second shift, he said, was around responsibility. "This has led to consumers pushing for more transparency and increased expectations around their ESG (environmental, sustainability and governance) initiatives," KIm said. "For instance, the launch of Hyundai’s Ioniq 5 battery-electric vehicle, alongside its decision to make every Genesis vehicle electric by 2025, was very well received as it was a testimony to its environmental commitment."
Naver and Kakao, with their access to consumer data, understand their audiences' needs and are able to develop meaningful services around them, said Wuestenhagen. "Since KakaoTalk launched its digital wallet, a mobile-based platform for storing digital identification such as government-issued certifications, in February, it has already exceeded 10 million users," she said. "Also, Kakao, which has been actively involved in Covid-19 vaccination efforts and whose founder has made large donations towards charitable activities, has announced initiatives such as an ESG plan to help drive the industry forward."
The platforms fulfill needs not just in terms of utility but also entertainment, said Sung.
"They also keep building new platforms and content that draws people in. For example, Naver and Daum webtoons are key sources of the movie/drama/animation content created these days."
In-market experts also noted that status as a strong local brand is not as much of a guarantee as it once was.
"Korean consumers continue to prefer local branded products in Korean market," said Cue's Lee. "Samsung's mobile phones and Hyundai Motors' products are considered the most representative. However, this trend is being diluted considerably in recent years.
For example, Hyundai and Kia Motors account for 86.3% of the total market share in Korea. However, the domestic automobile industry recorded reverse growth in August while the imported automobile industry is showing steady growth—growing by 1% compared to the same period last year. According to the Korea Automobile Importers and Distributors Association (KAIDA), the cumulative number of registered imported vehicles from January to August this year was 194,262, up 14.3% from the same period last year."
This shows that "value consumption" has become a new trend, where Korean consumers no longer insist on national branded products and value quality, Lee added, citing Starbucks as an example maintaining the No. 1 position in Korea, beating out local brands.
Among the so-called 'MZ' generation (a combo of Millennials and Gen Z commonly used in the market), high quality doesn’t always equate to trendy and desirable, either says Sung, citing international high-fashion brands and Apple as examples.
"Millennial and Gen Z have become a new consumer segment, which prioritises 'me' over nationality, said Gonwoo Yang, executive account director and head of brand strategy at TBWA South Korea.
Lee observes that openness to foreign brands also holds true online. "The services of Naver and Kakao are localized and optimised for Korean consumers, making it difficult for foreign platforms and services to compete," he said. "However, distinguished and high-quality overseas services such as YouTube overwhelm the same services as Naver and Kakao."
Yang cites Tesla and Nike as additional examples of foreign brands succeeding among younger consumers. The automaker is "rapidly increasing consumer preference and influence in the market over local auto brands" thanks to its innovations in autonomous driving, although it can’t be compared with local brands in volume yet. Nike is "strengthening market dominance through innovation in its distribution strategy by accelerating digital transformation and fortifying its D2C (direct to consumer) channel," Yang said.
Netflix provides another example. "Netflix's success in Korea is due to easy access to a variety of content and fast updates, not only global content but also local content," Lee said. "In addition, Netflix has invested in Korean content, and Korean users feel proud to see Korean content become a hit in the global market."
Lack of success globally can work against a local power as well. Lee cites disappointment in LG's withdrawal from the global smartphone market, for example. Yet the company continues to innovate at home. In the last year, LG created a hit with the 'StanbyMe', a battery-powered TV on wheels meant to move around the home. "This product has been a huge success in connection with the lifestyle of the 'with Corona' era, as well as the egoism consumption of wanting one's own screen in one's own space."