While Korean consumers have been patriots, companies seem to be pirates. The older generations firmly believed that buying domestic products would help our country. They even regarded buying imported goods as traitor toward the country.
Thanks to this deep-rooted social atmosphere, companies have grown to international companies. Unfortunately, some companies seem too greedy to consider consumers’ benefit. For example, some companies set high-quality products for export sales and low-quality products for domestic sales. Prices are even set higher for domestic products.
Quality difference is most widely known especially in automobile market. Products for domestic sales lack some parts or have inferior qualities compared to the products for overseas sales. For example, the former ones have only one side-impact beam while the latter one have two. The beam protects the driver from side collision, and it means domestic consumers are more vulnerable to it.
Safety problems also lie in airbag. Automobiles for domestic sales include first or second generation airbag while those for export include third or fourth generation airbag called smart airbag and advanced airbag respectively. These are upgraded version that activate differently according to driver’s height, weight, and posture. Nevertheless, few actions for preventing further accidents were made and companies are still maintaining their old models.
Some blame Hyundai and KIA motors, two major Korean automobile companies, for setting excessively high price for domestic sales compared to exporting sales. However, issues related to potential danger and price should be considered separately. The former cannot be justified for profit seeking, whereas the latter can be. Profit seeking is very natural under capitalism and price discrimination is one of the best choices for the company to maximize their profit. Companies may neither be praised nor be blamed for their market strategy.
Yet many consumers complain about different price between Korea and America. The reason lies in different market system. Domestic automobile market is close to oligopoly market since two major companies account for two thirds of the total market share. Price-fixing should, of course, be blamed and prohibited but high price, itself, cannot be. Market is close to competitive market which various companies struggle with. Market power of a single company is much less so most companies set lower prices in order to survive. Not only Hyundai and KIA motors, but also many other companies lower their prices in the U.S. market. In this sense, price discrimination is both strategic and inevitable. What should be blamed is not different price but the companies’ indifference toward consumers’ safety.
Recently Korean snack market is becoming a center of the controversy. Over packaging and high price compared to exported goods were broadcasted and aggravated domestic consumers’ discontent. Consumers have already been dissatisfied with constant price increasing. However, unaware of the fact, companies are remaining still until the complaints became widely known. After the broadcasting, many turned their eyes to foreign snacks and some even are urging boycott of domestic snacks.
Consumers’ anger is quite natural and it is hard to find proper reasons to soothe it down. As price differentiation by automobile companies is partially inevitable due to the different market system, snack companies are overly obsessed with making profits. Some domestic products are twice as expensive as exported products with smaller quantities. Even when price of raw material went down, major snack companies have constantly raised their price. With ten dollars, American consumers can buy 11 items while Korean consumers can buy only four items.
Companies’ greed seems to promote their downfall. As for automobile market, Hyundai and KIA are constantly losing their market power. Their domestic market share fell to 66 percent from 72 percent for the last two years. As for snack market, domestic companies’ share fell from 83 percent to 73 percent for the last two years. Domestic market is not a “safe zone” anymore.
One of the most respected entrepreneurs, Yoo Il-han’s most important principle was that company belongs to the country and people. In this sense, losing their trust is losing their reputation as a company. Korean comsumers are not unconditional patriots anymore. If discrimination persists, pirates will remain on the sea alone without their pray.
Choi Chan-kyu email@example.com
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