Moving up the food chain

Sep 8, 2004
in Globalization

Normally I do not read too much into press releases on industry hires but I found this one interesting on many levels. Intel, a tremendous brand in its own right, hired a marketing executive from Samsung, a Korean company. Most people assume that the US' competitive advantage over the rest of the world lies in design, innovation, and branding. We can outsource manufacturing and development to countries like China, Korea, and India to create great products at lower prices. However, what we need to understand is that these countries are not just content in producing widgets. They, too, have aspirations in moving up the product food chain to develop their own brands, design their own products, and manufacture them. So for me it was quite ironic to see one of the world's best brands, Intel, hire the marketing exec from Samsung, where just five years ago it had no brand and was just seen as a low cost producer. What a tremendous job Samsung has done in just a short period of time. As you can see from Samsung's numbers, it has done an excellent job moving up the food chain, innovating, and creating a brand. This culminated in Intel hiring a Samsung executive. This is just the beginning. In the WSJ today, there was a great front page article (sub required) on Chinese telecom equipment companies penetrating worldwide markets. Once again, this is another example that the very advantages that the US has in innovation, design, and brand may be threatened in the long term, especially if we do not pay attention.

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This post was written by who has written 357 posts on BeyondVC.

4 Responses to “Moving up the food chain”

  1. quanta Sep 8, 2004 at 7:09 pm #

    Just to toot my own horn for a sec, I’ve written up a quickie business case on Samsung, focusing on their mobile division, a few weeks ago: link to silentblue.net

    You’re right, Samsung has gone from cheap OEM to premium brand name in a very short time. (Samsung still makes all of Apple’s LCD panels, I heard.)

    Reply
  2. Ed Sim Sep 8, 2004 at 9:49 pm #

    Nice write up-we are in synch on this one.

    Reply
  3. Derek Sep 15, 2004 at 5:52 pm #

    You can access the WSJ article here (without subscription):

    link to interactive.wsj.com

    According to the article, about all the US has going for it at this point is the distrust and out-dated perception that the Chinese just make cheaper products (similar to Japan’s reputation 30 years ago).

    Reply
  4. Andrew Apr 24, 2006 at 6:42 pm #

    Eric Kim, the Chief Marketing Officer at Intel, is more American than he is Korean. He earned his undergraduate degree at Harvey Mudd and graduate degrees at UCLA and Harvard. Before he joined Samsung, Eric had never worked in Korea. I have even heard that his Korea language abilities are somewhat limited.

    Reply

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