South Korea has emerged as one of the electronics and manufacturing superpowers of the world in recent history. Their megacorporations rule the world in sectors such as consumer durables, home appliances, telecom technologies, smartphones, automobile and shipbuilding industries. Among the various Korean giants, Hyundai Corporation is one of the oldest and largest of them.
Chung Ju-Yung founded Hyundai as a small construction firm in 1947 and its headquarters are in Ulsan, South Korea. It took the company more than 2 decades to commence operations outside of South Korea in 1965. The markets of Guam, Thailand and Vietnam were some of the very first that the company ventured into.
Hyundai Corporations has numerous arms such as Hyundai Electronics, Hyundai Heavy Industries (HHI), Hyundai Motors and so on. HHI has four core business divisions: Shipbuilding, Offshore & Engineering, Industrial Plant & Engineering and Engine & Machinery. It also has five non-core related subsidiaries: Hyundai Electric & Energy Systems, Hyundai Construction Equipment, Hyundai Robotics, Hyundai Heavy Industries Green Energy and Hyundai Global Service. They started shipbuilding in 1972 and currently are the largest shipbuilding company in the world.
India has emerged as one of the largest consumer markets in the world in the past 3 decades, especially since the Economic Liberalization that took place in 1991. In the last couple of years, India has outpaced China in the annual growth rate. The liberalization allowed foreign companies to enter the Indian market and let the Indian consumers experience global products in day-to-day life.
Hyundai is a popular name among Indian consumers because of their automobiles. Their cars are one of the highest sold in the Indian market. They compete with the likes of Honda (Japanese giant), Tata (Indian conglomerate), Mahindra (Indian automobile and tech major) and Maruti Suzuki (Indo-Japan Collaboration Company) in the cars industry. However, only a handful of the Indian consumers are aware that this Korean major to be into other industries other than the automobile one.
Indians have a very good reputation regarding Korean brands such as Samsung and LG. India’s home appliances, consumer durables and electronics market is flooded by these two companies. They sell products ranging from TVs to refrigerators, washing machines, microwave ovens, so on and so forth.
It has been noticed that the Indian middle-income families are growing rapidly as the economy is performing very well for a long time now. This has raised the consumption levels among all the regions in India. The expenditure that the average family does on home appliances and other electronic devices have also increased many folds.
We have seen a huge surge in various brands of electronics and home appliances coming in from various parts of the world to India. Hyundai electronics have noticed the developments in the Indian market and understood that this opportunity needs to be tapped in to generate huge revenue.
According to a Business Standard report, the company is focusing on market research, product innovation, Artificial Intelligence, Energy Efficiency and technology. These things are important for any company to get a good knowledge of the market and how to custom design a product for a specific market. Indian being a vastly different market as compared to the East Asian or Western markets, the products needs to be significantly different too. There are certain features that Indians would necessarily need that other consumer might ignore and vice versa. Thus, these things need to be considered before stepping foot here.
One of the major advantages that the company has is its reputation. The major hurdle that any new company faces while launching in a new market is that the people are unaware of the brand. They spend most of their money on marketing and brand building etc. Here, Hyundai has already built its good name through their quality automobiles in the market and after sales service too. People will easily connect with the brand, as they will think that if a company can make good car engines then they can certainly make very good washing machine engines or refrigerator compressors or AC motors. Although this might not be true, the consumers will certainly believe that. This is what we saw with the Xiaomi’s product line in Indian apart from their smartphones. Since Xiaomi’s smartphones were popular, their other products sold out very easily.
Having said that, Hyundai cannot just play their popularity card at all times. India is a very price sensitive market. Reputation matters for sure, but if the prices of Hyundai products are too high then they will start comparing the value for money with the likes of Samsung, LG, Sony, Godrej and even the newer players such as Xiaomi, Haier, TCL and Panasonic.
There is only a small percentage of Indian consumers who are very brands conscious and ignore the price for good brands but most of the consumers care less for a brand if the price is out of their budget. The reason for the success of the newly entered Chinese brands is that they are very affordable. Indian consumers can be allured by Hyundai by starting out at relatively affordable prices and their already existing brand awareness. The company is targeting to enter the smart appliances market segment, which is rapidly expanding in India. Older goods are being discarded and the market is opening up to inculcate the new technologies.
Hyundai already possesses a huge manufacturing prowess. They can utilize the same in their electronics and home appliances manufacturing as well. One major thing that they need to analyse and understand is the complex supply channels in India. In the past few months, there has been chaos in the Indian online and offline channels due to various, strikes, bans and new government policies. There have been new complications that rose after the new E-commerce policy was announced by the Indian government. Hyundai has to keep in mind the various laws, regulations and pros & cons of each and every channel before starting out in the country. There will also be a huge difference in the consumption patterns of the metropolitan, urban and rural households. These factors need to be considered by Hyundai before making inroads.