[SUPER RICH] Foreign billionaires’ firms muscle into Korea

When global companies like Uber and IKEA expanded their business into South Korea last year, local taxi firms and retailers were caught off guard by their cheap pricing and fresh business ideas.

And it was natural for their billionaire founders, Travis Kalanik and Ingvar Kamprad, respectively, to make headlines here for their success stories and underlying strategies.

This year, more ― and bigger ― billionaires are in store to make inroads into in Korea, posing a challenge to their local competitors, while receiving a welcoming response from local consumers.

Amazon, the world’s largest e-commerce company by revenue, is widely expected to make a full-scale entry into the Korean market this year. The company recently rented out two floors at GS Tower in Gangnam, Seoul.

Jeff Bezos, whose personal wealth is estimated at around $28.7 billion, founded the online bookstore in 1994. It has since then become more than just a bookstore, with Amazon now seeking to enter the mobile payment market.

Market insiders believe the new office will become an “operation base” for the website operator to enter Korea’s online retail market, threatening its domestic counterparts such as Interpark, Gmarket and 11st, among others.

“When Amazon officially begins retail business here, no local competitors will be safe from its global competitiveness,” said Kevin Lee, a Hyundai Home Shopping global marketing manager. “Amazon’s brand value and likability among Korean consumers are already significant.”

The local automobile industry, meanwhile, is fearing the expected arrival of U.S. electric vehicle firm Tesla Motors.

It was discovered recently that a number of Tesla officials visited the National Institute of Environmental Research and Korea Transportation Safety Authority to make inquiries about the market environment and regulations of eco-friendly vehicles here.

Once accomplished, Korea will be Tesla’s third Asian station. 

Elon Musk, whose net worth is estimated at about $8 billion, has stressed that “the company aims to sell 50,000 electric cars annually by 2020,” showing his confidence in the business.

Korea is generally regarded as a market with high growth potential. According to research firm Frost and Sullivan, the domestic electric vehicle market will post an average annual growth of 72.7 percent and have 90,000 stations by 2020. Moreover, Jejudo Island plans to replace all cars with electric vehicles by 2030.

Musk, the billionaire founder, has stressed a focus on the European and Asian market and lower prices for mass appeal.

“Growth in demand for electric cars is insignificant for now. But it is expected to grow gradually once foreign carmakers start unveiling models and infrastructure is firmly established,” an electric car researcher surnamed Yim at Hyundai Motor said. 

By Korea Herald Special Investigative Team
(monicasuk@heraldcorp.com)

Kwon Nam-keun
Hong Seung-wan
Sung Yeon-jin
Bae Ji-sook
Yoon Hyun-jong
Min Sang-seek
Kim Hyun-il
Suk Gee-hyun