Olympics delay deals setback to Samsung’s Japanese plans

The postponement of the Tokyo 2020 Olympics due to the coronavirus, has sent shockwaves throughout the sporting world, but also the business world. (AFP)
Short Url
Updated 28 March 2020

Olympics delay deals setback to Samsung’s Japanese plans

  • The delay may mean the South Korean tech giant has lost a crucial window of opportunity

SEOUL: For Samsung Electronics, the 2020 Tokyo Olympics was going to be its springboard to a long-held goal — significant inroads into Japan’s lucrative smartphone market, where Apple Inc. dominates.

But after the Games were postponed to 2021 due to the coronavirus pandemic, the long-time sponsor’s marketing plans — centered on its new S20 smartphone — have gone awry.

The delay may mean the South Korean tech giant has lost a crucial window of opportunity. It had been expected to tout its 5G capability in its Olympics ads, aiming to attract a population excited to watch the Games with cutting-edge technology before Apple had a 5G product on the market.

“Samsung was keen to use the Olympics opportunity in Japan. In that sense, it’s a bad situation,” a person familiar with Samsung’s operations told Reuters.

“A lot of the momentum for smartphone demand in the lead-up to the Olympics will also be gone.”

HIGHLIGHT

  • Samsung may have lost opportunity to take early lead in 5G.
  • Japan long an Apple stronghold, Samsung has 4% market share.
  • Experts expect Samsung campaign to reset around a new phone.

Former Samsung officials and analysts said it would likely go back to the drawing board to promote a new flagship phone due next year.

When asked about the impact of the Olympics postponement on its strategy for the Japan market, Samsung declined to comment, saying only it would continue to provide innovative technology for Japanese customers regardless of when the Games commence.

Samsung may be the world’s No. 1 smartphone maker by volume but it has just a fraction of the Japanese market.

In contrast, Apple which first began selling the iPhone in Japan in 2008, gained share thanks to an aggressive advertising and pricing campaign from SoftBank — at the time its sole distributor. Japan has since become a loyal premium market and key profit center for the US firm.

Apple currently commands 53 percent of the Japanese market, Sharp Corp. has 12 percent and Sony Corp. has 7 percent, according to Counterpoint Research. Samsung, which has lost ground since 2013, has 4 percent.

Indicative of Samsung’s struggles was its 2015 decision to drop its name from smartphones sold in Japan and just go with Galaxy branding — the only market where it does so. It’s a move some analysts attribute to historical tensions that often flare up between South Korea and its neighbor.

“I believe they did so due to the growing number of Japanese consumers who take political factors into account in their purchases,” said Shengtao Jin, a research analyst at Canalys.

In its run at Apple’s stronghold, Samsung had laid the groundwork for a concerted campaign.

In March last year, it opened the world’s biggest Galaxy store in Harajuku, Tokyo’s popular shopping district for youth fashion and pop culture. Boasting eight floors, the glitzy building has an exterior decorated with more than 1,000 smartphones. Samsung’s mobile and network division chief Koh Dong-jin, officials from the International Olympic Committee and Tokyo 2020 organizers attended the opening ceremony to mark 500 days until the Games.

Then in May, Samsung’s heir and de facto head, Jay. Y Lee traveled to Japan, meeting with executives from mobile carriers NTT DoCoMo Inc. and KDDI Corp. to discuss 5G cooperation.

DoCoMo and SoftBank Corp, the domestic telecom arm of SoftBank Group, are currently rolling out 5G services. But the delay of the Games means 5G is not expected to gain momentum until Apple launches a 5G-capable iPhone, analysts said.

That phone is expected to arrive by end-2020, though some media reports have said it may be delayed by the pandemic.

“Samsung could have taken an early lead in 5G but the Games postponement is a setback,” said Jeong Ok-hyun, a former LG mobile executive and a professor at Sogang University in Seoul.

“The virus could also lead to delays in the development of the 5G market, which will be a relief to Apple.”

For the time being, it remains to be seen if Samsung will proceed with plans to sell a special Olympics edition S2v0 phwone with 5G capability. The phone to be sold by DoCoMo was due to be launched in June and Samsung began taking pre-orders this month.

 


HSBC reports lighter-than-expected third-quarter profit fall

Updated 27 October 2020

HSBC reports lighter-than-expected third-quarter profit fall

  • HSBC has a further headache – geopolitical tensions via its status as a major business conduit between China and the West

HONG KONG: HSBC said Tuesday its third-quarter post-tax profits fell 46 percent on-year as the Asia-focused banking giant continued to take a hammering from the coronavirus pandemic and spiraling China-US tensions.
However, the profit falls were not as bad as some analysts had predicted and HSBC said it expected credit losses to be at the lower end of a previously announced $8 billion to $13 billion range.
The global economic slowdown caused by the virus has hit financial giants hard and there is limited optimism on the horizon as Europe and the United States head into the winter with infections soaring once more.
HSBC has a further headache — geopolitical tensions via its status as a major business conduit between China and the West.
As a result, the lender is in the midst of a worldwide overhaul, aiming to slash some 35,000 jobs by 2022, primarily in its less profitable European and American divisions.
“We are accelerating the transformation of the Group, moving our focus from interest-rate sensitive business lines toward fee-generating businesses, and further reducing our operating costs,” chief executive Noel Quinn said in a statement accompanying the results.
Reported post-tax profit for the third quarter came in at $2 billion with revenue down 11 percent at $11.9 billion, the statement said.
Adjusted pre-tax profit slid 21 percent to $4.3 billion in the period, beating a $2.8 billion estimate by Bloomberg analysts.
Quinn described the latest figures as “promising results against a backdrop of the continuing impacts of Covid-19 on the global economy” as well as low interest rates.
In the first six months of 2020, HSBC’s post-tax profits were down 69 percent, meaning the third-quarter results were something of an improvement as some major economies relaxed some of their coronavirus restrictions.
The bank said its board would consider whether to pay “a conservative dividend” for 2020 based on final end of year results and how the global economy looks in early 2021.
Earlier this year, UK regulators called on British banks to scrap dividends for the year to preserve capital during the pandemic crisis.
HSBC makes 90 percent of its profit in Asia, with China and Hong Kong being the major drivers of growth.
As a result, it has found itself more vulnerable than most to the crossfire caused by the increasingly bellicose relationship between Beijing and Washington.
The bank has tried to stay in Beijing’s good graces.
It vocally backed a tough national security law that Beijing imposed on Hong Kong in June to end a year of unrest and pro-democracy protests.
The move sparked criticism in Washington and London but analysts saw it as an attempt to protect its access to China, which has a track record of punishing businesses that do not toe Beijing’s line.
“Geopolitical risk, particularly relating to trade and other tensions between the US and China, remains heightened,” HSBC said in Tuesday’s profit statement.
The US has sanctioned nearly a dozen key Hong Kong and Chinese officials over the national security law, telling international banks to stop doing business with them.
China’s national security law, however, forbids businesses in Hong Kong from adhering to foreign sanctions regimes, leaving many in an unclear regulatory tight spot.
“Investor and business sentiment in some sectors in Hong Kong remains dampened and ongoing tensions could result in an increasingly fragmented trade and regulatory environment,” HSBC said in its statement.
The bank also highlighted the uncertainty over Britain’s withdrawal from the European Union as another potential headwind.
Talks for a post-Brexit trade deal have made little headway with a 31 December deadline fast approaching.
“There is a risk of additional ECL (expected credit losses) charges, particularly in the UK in 4Q20, if the UK and the EU fail to reach a trade agreement,” the bank said.