Olympics delay deals setback to Samsung’s Japanese plans

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

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.

 


China economy grows in 2020 as rebound from coronavirus gains

China economy grows in 2020 as rebound from coronavirus gains
Updated 45 min 54 sec ago

China economy grows in 2020 as rebound from coronavirus gains

China economy grows in 2020 as rebound from coronavirus gains
  • Growth in the three months ending in December rose to 6.5 percent over a year earlier
  • China’s quick recovery brought it closer to matching the US in economic output

BEIJING: China eked out 2.3 percent economic growth in 2020, likely becoming the only major economy to expand as shops and factories reopened relatively early from a shutdown to fight the coronavirus while the United States, Japan and Europe struggled with rising infections.
Growth in the three months ending in December rose to 6.5 percent over a year earlier as consumers returned to shopping malls, restaurants and cinemas, official data showed Monday. That was up from the previous quarter’s 4.9 percent and stronger than many forecasters expected.
In early 2020, activity contracted by 6.8 percent in the first quarter as the ruling Communist Party took the then-unprecedented step of shutting down most of its economy to fight the virus. The following quarter, China became the first major country to grow again with a 3.2 percent expansion after the party declared victory over the virus in March and allowed factories, shops and offices to reopen.
Restaurants are filling up while cinemas and retailers struggle to lure customers back. Crowds are thin at shopping malls, where guards check visitors for signs of the disease’s tell-tale fever.
Domestic tourism is reviving, though authorities have urged the public to stay home during the Lunar New Year holiday in February, normally the busiest travel season, in response to a spate of new infections in some Chinese cities.
Exports have been boosted by demand for Chinese-made masks and other medical goods.
The growing momentum “reflected improving private consumption expenditure as well as buoyant net exports,” said Rajiv Biswas of IHS Markit in a report. He said China is likely to be the only major economy to grow in 2020 while developed countries and most major emerging markets were in recession.
The economy “recovered steadily” and “living standards were ensured forcefully,” the National Bureau of Statistics said in a statement. It said the ruling party’s development goals were “accomplished better than expectation” but gave no details.
2020 was China’s weakest growth in decades and below 1990’s 3.9 percent following the crackdown on the Tiananmen Square pro-democracy movement, which led to China’s international isolation.
Despite growth for the year, “it is too early to conclude that this is a full recovery,” said Iris Pang of ING in a report. “External demand has not yet fully recovered. This is a big hurdle.”
Exporters and high-tech manufacturers face uncertainty about how President-elect Joseph Biden will handle conflicts with Beijing over trade, technology and security. His predecessor, Donald Trump, hurt exporters by hiking tariffs on Chinese goods and manufacturers including telecom equipment giant Huawei by imposing curbs on access to US components and technology.
“We expect the newly elected US government will continue most of the current policies on China, at least for the first quarter,” Pang said.
The International Monetary Fund and private sector forecasters expect economic growth to rise further this year to above 8 percent.
China’s quick recovery brought it closer to matching the United States in economic output.
Total activity in 2020 was 102 trillion yuan ($15.6 trillion), according to the government. That is about 75 percent the size of the $20.8 trillion forecast by the IMF for the US economy, which is expected to shrink by 4.3 percent from 2019. The IMF estimates China will be about 90 percent of the size of the US economy by 2025, though with more than four times as many people average income will be lower.
Exports rose 3.6 percent last year despite the tariff war with Washington. Exporters took market share from foreign competitors that still faced anti-virus restrictions.
Retail spending contracted by 3.9 percent over 2019 but gained 4.6 percent in December over a year earlier as demand revived. Consumer spending recovered to above the previous year’s levels in the quarter ending in September.
Online sales of consumer goods rose 14.8 percent as millions of families who were ordered to stay home shifted to buying groceries and clothing on the Internet.
Factory output rose 2.8 percent over 2019. Activity accelerated toward the end of the year. Production rose 7.3 percent in December.
Despite travel controls imposed for some areas after new cases flared this month most of the country is unaffected.
Still, the government’s appeal to the public to avoid traditional Lunar New Year gatherings and travel might dent spending on tourism, gifts and restaurants.
Other activity might increase, however, if farms, factories and traders keep operating over the holiday, said Chaoping Zhu of JP Morgan Asset Management in a report.
“Unusually high growth rates in this quarter are likely to be seen,” said Zhu.