Though Daewoo  is one of South Korea’s largest conglomerates, or ‘chaebol,’  with worldwide sales of $57 billion in 1995,  until recently the group was little known outside Korea.  Daewoo’s  25 companies  are among Korea’s largest firms  involved in motor vehicles, heavy industry & shipbuilding, electronics & telecommunications, financial services, and construction.  For most of its 30 year history Daewoo was content to manufacture heavy engineering  products  or consumer goods that were marketed under other firm’s brand names. Daewoo Electronics, for example, initially built its business by making low cost electronic appliances and AV equipment for large retail chains in the USA and Europe. 

This strategy gradually began to change during the late 80’s as Daewoo discovered the virtues of building brands and the role these could play in marketing. While large retaillers had no hesitation dumping Daewoo as their own-brand manufacturer if, for instance, the Chinese could make a cheaper offer, they were clearly willing to give store space to brands that consumers’ demanded. As a result, Daewoo today is strongly focused on building  its brand name internationally for automobiles and electronics.  By 2000, the company aims to be one of the world’s top ten automakers, both in sales and quality. It also plans to be supplying 10% of world demand for consumer electronics by the same date. Over US$ 5 Billion is being invested to achieve these goals.  The objectives are all the more impressive considering that five years ago, Daewoo Electronics was regarded as an "also ran"  in Korea while Daewoo Motors was seen as a manufacturer relying heavily on outdated Japanese and US technologies.  

The global transformation is the initiative of one man, Mr. Woo-Choong Kim, who founded the company in 1967 and has closely controlled it ever since.  "At Daewoo, globalization means localizing operations in nations around the world in an integrated system that  includes design, production, sales, service, finance, technology and resource development," says  Kim. 

But as it races for the future, Daewoo has also to learn about consumer marketing and advertising. "Our now approach is a very de-centralized one," says Mr. Sung-Bong Lee, director of  corporate affairs. "In each country, it is our local managers who are responsible for selecting agencies and overseeing the development and approval of advertising. If this means that in Europe, for example, there are totally different advertising campaigns running in each of the sixteen countries where we are selling cars, then that is OK provided the campaigns meet the different needs of each market place. The managers of each company in each country work very independently of each other."

Daewoo’s belief in local control is so firm that the concept of working with one or more aligned  agency networks has no place in their current thinking. While  some Daewoo executives feel there could be merits in such an approach,  there are no plans to lessen the power of country managers.

However this year, Daewoo’s Seoul HQ does plan to become involved in Europe itself. "We are developing a pan-European  corporate campaign that will provide additional support to the acitivities in each country. And we are also looking at media opportunities where we feel there are additional opportunities to reach groups of people but which are not part of  a country’s campaign. Outdoor signage and airport billboards are examples," says Lee.

While advertising and marketing overseas is left entirely to local subsidiaries, the Seoul HQ still finds a need to enlist its Korean agency, Korad, Ogilvy & Mather  to help around the world.  "Sometimes our subsidiaries ask us for some help," and then we turn to Korad, Ogilvy & Mather," says Lee. " We tend to use  them in new markets, and for regional media such as  Star TV in Asia.  We  may also use them in markets  where have no presence. Sometimes we will  advertise to establish our name  before we enter a market, such as happened in Bulgaria and Ukraine. We may then ask Korad to help us find a suitable agency, or do the work themselves. 

Daewoo is Korad, Ogilvy & Mather’s largest client  in Korea, accounting for one third of the agency’s US$ 250 million billings. The agency has a special international division in Seoul that handles overseas projects for Daewoo. A Pan-Asian campaign on Star TV is one example. The involvement goes further than creating campaigns. One of Daewoo’s major new markets is India where Korad and the UK’s WPP plc jointly bought a creative agency, Equus Advertising, in New Delhi to work for Daewoo.  "The start-up of Daewoo in India is a critical project and it calls for a much deeper and broader range of support from an agency than their initial billings might justify. And so we decided to buy Equus to make sure that the wide range of services they need would be available," says Ms. Il-Ling New, director of Korad, Ogilvy & Mather’s Overseas Division.  Similar investments may be made in other markets, possibly in Vietnam and the Phillipines, says agency president Myung-Ha Kim.

Daewoo’s global ambitions have cause Ogilvy some headaches with Ford, their major client worldwide. Ford rightly regards Daewoo as a competitor, all the more so as Ford are planning to market their cars in Korea in the near future. Consequently, Ogilvy are setting up a second agency in Korea, to be called Ogilvy & Mather Seoul which will operate independently of Korad, Ogilvy & Mather, but have the same Korean equity partner.
 
 

Daewoo’s Agencies in Europe 1996

· Europe: 
· Austria - Promota
· Benelux - Lamarque
· Bulgaria - Cres
· France - Carat
            - Carette & Foliot
· Germany  - von Mannstein
  - Siegel & Buck, Bornemaun
· Greece - Staff
· Italy - Firstline
· RCS Pubblicita
· Norway - Reklamebyraet  Cicignon Oslo
· Poland - Lintas
· Portugal - Abrinico
· Spain - Eqipo Tres Publicidad
· UK - Duckworth, Finn
· Poland - Lintas