Consumer Electronics Market in Singapore

Consumer Electronics Market in Singapore-Dissertation Writing Help

Executive Summary

Consumer Electronics A Growing Market

The Consumer Electronics market in Singapore experienced strong growth from 2003-2008, with sales for the 2007-2008 period markedly better than the 2006-2007 period. Much of this growth was due to various sub-sectors experiencing some of the most dramatic transformations ever witnessed in the industry as a whole, as new and emerging technology changes the way consumers live, work and play.

Singapore Enters A Technical Recession; Retail Sales Slump.

Singapore entered a recessionary phase in H208 – its first since 2002 – as the second and third quarters of 2008 saw the local economy contract. Much of this stems from the sub-prime crisis which has battered financial markets and economic conditions worldwide, as major financial institutions and banks collapse one by one, sending shockwaves throughout the world. Consumer retail sales have slumped as pessimism and fear of job losses grip consumers, who have firmly shut their wallets.

Flat-panel Hdtvs Still Red-hot

Flat-panel HDTVs, both of the LCD and Plasma screen varieties, continue to expand at an astonishing pace as consumers continue to embrace the digital revolution and leave the dark age of analogue TVs behind them. An ultra-competitive market and falling costs of technology and manufacturing have also seen price cuts across this market segment, making these products more accessible to budget consumers; flat-panel HDTVs are now a common consumer electronic product, a far cry from the position of a toy for the rich, which it once held.

Japanese and Korean Manufacturers Continue To Dominate

Japanese and Korean giants such as Sony, Samsung, Panasonic and LG, all of which are household names globally, continue to dominate the local consumer electronics scene, with Sony and Samsung currently slugging it out for overall market dominance. Samsung has unseated Sony to take the mantle of being the market leader in the ultra-competitive and strategically-important flat-panel HDTV market and is the only rival to Sony in terms of market reach and breadth. The digital revolution has breathed new life into multiple product segments, which were previously half-asleep, spurring innovation and technological leaps across the entire market as the key themes of convergence, connectivity and digital media sets the flavour for the entire market.

Future Growth To Remain Healthy and Strong

As the world becomes increasingly connected digitally, consumer electronics will play an increasingly critical role in how individuals, households and organisations function. No longer will consumer electronics be deemed a luxury or purely for entertainment – the digital revolution has ensured that a minimal level of consumer electronics will be required for integration and participation in the new world. As a result, the Consumer Electronics market is expected to continue growing over the future review period, as well as outperform the already impressive growth experienced over the current review period.

Key Trends and Developments

Recession and Financial Crisis Put the Brakes on Consumer Spending

Export-dependent Singapore has officially plunged into its first technical recession since 2002. GDP growth contracted by 6.3% in Q308, following a 5.7% contraction in Q208, as consumer demand falls worldwide amidst the worst financial crisis experienced by the world since the Great Depression, and as the global economy teeters on the brink of an unprecedented downturn.

International stock markets such as Dow Jones and the Nikkei have experienced record-breaking declines as once-revered financial powerhouses and banks collapse across the US and Europe with alarming speed, shocking fearful consumers worldwide into hoarding cash and drastically cutting consumption in a bleak period of financial uncertainty and recession fears.

Current Impact

As Singapore slips into recession amidst a gloomy global economic climate, consumers are starting to reduce their discretionary spending as they brace themselves for what some market analysts have predicted will be “a prolonged and painful downturn”. Indeed, the local media has been inundated with articles warning consumers of the looming – and now present – recession, together with a myriad of suggestions on cost-savings measures.

The statistics are similarly bleak – August’s Retail Sales Index, a monthly publication by the Department of Statistics with a time lag of two months, which tracks retail receipts in Singapore’s consumer markets, cited the third consecutive monthly decline in retail sales since June, although computing products were surprisingly resilient and continued to display sustained growth. Considering that the financial storm escalated only after September 15th following the collapse of Lehman Brothers, retail spending for the next four months of 2008 was expected to be even bleaker.

Recreational goods – the heading that the majority of consumer electronics in Singapore falls under according to the Department of Statistics’ classification – has been among the worst performers as reflected in the Retail Sales Indexes, reflecting their heavy dependence on discretionary “feel-good” spending. This is likely to reverse the surge in retail spending experienced in H108, which was buoyed by optimistic economic growth rates put forward by both market analysts and government economists and falling inflation rates – which, however, still remain relatively high at 5.8% in August. Already, Sony and Sharp stocks have experienced sharp declines amidst fears that consumers will refrain from purchasing consumer electronics products globally in the current gloomy climate.

Outlook

In the light of recent developments, the government’s forecast for GDP growth for 2008 has decreased from an earlier estimate of 4-5% to around 3%, which if realised, would make it Singapore’s weakest growth in seven years. Most analysts largely agree that this recession is likely to drag into H109, with recovery only likely in early 2010.

However, much depends on how the ongoing financial crisis and credit crunch pans out, as well as the health of the global economy. Economic growth in Singapore is closely linked to those of its major trading partners, in particular the US and Europe, as a result of its export-dependent economy, which is extremely susceptible to external demand shocks.

The signs are already there that external demand is in a free-fall –  July and August saw a 5.8% and 14% fall in Singapore’s non-oil domestic exports respectively on an annual basis. Domestic demand is also starting to experience a contraction.

Future Impact

In the short to medium term (2009-2011), retail spending on consumer electronics is expected to decline moderately as consumers tighten their purse strings in the face of a shrinking economy. Budget consumers are expected to lengthen the replacement cycles of their existing consumer electronics in an effort to reduce discretionary spending in the short term, or even cut out such purchases completely among those hardest hit.

Middle-income consumers are expected to continue purchasing consumer electronics but there will likely be a shift in purchasing patterns towards emerging value-brands from local manufacturers or new labels from non-conventional overseas markets such as Taiwan. These consumers are also likely to mostly stay with second generation technology and products, shunning the premium that comes with the latest technology or models. For example, more consumers among this group are likely to opt for smaller screen sizes and HD-Ready models when shopping for a flat-panel TV set, rather than spending more on a top-of-the-line, full–HD model.

However, consumption patterns within the high-income consumer group is not expected to differ much, as this group will be the least-affected by the expected downturn, with per capita income expected to largely remain stable across this consumer group. Uptake of new technology and premium models is expected to be driven to a greater extent by this group.

In the long term, the economy is expected to recover from the downturn, and an increase in retail spending on consumer electronics can be expected to surface, although the extent of this recovery largely depends on the speed and depth of the economic rebound.

Value-brands Starting To Gain Acceptance Among Consumers

Consumers are expected to increasingly accept and favour value-brands in a market once dominated by Japanese and Korean labels, as the quality and technology that these new value brands offer – at a significantly lower price than comparable Japanese and Korean products – continue to increase.

Examples of these value-brands include local electronics manufacturers Akira and Palladine, as well as Taiwanese electronics manufacturer Chimei, within various sectors such as the HDTV sub-sector, the portable DVD players sub-sector, small audio products sub-sector, and the DVD players sub-sector. In particular, the HDTV sector has been experiencing an increasing number of value-brands entering the market with an impressive range of models and screen-sizes.

Current Impact

Currently, these value-brands have an insignificant market share as consumers largely continue to gravitate towards global brand names such as Sony, Samsung, Sharp and Panasonic, all of which have been household names in the local market for decades. Furthermore, these major brand names typically dominate the advertising and marketing scene, while the value-brands attract little public attention or exposure. This leads to an understandable apprehension within consumers regarding the quality or performance of these value-brands, especially when it comes to big-ticket and technologically-complex products such as HDTVs or home theatre systems.

The fact that these value-brands typically adopt second generation technology and are not market leaders when it comes to technological/product innovation makes it all the more harder for them to gain market share. Indeed, specialist retailers in Singapore such as Best Denki or Courts do not stock or display such value-brand products on their shelves at all, instead devoting shelf-space to the major Japanese and Korean brands.

However, the product lines of these value-brands now boast unit design, technology and quality that are comparable to those offered by the usual Japanese and Korean brands. Certain brands such as Chimei and Akira are even competing with the major brands in the high-end segment of the market, such as the large screen (52” or above) full HDTVs sector. Distribution channels such as mixed retailers and hypermarkets are increasingly devoting more shelf-space to these value brands as their value-for-money models finds favour among budget-conscious customers.

Outlook

Brand awareness among consumers of these value-brands is forecast to increase in the future thanks to increasingly aggressive advertising by hypermarkets such as Carrefour and Giant, as well as mixed retailers and supermarkets, which are the main retail channels for such value brands. This is largely due to the need for these retailers to offer a more economical alternative for popular consumer electronics products such as HDTVs for their typically budget-conscious customer base.

Value-brands are definitely not a passing fad and look set to stay and even expand on their market share and operations in the Singapore market, as long as they are able to continue offering a level of technology, product quality and design comparable to their Japanese and Korean big brand competitors, all at a significantly lower price point.

Future Impact

The short to medium term will see value brands expand their presence and market share in the Singapore market, as the product lines of these value-brands continue to see improvements in quality, technology and design. However, they are not expected to be major players or garner enough market share to become a significant threat to the more established Japanese and Korean brands in the market, especially in the upper-end segment of the market, where these value-brands are still lagging behind their more established competitors in terms of technology and product features. They also suffer from a “perception problem” by consumers, who still innately trust well-known brands such as Sony or Samsung when it comes to purchasing high-end, big ticket consumer electronics such as large screen full HD flat panels TVs.

Hence, it is in the low-end to middle-end segment of the market that these value-brands are expected to gain the most market share and build up on their brand names, competing in the smaller screen sizes such as 40”-42” and below, in HD-Ready formats rather than Full-HD models. Technological innovation and product quality is crucial for value-brands to achieve this goal, as poor product quality and backward technology is the most common perception consumers have of value-brand consumer electronics. Therefore, when the aggressive pricing of value-brands will be sufficient to persuade the marginal buyers in the low- to middle-end segment of the market to try them out, it is important that their products will also be capable of meeting the expectations of modern-day consumers and the minimal standards set by their more established competitors. Otherwise, it will be near impossible for value-brands to gain any sort of widespread acceptance among consumers and might even destroy any goodwill that they have built up among consumers so far.

In the long term, as technology in certain consumer electronics segments (such as the flat-panel television market) matures and become more streamlined across market players, it is expected that value-brands will be able to offer product models incorporating technology and features that rival those of their competitors. This will give value-brands a strategic opportunity to establish a foothold in the consumer electronics market in Singapore, similar to the way Samsung propelled itself to the forefront of the global consumer electronics market in recent history. The major difference between value-brands and the more established brands will be product quality (in terms of build, finish and reliability), price bracket and brand awareness. Therefore it is critical for value-brands to build up sufficient brand awareness in the short to medium term by competing in the low to medium end segment of the market where they have leverage over the more established brands (as opposed to the higher end segment of the market, where there is less consumer acceptance of these value-brands) in order for them to capitalise on the opportunities that will present themselves in a more mature market.

Consumer Electronics Fairs Increasingly Crucial To Retail Sales

The first consumer electronics fair in Singapore was the PC Show, which had its inaugural exhibition in 1991. 18 years later, Singapore is host to four consumer electronics fairs - the PC Show, the IT Show, COMEX Singapore and SITEX - which are held annually every quarter of each year. These consumer electronics fairs are now the favoured platforms for manufacturers and distributors to launch new product lines and/or models locally, and in some cases, regionally or worldwide.

In addition, these consumer electronics fairs have historically attracted a large number of consumers, including window shoppers and marginal buyers as well as bargain hunters with specific products in mind, all attracted by bargain bundle deals, freebies and discounts. These consumer electronics fairs often take on a carnival-like atmosphere, with various exhibitors holding ‘hourly specials’ and ‘limited set offers’. More importantly, these fairs are events where consumers converge at to view and in some cases, try out new product launches by manufacturers.

Current Impact

These consumer electronics fairs have been enthusiastically received by local consumers and tourists, with the PC Show 2008 attracting a record number of 1.12 million visitors, with over 600 exhibitors/vendors over the three days it was held and with a sales receipts amounting to $51.7 million - a major increase from 2007’s 907,000 visitors, 400 plus exhibitors and $26.2 million in sales receipts. This was slightly less than a quarter of Singapore’s resident population in 2008 and with sales receipts almost doubling from the PC Show 2007, it was an impressive three-days event. The other consumer electronics fairs posted similarly impressive numbers: COMEX 2008 Singapore pulled in 730,000 visitors and more than 800 exhibitors; and the IT Show 2008 brought in 735,000 consumers and over 780 participating exhibitors, generating sales receipts of $54.5 million, which was an increase of $6.5 million from the IT Show 2007. These fairs demonstrate the Singapore market’s ravenous appetite for consumer electronics, as well as the ability of these consumer fairs to pull in significant numbers of consumers.

As a result, consumer electronics fairs have served to boost the sales of consumer electronics in Singapore substantially even though it is not a traditional retail channel. In addition, an increasing number of major players have taken advantage of the huge numbers of visitors streaming in and out of these consumer electronics fairs to launch new product lines or unveil new product models, attracting a large amount of publicity and exposure at a minimal cost. HP, for example, unveiled its TouchSmart IQ805d PC at COMEX 2008 Singapore, claiming it to be the only all-in-one touch-screen desktop on the market; retailer EpiCentre exhibited the new MacBook Air – the world thinnest notebook – at the PC Show 2008, where Canon also launched its latest SELPHY compact photo printer, the CP770. 

Outlook

Consumer electronics fairs are now an important event in the calendars of consumers, manufacturers and retailers and look set to be a permanent feature in the Singapore market. The fairs have multiple positive effects on the industry that stretch far beyond the additional retail sales that they generate over the period in which they are held, the most important of them being the feel-good sentiment that these fairs seem to generate in consumers.

Consumer electronic fairs look set to grow stronger with each passing year, with historical data showing impressive increases in the number of visitors, retail sales recorded and number of exhibitors/vendors participating over each preceding year, which clearly points to the increasingly popularity and importance of these consumer electronics fairs. Each of the fairs have also been steadily increasing their total exhibition floor space in each successive year, reflecting the confidence that the organisers of these fairs have in public and exhibitor responses.

Future Impact

In the short to medium term, as an economic recession dampens consumer sentiment, the role these consumer electronics fairs play in stirring up consumer confidence and lifting their spirits will become more crucial in boosting flagging retail sales through normal distribution channels. Furthermore, there is a common perception among consumers of value savings to be gained from the steep discounts or ‘freebies-with-purchases’, which have been typically offered by exhibitors and vendors. This may lead to a larger number of consumers holding back on planned consumer electronics purchases, especially big ticket items such as high-end computers and large screen full-HD flat panel TVs, and waiting to make the purchase at one of the quarterly consumer electronics fairs.

However, much depends on the depth and breadth of the economic recession in Singapore. With 2009 looking to be a bleak year promising a larger number of job losses, there might not be any feel-good sentiment left amongst the majority of consumers. In a scenario where job losses and unemployment are running high, it might be possible that four consumer electronics fairs a year may prove to be unsustainable in the short to medium term, forcing organisers to scale down these fairs. A weakening Singapore dollar will not help matters either, as imported consumer electronics, which make up the bulk of local retail sales, will become substantially more expensive, especially in the light of a soaring yen. 

A Digital and Wireless Future for Consumer Electronics

Consumer electronics products are increasingly being driven and tied by media content – some are exclusive to particular brands, such as Apple’s iPod Touch and iPhone, or Nokia’s mobile phones from the XpressMusic line – which are increasingly dynamic, interactive and accessible even when on the move. Gone is the era when the depth and breadth of content available were limited by the consumer products owned by an individual; in today’s digital and wireless world consumers choose their gadgets according to the content they wish to experience, rather than being limited by the gadgets which they already own.

Content is, however, dependent on the quality and the extent of the infrastructure available to support and distribute it. In this respect, the Singapore market is moving rapidly in the right direction, taking the local market towards a fully digital and wireless future.

Current Impact

The Intelligent Nation 2015 blueprint is Singapore’s roadmap towards the provision of seamless (wireless) access to technology; the backbone of this plan is a new digital super-highway for ‘super-connectivity’ that will be open-access and carrier-neutral – both wired and wireless for ultra-high broadband speeds and pervasive connectivity island-wide – which is currently called the Next Generation National Broadband network. Digital media is also being actively promoted through channels such as digital TV content, which is being gradually introduced into free-to-air broadcasts, mobile TV content and Video-On-Demand. 

The result is an increasing migration towards digital and wireless technology within consumer electronics, as consumers gradually immerse themselves in a digital and interconnected environment where analogue technology can no longer meet their demands or needs. The most prominent example of this is in the televisions sector, where HDTVs (which are near-exclusively retailed in flat-panel TV formats) have almost completely replaced analogue CRT TVs in a few years, even though digital TV content is still not widely available via free-to-air channels, underlining consumers excitement over digital content and the increased level of interactivity and the improved content that is promised.

The now-improved wireless broadband network that offers faster and wider coverage – especially the 3.5G or HSPA network offered by mobile phone service providers island-wide – has also popularised the current trend of streaming digital content such as mobile TV and Video-On-Demand to consumers on the move, through a wide range of portable and mobile consumer electronics including mobile phones and smart phones to the Internet-capable iPod Touch media player and ultra-portable laptops with screen sizes as small as 7 inches. Such devices, which are evolving to offer an impressive array of connectivity capabilities for multiple purposes and networks, all integrated into a single device, are increasingly popular with consumers who have started to regard them as indispensable to their daily lives.

Outlook

Singapore is one of the most connected nations in the world, with broadband household penetration in 2007 standing at 77% - an increase from 65% in 2006 - signalling the increasing pace in the digital revolution among local consumers. This expanding group of digitally-inclined individuals are no longer content with simply conducting daily activities such as banking transactions, paying bills and taxes, online shopping and making travel arrangements and reservations digitally, they are also demanding access to digital media and content – some of it exclusive – anywhere and anytime.

Exclusive content tied to a particular brand is fast catching on in Singapore and is expected to grow over the forecast period as the way digital media content is marketed, packaged and sold to consumers drastically changes. The new Applications Store is currently available in Singapore, accessible through the iTunes software, exclusively for owners of Apple’s latest iPod Touch and iPhone devices. However, Singapore still lacks its own iTunes store, ostentatiously due to piracy concerns, with Japan and Australia being the only countries in the Asia region to have their own iTunes stores. There is also the Nokia Music Store, similar to the iTunes store but exclusive for owners of Nokia’s mobile phones; and Sony-Ericsson looks set to launch its own online digital music store similar to Nokia’s and Apple’s models.

Future Impact

The shift in the way digital media is being made available and delivered to consumers will have two major impacts on the consumer electronics industry, in particular the portable consumer electronics sector, over the forecast period. The first trend will be that future product ranges and models will come equipped with an array of connectivity options and wireless capabilities, even on budget entry-level models. Manufacturers will constantly release a new stream of products to match the rapidly improving infrastructure and services that become available in Singapore as technology trickles down the product chain. In 2007, when HSDPA or 3.5G network services were first introduced only the higher tier mobile phones were 3.5G-capable, and this was a major selling point for these models. A year later, in 2008, HSPA has replaced HSDPA and is now the de-facto network standard, with almost every new model of mobile phones released being 3.5G capable.

The second, more important trend, will be how manufacturers will start leveraging on their exclusive content to push sales of their product units, while at the same time turning their content-distribution business into a viable revenue stream, propelling them into a whole new arena transcending the traditional boundaries between the worlds of manufacturing and content distribution. Apple is the forerunner and visionary in this aspect with its iTunes music store and iPod combination taking the market by storm nearly half a decade ago. Today, Apple’s iPods, iTunes and iPhones dominate the digital music and portable media player markets, with new players like Nokia and Motorola struggling to catch-up.

However, Nokia’s groundbreaking “Comes with Music” digital music service, which debuted in the UK in 2008 and in Singapore and Australia in 2009, looks set to revolutionise the market with its subscription-based model. Every XpressMusic Nokia device – the 5800 XpressMusic was the first to be introduced – will come with one year of unlimited access to the entire Nokia Music Store catalogue, allowing owners to explore and enjoy a diverse catalogue of music, revolutionising their digital music experience. With this subscription being non-renewable or non-purchasable, it is expected that consumers who want to extend their “Come with Music” subscription will have to purchase a new XpressMusic Nokia device, thereby leveraging on the exclusive content which is cheap and accessible in order to sell product units.

Currency Fluctuations To Affect Prices of Consumer Electronics Locally

The recent sub-prime crisis, which has spread far and wide from the US financial markets to rock global financial markets from Europe to Japan to South Korea, resulted in substantial currency fluctuations over the course of 2008. With the majority of consumer electronics in Singapore being imported from manufacturers based in Japan and Korea, and to a lesser extent Europe (Phillips, Nokia, Motorola and Apple), the decline or appreciation of these participating currencies will have an effect on the price of imported consumer electronics in the Singapore market.

The Monetary Authority of Singapore announced an increase in the trading band of the Singapore dollar in April 2008, which effectively resulted in the appreciation of the currency. This move was undertaken by the central bank in an effort to rein in soaring inflation, which had reached the highest level recorded in 26 years during the April 2007-2008 period. It was hoped that as Singapore imports the majority of its consumption, an appreciation of the Singapore dollar would be effective in reducing consumer price inflation. This helped to offset an increase in the yen over the H108, however, the strengthened Singapore dollar started to hurt exports and as the sub-prime crisis rapidly deteriorated with the collapse of Lehman Brothers, Singapore slipping into a technical recession in the H208. This prompted the Monetary Authority of Singapore to reset the trading band to a neutral range, hereby halting the appreciation of the Singapore dollar and starting a depreciation process in an effort to boost exports by weakening the dollar.

Current Impact

As the financial crisis took global financial markets by storm, many currencies started to drop rapidly in value, including the South Korean won, which had already been declining steadily as South Korea’s exports to the United States – its most important export market – starting falling in the face of weakening demand before accelerating into a freefall that saw it lose more than 48 percent of its value against the US dollar for the first three quarters of 2008.

Furthermore, the yen started to strengthen as investors scrambled to buy yen in order to pay off yen-denominated loans taken in good times when interest rates of yen were at rock bottom. This has hurt Japanese exports, especially those of consumer electronics, which were already being hit by weakening demand worldwide and an appreciating yen which has cut deeply into overseas profits. Major Japanese consumer electronics firms such as Sony and Sharp announced sharp falls in profits for Q308.

The result is that Japanese consumer electronics are now less price-competitive in the Singapore market, with Japanese manufacturers expected to face further pressure as the yen continues to appreciate against the Singapore dollar, making it more difficult for them to adjust accordingly to compensate for weakening consumer demand. On the other hand, South Korean manufacturers are facing the opposite situation - with the won in a free-fall, their consumer electronics are now more price-competitive in the local market, giving South Korean brands greater flexibility in pricing strategy in order to deal with lower demand and consumers who are likely to become more price-sensitive as they shift from consumption towards savings.

Outlook

The yen is expected to continue to appreciate in value as substantial carry-trades denominated in yen are still being held by both institutional investors as well as organisations hedging against currency fluctuations. On the other hand, the won stabilised in Q408 but further depreciation is expected to be seen in the short term as the South Korean economy continues towards a full-blown recession.

Much depends on how consumer demand will weaken locally and globally over the forecast period – a steep decline in global consumer demand will send the won spiralling further down in value as consumers continue to dump South Korean stocks and currency. The yen, which has appreciated for all the wrong reasons, is unlikely to be significantly affected by economic fears as institutional investors continue to unwind their carry-trades; in addition, the yen is currently seen as a safe haven alternative to the dollar.

Future Impact

How much of an impact such currency fluctuations will have on the consumer electronics market in Singapore depends on the severity of the expected decline in demand for consumer electronics. If the drop in consumer demand is not severe, little to no price revisions in this already ultra-competitive market can be expected as manufacturers prepare themselves to ride out the bad times counting on new product lines and the strength of their brand names to sustain sales. This will largely hold true for the big names such as Sony, Samsung, Nokia and Panasonic but smaller players may cut prices if possible to maintain sales or even gain market share as consumers tend to gravitate towards tried and trusted brand names in times of uncertainty, a trend which will hurt smaller players and niche brands. 

If local consumer demand weakens considerably instead, more pronounced changes in the pricing structure of consumer electronics can be expected. South Korean manufacturers will likely exercise their flexibility in pricing in an effort to shore up flagging sales. This may come in the form of straight-forward price cuts or offering additional equipment to consumers for free depending on the value of the purchases, a tactic already used by manufacturers and retailers working together to stimulate demand without slashing their official Minimum Recommended Selling Price (MRSP). The latter method has proven to be the more popular route taken by manufacturers in the local market with consumers standing to receive free home-theatre-in-a-box sets, smaller screen LCD HDTVs, consumer white goods or shopping vouchers when they purchase certain models or spend above a certain amount on a particular brand. 

South Korean manufacturers will have more flexibility in extending such promotional packages or pricing revisions as their consumer electronics will cost less in local currency as opposed to their Japanese counterparts, with the latter having to incur a substantially higher cost, or having little breathing space to exercise pricing revisions. Therefore, in the latter scenario, it can be expected that South Korean brands will gain market share at the expense of their Japanese rivals.