Samsung Electronics

Why Are Samsung Electronics’ Products so Expensive in South Korea?

After hearing good things about the Samsung Galaxy S9, Samsung Electronics’ latest phone, I thought about parting ways with my slowed-down iPhone. I happened to stumble upon the South Korean company’s U.S. website, where the S9 handset (64GB) was priced at $719 — about 767,000 won.

On the company’s South Korean website, the same phone was priced at 957,000 won: a full 25 percent higher than the U.S price! Samsung Electronics’ other products are no different. This 189cm QLED TV is $2592 cheaper in the U.S ($9,591 vs $6,999).

So is Samsung Electronics selling its phones unduly cheaply in the U.S., or is it ripping off South Korean consumers?

The electronics giant released lengthy statements in 2011, 2014 and 2015 to explain the price discrepancy.

“The prices of Samsung Electronics mobile phones sold in South Korea and abroad are not greatly different,” the company said in 2011, claiming that consumer prices varied according to contract conditions and subsidies from telecommunication companies.

Some argue that South Korean consumers enjoy high subsidies from telecom firms when they sign up for contracts — the majority of which last two years. But as many U.S. consumers also depend on mobile contracts, it’s difficult to attribute the higher cost of mobile phones in South Korea solely to subsidies.

When it comes to Samsung TVs, various South Korean media reports cited differences in distribution structure as a possible cause of discrepant prices.

“South Korea is monopolized by big conglomerates and a few retailers but the U.S. has many local distributors, promoting competition and causing companies to lower the prices,” said one report.

Economy of scale is also a factor: The U.S. market is simply a lot bigger, allowing retailers and e-commerce companies to purchase Samsung products in bulk.

However, Samsung phones are also cheaper in some smaller countries such as Hong Kong, France and Germany.

And finally, labor cost. Over 95 percent of Samsung TVs sold in the United States are produced in Mexico — which has an average wage one-sixth of that of South Korea.

The company admitted in 2011 that one of its TV models sold in the U.S. for $76 less than in South Korea — but claimed that things were evened out by its inclusion of a free pair of 3D glasses for South Korean buyers.  

Well — that’s for South Korean consumers to decide.

 

Cover Image: A South Korean Olympian holding a Galaxy Note 8. (Source: Samsung Newsroom Flickr)

 

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Juwon is a journalist at Korea Exposé covering all things business. She’s previously worked as a TV producer in Channel News Asia in Singapore and has interned for Bloomberg, AP and Google. Juwon is a proud owner of her dog Noah and a graduate of Journalism and Media Studies Centre at the University of Hong Kong.