Korean LED company shines thanks to FTA with EU

○ European reluctance to buy Korean products in June 2010

"I like your products... I`ll visit you and check out your products."

A major buyer visited ST Wide in June last year ahead of the official signing of the Korea-European Union free trade agreement. He was Schuzalei Hannes, 40, from the German company LED Project.

After spotting ST products in an LED exhibition at the Korea International Exhibition Center, or KINTEX, in Goyang, Gyeonggi Province, he opted to visit the Korean company.

In the wake of the buyer`s visit, ST staff ranging from the chief executive officer to the chief technical officer were on high alert. If things went well, eight staff members at the company could join forces and open a beachhead for its advance into the European market.

ST CEO Lee Kang-woo said, “I recalled memories of a time in the past when we visited European countries, including the Netherlands and Austria, to sell our products, to no avail, over the past three years.”

Asked by the buyer to show products, the company presented its flagship product “Down Light.” Designed to be installed on the ceiling, this device generates elegant lighting and cuts electricity consumption about 40 percent when compared to ordinary fluorescent light.

After thorough and prolonged study, the company removed a converter that transformed current and reduced the parts cost by 10,000 won (10 U.S. dollars). Having completed its application for a patent, the company won Europe’s CE certification to enable a foray into the European market.

ST CTO Kim Lang-ki said, “Because we were confident of our products’ quality as evidenced by the fact that all 11 of our models won European validation, we ambitiously presented our products to the buyer.

"The problem is price," said the German buyer Hannes.

While touching the product to check, the buyer started talking. As ST staff had such high expectations, they were hugely disappointed.

"I wish to introduce the product in Europe because I like it, but its price is double that of Chinese products,” Hannes added. The German buyer wanted a price cut that ST could not agree to, so both sides failed to narrow differences in negotiations and Hannes returned to Germany.

○ Buyer requests samples a week ahead of agreement`s effectuation

"Let`s meet as soon as possible. Please produce samples immediately."

Hannes called ST Wide just one week before the effectuation of the free trade deal in June this year. ST CEO Lee and Hannes met at a hotel near the LED exhibition hall in KINTEX.

Lee insisted on the same price as last year but Hannes said, "The product can be adequately competitive this year,” adding, "If we sell the product you showed me last time, it can be competitive. Please send us samples first. You can expect a deal."

Lee felt a variety of sentiments. His company`s LED products had been sandwiched between cheap Chinese products and high-quality German items. A certain German buyer would say, “People use Chinese products for cheap prices and German products for brand value and quality, but Korean products are mediocre.”

With the free trade deal taking effect on July 1, however, the 4.7-percent tariff on Korean LED products in Europe was lifted and ST could adjust its price to 75 percent of those of German counterparts. The Korean products are a bit more expensive than Chinese but are competitive in quality on par with German products.

Lee said, “We can produce our buyer demands in a matter of a week if it takes a month for a conglomerate to produce the same product,” adding, “We exported samples worth 2,000 dollars to Slovakia and are waiting for an official order. We are actively engaged in negotiations for export with European countries, including the Netherlands and Austria."

sun10@donga.com