Taking the Lead in Carving out Overseas Markets with Product Differentiation Using the Elements of Ginsenoside
Daedong Korea Ginseng Co., Ltd., located in Geumsan in Chungcheong Province, a chief area for producing Korean ginseng, specializes in processing red ginseng focusing on the expansion of exporting markets. Daedong Korea Ginseng produces 100 kinds of products ranging from green ginseng (undried ginseng) and rooted ginseng to processed products and functional health foods. The representative rooted ginsengs include 4, 5, or 6-year old red ginseng, ‘Pibujiksam,’ and ‘Hongsemi.’
Processed ginseng products include ginseng concentrates, pouch-typed red ginseng deep extract, red ginseng extract, and red ginseng ton. Other products are ginseng powder, ‘Dangsam’ (made of the roots of Codonopsis pilosula Nannfeldt), ginseng Jeolpyeon (sliced ginseng preserved with honey), ginseng Jingwa (Jingwa: rare dainties), ginseng teas, capsulated red ginseng, dietary fiber, etc. These products are distributed under the brand name ‘Bulogeon.’ Only the functional health product, ‘capsul-type New Life M·W·S,’ does not use this brand name. The New Life M·W·S containing red ginseng targets three different consumer brackets. The M of the New Life M·W·S stands for men, W for women, and S for students.
The products are distributed to general markets like Kyungdong market and Geumsan market and directly to visitors to the company. The sales total of the Daedong Korea Ginseng was 4 billion won in 2005 up to a recorded 6.5 billion won last year. This year the Daedong Korea Ginseng aims to get 8 billion won and, as of June, 3 billion was already tallied.
The management principle of Daedong Korea Ginseng is to popularize and globalize its high quality products. This principle underlies a business strategy that emphasizes quality management, consumer confidence, and differentiated marketing. The Korean government designated the company as ‘self-inspection company No. 13’ and it has forged a cooperative contract with Chung-Ang University (CAU) and the ginseng-Sanyangsam research center. Also, in 2005, the company received ISO 14000, an environment-management system certification, and ISO 22000 from the International Organization for Standardization (ISO) as well as recognition from the U.S. Food and Drug Administration (FDA) in 2007. Daedong Korea Ginseng has established an annex laboratory. In particular, the company introduced a drying system using elvan for the first time in the industry and now is taking the lead through differentiation. The drying system using elvan is used in all processes of extracting and concentrating red ginseng and it makes it more delicious.
Daedong Korea Ginseng is focusing on the export. Choi Sung-keun, the CEO of the company, said: “I started my ginseng business in 2002 to export Korea ginseng based on 30-year’s expertise in dealing with medicinal herbs like ‘Nokyong’(the young antlers of the deer). Export was started in 2003 first to the United States and the earning was USD$ 0.6m in 2006, but it went down to USD$ 0.2m last year. The reason for the decrease was that the company did not get paid properly because of deferred payment for export. To fix this problem the company diverted the payment methods to opening a letter of credit (L/C) and using prepayment.
The company has set up the export goal of USD$ 0.35m this year and, as of June, it has raked USD$ 0.1m. Daedong Korea Ginseng exports its products to Vietnam, Dubai, Japan, and the United States, and now the export to Dubai in the middle-east is getting bigger. Starting with the participation in the Middle East Natural & Organic Products Expo 2006 (MENOP 2006), the company has been increasing its export volume every year in association with importers from Dubai.
Mr. Choi stressed:“We are exporting mainly processed products and red ginseng deep extract and red ginseng tea are registered items in Dubai. Now we are trying to register products like rooted ginseng, concentrates, ginseng Jeolpyeon, deep-extract red ginseng Jeong, Jin red ginseng (red ginseng beverage). It is very important to boost the promotion and recognition of Korean ginseng and to open up new markets in the Middle-East region.”
In the United Kingdom the company is negotiating for the sale of products containing ginseng in the form of compound additives like coffee or beer with chocolate and deep red ginseng contained. Product development will be conducted on the basis of separating the various elements of Ginsenoside like Rb1, Rb2, Rg1, Rg3, and Rh2, and strengthening each function of the elements. To this end, the company has prepared equipments like HPLC (equipment analyzing the elements of Ginsenoside) and it rigorously inspects the equipment for remaining agrichemicals. Mr. Choi said: “Product differentiation can lead to success in international sales. Once we develop products using the elements extracted from Ginsenoside then we can expand into markets at home and abroad.”
Inquiries Choi Sung-keun (CEO of the Daedong Korea Ginseng Co., Ltd.)
Park Sung Eun email@example.com
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