Japan eyes new tech battlefields

By Rhee So-eui and Kiyoshi Takenaka

SEOUL/TOKYO (Reuters) - Japan has the technology, but South Korea has the product ... and the profits.

In the longstanding rivalry between these two near-neighbour North Asian technology industry heavyweights, the pendulum has swung Korea's way.

South Korea's Samsung Electronics (005930.KS) and LG Electronics (066570.KS) have wrested market share from Japanese powerhouses such as Sony (6758.T) and Sharp (6753.T) to become world leaders in mobile phones, memory chips and flat-screen TVs.

Yes, much of the shift is down to the vagaries of global currency markets -- the Korean won is 22 percent cheaper per dollar than two years ago, while the yen has gained 22 percent.

But there's more to it than just export competitiveness as the weaker won helps Korean exporters by making their products cheaper overseas.

Nimbleness and market savvy have bred branding success for the Koreans, who are lauded -- even by their Japanese rivals -- for their product strategy.

"We cannot help but admit that the decisive factor behind our loss to Samsung is product strength ... and marketing," Sony CFO Nobuyuki Oneda said late last month.

On October 30, Sony posted its fourth consecutive quarterly operating loss, though it did trim its annual loss forecast, while on the same day Samsung reported its best-ever quarterly net profit and gave an upbeat outlook for 2010.