Bloomberg News

Samsung Must Make Do After U.K. Olympic Torch Relay Is Downsized

May 17, 2012

Samsung Electronics Co.’s sponsorship means its brand will be accompanying the Olympic flame across Britain. The company said it would have preferred a repeat of previous global tours.

The torch will be accompanied by former England soccer captain David Beckham as it arrives on a specially painted golden British Airways Airbus SAS A319 jet from Greece today for the start of a 70-day procession.

The decision by organizers of the London 2012 games to limit the torch procession to the host country came after the previous relay for the Beijing 2008 event was marred by protests over China’s human-rights record.

“We prefer international because we can contact more customers and people around the world,” Sunny Hwang, Samsung’s vice president and head of worldwide sports marketing said in an interview in London. “But that’s what we cannot decide. That’s the decision from the Olympic committee.”

Samsung, the world’s largest mobile-phone maker, has sponsored the torch relay since the Athens games in 2004 as it seeks to boost its brand and lift selling prices for its devices. The South Korean manufacturer’s products bring in higher prices than Sony Corp. (6758) since it first began sponsoring the Olympic Games in 1998 as a top-tier partner, Hwang said.

The British torch relay will start tomorrow at Land’s End, Cornwall, taking the Olympic flame on an 8,000-mile journey crisscrossing the U.K. so that it will be within 10 miles of 95 percent of the population, organizers say. It will be carried by 8,000 torchbearers before reaching the Olympic Stadium on the evening of July 27 for the opening ceremony.

Magnet for Protests

During the Beijing games, the 129-day global tour attracted violence and led to reshuffled routes after becoming a magnet for global protests.

“It’s probably more modest and conservative than the Chinese effort,” said Graham Hales, chief executive officer of research firm Interbrand London. “China wanted to put its name on the map and I don’t think the U.K. is looking at it on that basis.”

Samsung would have preferred taking the torch around the world again even if there had been some protests, provided such actions didn’t draw widespread publicity.

“It depends on the degree of protest,” Hwang said. “If it’s a serious one, exposing our brand in newspapers all over the world would not be always positive.”

Discount Sales

Before its Olympics sponsorship, Samsung, which last quarter surpassed Nokia Oyj (NOK1V) as the world’s largest mobile phone maker, had to sell consumer electronics at a 20 percent to 30 percent discount to its rivals.

“Sony was the main competitor, so we had to put lower prices,” Hwang said. “These days our price tag is much higher than them.”

Samsung’s 2011 brand value climbed 188 percent to $23 billion since 2002, while Sony’s declined 31 percent to $9 billion, according to Interbrand.

“Sony has been going backwards,” Hales said. “Samsung took themselves into a market where brand was important.”

To contact the reporters on this story: Jonathan Browning in London at jbrowning9@bloomberg.net; Tariq Panja in London at tpanja@bloomberg.net

To contact the editors responsible for this story: Kenneth Wong at kwong11@bloomberg.net; Christopher Elser at celser@bloomberg.net


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