All the big names were at the Houston Auto Show: General Motors, Ford, Chrysler, Volkswagen, Toyota and Nissan. But the name that attracted the most attention was a new one: Hyundai (rhymes with Sunday). Hyundai is the first South Korean company to export cars to the U.S. At the Houston show and at the National Automobile Dealers Association convention in New Orleans, Hyundai last week unveiled its new Excel, a front-wheel-drive subcompact with an enticing base price of $4,995. The company is launching Excel with a $25 million advertising campaign and confidently predicts that it will sell 100,000 vehicles in the U.S. this year. That is not a modest mission: no foreign importer has ever come close to selling that many cars during its first year in the American market.
But no one is discounting the South Koreans. In the past few years, several Korean companies, including Samsung, Goldstar and Daewoo, have successfully invaded America with television sets, videocassette recorders and even personal computers. Because wages are generally lower in South Korea than they are in either the U.S. or Japan, Korean products often sell for 25% less than their competition's. By offering attractive items at very low prices, the South Koreans may become the new Japanese. Says one Tokyo businessman: "Sometimes we see our spitting image in the Koreans, and we're downright afraid."
Price-conscious American consumers, though, are delighted. Robert Tout, a 29-year-old textile worker in Carlisle, Ky., owns a Samsung 19-in. color television set, which sells for about 50% less than a Sony of the same size. Says he: "I had no idea it was Korean when I bought it. It's good stuff." Though some consumers are wary of the quality of Korean imports, many others are impressed by the manufacturing standards. Jaclyn Jerabek, a research scientist at Columbus-based Battelle Memorial Institute, owns a Korean-made personal computer. Says she: "I made a good choice. I would go out right now and buy another one."
The popularity of the Korean goods has helped swell the U.S. trade deficit, which reached a record $148.5 billion in 1985, according to new figures released last week by the Commerce Department. Last year's deficit with South Korea amounted to $4.8 billion.
The Koreans have been exporting to the U.S. for decades, primarily selling such industrial products as textiles and, since the early 1970s, steel. Only recently have Korean firms begun to sell a variety of consumer goods. They first entered the mass market indirectly. In 1979 Samsung began making television sets that are among those sold in Sears stores as the company's house brand. Similarly, J.C. Penney started selling microwave ovens manufactured by Goldstar in 1983.
Three years ago, Goldstar built a plant in Huntsville, Ala., to manufacture color television sets bearing the company's own name. Consumer response was swift and positive. Since 1983, Goldstar's revenues from TV sales have more than tripled, to $100 million in 1985. TV sets with the Samsung label have also become brisk sellers.