Korean PCs shedding ‘Made in Korea’ label

At Yongsan Electronics Market, finding a Korean computer is easy, as many vendors at the nation’s biggest cluster of electronics retailers have products by Samsung Electronics Co. and LG Electronics Inc. But finding one that’s made in Korea isn’t so easy. A closer look at the inside of the Korean brand computers shows that the vast majority of the parts are from China or Taiwan. The decline of Korean-made parts reflects the fortunes of the Korean PC industry. In the 1980s and 1990s, sales of Korean-made PCs jumped here and abroad. Computers with the “Made in Korea” labels were seen as a symbol of the technological achievements of “IT Korea.” Exports of Korean-made computers rose to $1.8 billion in 1999 and $2.8 billion in 2000. But since then, the ascension of China as a maker of cheap computers has depressed the Korean PC industry. Korea’s computer exports plunged to $595 million last year, and the number of computers produced by Korea’s four largest PC makers ― Samsung Electronics, LG Electronics, Trigem Computer Inc. and Jooyontech Co. ― fell to 1.8 million last year, from a peak of 2.37 million in 2000. One by one, Korean PC makers are dropping out completely. Hyundai MultiCAV Co. folded in January, followed by Hyunju Computer Co. in April, and Trigem applied for receivership in May. There’s no sign that the computer industry will be recovering anytime soon: Exports this year through May totaled $134 million, on pace to fall even further than last year’s dismal results. LG Economic Research Institute published a report last month that warned that unless the industry finds some breakthrough, it will continue to free fall. “Once Korea’s most successful exporter, the PC industry had a trade deficit in the last quarter of 2004 for the first time,” researcher Park Dong-wook said. “The industry is in grave danger.” Seo Dong-hyuk, a researcher for the state-run Korea Institute for Industrial Economics and Trade, echoed this contention. “The industry’s part in annual gross exports dropped to 6.9 percent last year from 8.2 percent in 2003,” he said, with the exports of PCs falling 20 percent this year so far. With the world’s leading computer makers moving their production to China, they are able to continually cut retail prices, which makes them more attractive to customers. The strategy is paying off. The market share of the five biggest PC producers in the world, including Dell Inc., increased to 47 percent last year, compared to 31 percent 10 years ago. Dell, which is known for inexpensive laptops, saw its worldwide market share grow steadily from 10 percent in 2000 to 18 percent in 2003. Smaller PC makers are being left behind as a result. After applying for receivership in Suwon District Court in May, Lee Hong-sun, Trigem’s chief executive officer, said competition from Chinese and Taiwanese producers forced the company to cut their computer prices steadily since 2002, which ate away at the Korean manufacturer’s profits. To stay competitive, Samsung and LG are moving their assembly lines to China. Samsung Electronics will make all of its laptops at its Suzhou plant in China this year, and LG Electronics is moving its desktop and laptop production to Kunshan. “We will replace the laptop production lines at the Pyeongtaek plant in Gyeonggi province with cellular phone production lines,” said an official at LG Electronics. Despite the bleak outlook for the domestic PC industry, experts said computer makers here can survive by developing advanced technology, marketing outstanding items, producing value-added products and reorganizing their companies. “The development of international high-value brands and linking services between other digital appliances, along with pioneering in the field of next generation, high-performance PCs are the strengths, as well as the solution, for Korea, the leading IT country,” said one official from the Ministry of Information and Communication. by Chang Chung-hoon, Lee Hee-sung