The threat from ChinaChina is rapidly making inroads into products dominated by Korea’s powerful manufacturing industry. Leaving behind its reputation as a leader in copycat brands, Chinese companies are finding a place in our living rooms with their price-competitive - and also quality-competitive - electronics products.
The news that Xiaomi has exceeded Samsung Electronics in China’s domestic smartphone market is just the tip of the iceberg. Korean companies are fighting among themselves to become the distributor of Xiaomi cell phones in Korea. Another barometer of China’s infiltration of our markets is Tunland, Foton Motor Group’s next-generation pickup truck, which is making inroads in our car market.
After the Korea-China free trade deal takes effect from 2016, China will attack our markets with even greater force. Korea is very vulnerable to the competition. Korean customers like relatively high-quality goods with low prices. To make hay from the trend, our conglomerates are rolling up their sleeves to import Chinese products, as seen by LG U+’s distribution of Huawei’s Y6 smartphones from Tuesday. With the price of 154,000 won ($130), the Chinese smartphones are actually free of charge when you take into account government subsidies. Huawei went so far as to set up service centers to attract local customers.
The dangers are just registering with our laid-back companies. In particular, local companies must take real responsibility. They followed in the footsteps of their American and Japanese counterparts. U.S. companies handed over the semiconductor industry to Japan. Despite a desperate move to share technology and push for joint research and development, they couldn’t regain their control of the market. Automobiles are no exception. Japan’s complacency about shipbuilding and electronics led it to lose competitiveness with Korea. Now Korean companies are on the same trajectory and Chinese rivals are catching up.
The United States recovered global economic prowess in the 2000s after finding a growth engine in information and communication technologies. Japan is concentrating on aerospace technology and robotics. Korea dismissed Chinese challengers after a short-lived euphoria when we surpassed Japan in home appliances. Our companies must reinforce their competitiveness and invest in high-tech fields like biological products, aerospace, electric cars and the Internet of Things.
The government must lift unnecessary regulations with speed. The clock is ticking fast.
*JoongAng Ilbo, Dec. 16, Page 34