Remodeling Chinese business | | | | | | | | | | |

The Chinese business of Korean companies is on the turn.Since the 2000s, Korean companies have been actively investing, but in recent years, the sales of Korean companies in China have become more prominent.According to the Bank of Korea, the total sales of Korean companies in China have decreased from $ 241.7 billion in 2013 to $ 147.5 billion in 2019.Highly net profit ratio of sales is also 3 in 2013.5 % to 0 in 2019.It has fallen to 8 % (see Table 1).One of the major factors in declining sales and declining profitability is that the growth of the Chinese market has slowed down, and the competition between companies has been intensifying due to the improvement of the competitiveness of local companies and the increase in production capacity.

The five major groups of Korea are also reorganized in China

Furthermore, the effects of China and South Korea related to the deterioration of the high altitude defense missile (THAD) arrangement in Korea cannot be ignored.For this reason, Korean companies are reorganizing the Chinese business in order to recover profitability, as the sales scale in the Chinese market is not easy.In fact, Samsung, modern cars, SK, LG, and Lotte, also called the "five major groups" in Korea, have also reduced and withdrawn from China (see Table 2).By the way, if you dare to show the trends of the five major groups of China, Samsung, Lotte will be "Degetion China", modern vehicles will be "shrinking equilibrium", SK and LG will be "selection and concentration".

Note 1: This survey is conducted based on Article 9-9, Paragraph 1 of the Foreign Exchange Transactions Law.The target is a local corporation with an investment balance of over $ 2 million (excluding financial and insurance).Note 2: The net profit margin of sales is calculated from the sales of the original materials and the net income.Source: Created based on the Bank of Korea, "2018 Edition Overseas Direct Investment Management Analysis" and "2019 Edition Overseas Direct Investment Management Analysis"

Source: Created from various Korean media, etc.

The Samsung Group was the earliest reviewed Chinese business. As of the mid -2000s, Samsung Electronics, the core of the group, produced mobile phones, mainly in China and South Korea. At that time, it was necessary to increase production bases in order to respond to the expansion of the world's mobile phone market, but at that time, we chose a new factory in Vietnam instead of expanding production in China. The aim was to avoid the risk of too high in China. Since then, production costs such as labor costs have risen in China, and China's role as an export production base has ended, but it has been producing China for sales in domestic demand markets. However, the driving up of Chinese companies has reduced the share of Samsung Electronics in the Chinese mobile phone market of less than 1 %, no longer have the meaning of maintaining a mobile phone production base in China. The same is true for personal computers and TVs. As a result, the main production base of Samsung Electronics in China is only a semiconductor factory in Shaanxi Province, Shaanxi Province, and a household appliance factory and a semiconductor factory in Suzhou, Jiangsu Province.

The Lotte Group is the most tossed group in China and South Korea.In 2016, the official decision of THAAD deployment, China strongly rebounded to threaten its security, and the relations of China and South Korea worsened at once.In particular, the Chinese government imposed a de facto sanctions to the Lotte Group, which provided THAAD deployment sites in Korea, and the Lotte Department Store and Lotte Mart stores in China were closed.In the end, the Lotte Group sold out Chinese retail business and withdrawn.In addition, Lotte Confectionery and Lotte Seven Star beverages, which have lost important sales channels, have decided to reduce the reduction of Chinese production bases.

The modern car group has not even been sold in the Chinese market in recent years, both modern cars and kina under the umbrella. In the first place, the group established a joint venture in China at the end of the world's major car manufacturers and entered the Chinese market. Initially, sophisticated models were launched at a price with a sense of price, and the sales performance was improved by focusing on taxi demand. Therefore, the number of production capabilities and bases gradually increased, and eventually the annual production capacity of the two companies in China was 1.65 million in modern vehicles, 160,000 commercial vehicles, and 890,000 passenger cars. However, shortly before the expansion of production capacity, sales gradually stalled and had a significant overdose equipment. Sales sluggish, like Lotte, has the effect of the Thaad deployment problem, but fundamentally is due to the delay in improving the competitiveness of local manufacturers in China and the delay in response to sports multipurpose vehicles (SUVs) in the Chinese market. In order to eliminate excessive equipment, modern vehicles are moving to the reduction of Chinese passenger car production bases, which have increased to five factories and three factories.

The SK Group has been actively expanding Chinese businesses in China's Insider Strategy, which means reinvesting in China.However, he has come here, and has been reviewing the strategy of expansion, such as selling the SK Tower in Beijing and the rental car business.Although it has been observed that the group may have reduced the reduction of Chinese businesses, the group, on the other hand, "the funds secured by the sale of a rental car business and Beijing buildings are used for promotion steren investment in China.It is said that "Scheduled to" ("Yonhap News" on September 7, 2021), which is only part of a review of the Chinese business portfolio.

The LG Group is a representative example of the LG Electronics' refrigerator production facility in Zhejiang Province, and the sale of LG Beijing Twin Tower, such as LG Electronics, is a representative example of the Chinese business.In particular, the latter was an office building (completed in 2005), which symbolizes a group built on the main street of Beijing, but was sold for 8 billion yuan (about 136 billion yen, 1 yuan = about 17 yen).However, this is believed to be aimed at improving asset efficiency and risks rather than part of the group's reduction of the group.By the way, online economic media "Newsway" (dated February 7, 2021) said that LG Electronics stakeholders said, "Ensuring fluidity on the uncertainty of the global economy, investing in future growth, and improving shareholder value.Decides for. "

Additional investment in China, mainly semiconductors and in -vehicle batteries

Many Korean groups in Korea are also focusing on expanding the Chinese business in parallel with reorganization of Chinese businesses.The feature is that the field is concentrated on semiconductors and in -vehicle batteries.These Chinese markets are expected to expand further in the future, aiming to ensure share in the growing huge market.Except for the modern automobile group and the Lotte Group, which have not seen much aggressive measures, the movements of major groups are as follows.

The Samsung Group does not mean that all businesses are "out of China." For example, Samsung Electronics, in contrast to mobile phones, continues to invest in China in semiconductors. The company has a NAND flash memory factory in Xi'an City, Shaanxi Province. In the first place, the factory started construction in 2012 with a huge amount of $ 7 billion, completed in 2014 and became full -fledged production. At the time of the construction, the company said, "China accounts for 50 % of the world's NAND flash memory demand. By directly producing and supplying this product in China, it can respond more efficiently to the market and customers." The company has established a two major production system in Korea, expands its production scale, and can supply products stably by customers "(announced on May 9, 2014, announced by the company), securing the Chinese market as the reason for the construction of the Xi'an Plant. And two points: securing supply stability. The company has since continued to invest in the factory. Recently, the company has built $ 8 billion in order to respond to the increase in demand for NAND flash memory, and has built a second factory. The factory started construction in 2018, and the first stage of construction was completed in 2020, and products were shipped, and the second stage construction was reported to be completed.

The SK Group is actively engaged in three businesses: in -vehicle batteries, semiconductors, and petrochemicals. SK Innovation (currently SK -on. On October 1, 2021, the SK Innovation Battery Division was a distributed company) in 2013, established a joint venture for in -vehicle battery -producing along with the Beijing Train Group and Beijing. Currently running three factories, in September 2021, it announced that it would add $ 1.06 billion to local subsidiaries to establish the fourth factory in Shiojo City, Jiangsu Province. Production capabilities are expected to be the largest among the four factories, unlike the existing three factories, and will be operated by solo. The aim is to enhance the share at a stretch in the Chinese battery market, which is expected to expand. SK Hynix, then throwing $ 250 million in Chongqing, has built a semiconductor processing factory, and has begun its operation in 2014. Apart from this, the company announced in October 2020 that the NAND flash memory category of Intel was about $ 9 billion, including the Intel Dalian Plant. According to reports, SK Hinix plans to invest additional investment in Dalian Plants after the acquisition is completed. In 2013, SK General Comprehensive Comprehensive Comprehensive Comprehensive Comprehensive Comprehensive Comprehensive Comprehensive Associated with Chinese petroetment groups (Sinopec), which produced ethylene etc. in a joint venture, began operating in 2014, in 2014. The performance after the operation started is strong, and it is said to be a typical successful case of the SK Group's "China Insider" strategy. In 2017, it was decided to increase ethylene production equipment. 740 billion won (about 66.6 billion yen, 1 won = about 0.The equipment enhancement that invested 09 yen was completed in December 2020.In addition, China and South Chicken chicken in 2019 to 12.84 billion yuan, acquiring Prince Wuhan, a subsidiary of Sinopec.

The LG Group's recent large -scale investments include the construction of an OLED panel factory by LG Display and LG Energy Solutions (LG Chemicals in December 2020, and described in this article in "LG Energy Solutions" in front of the company). The construction of the in -vehicle battery factory is listed. The former OLED panel factory was announced by the company in 2017, establishing a joint venture in Guangzhou, Guangdong (capital 2.6 trillion won, LG display investment ratio 70 %), for television. It was to build a large organic EL panel factory. The company's second largest organic EL panel production base after Korea, the first large -scale organic EL panel factory for China, aiming to acquire the expansion of the Chinese OLED TV market. The factory started mass production in July 2020. On the other hand, in the latter in -vehicle battery factory, the LG Energy Solutions had previously had an in -vehicle battery factory in Nanjing, Jiangsu Province, but a 1.3 billion dollar was thrown in the same Nanjing City and built a second factory (2018. Construction started, completed in May 2021). While the first factory was a base for automakers in China, the second factory is positioned as an export base for Europe.