Invasion of South Korea by Chinese companies

When the first episode of “Squid Game” was released on Netflix in September 2021 and became an unprecedented hit, surpassing 100 million household views for the first time in Netflix history, South Korea was in a festive mood. Tourists worldwide flocked to the country, taking photos and buying green tracksuits and dalgona candy in Myeongdong. The Korea Culture and Tourism Institute even released a regression analysis showing that the popularity of South Korean content followed by the success of “Squid Game” could potentially double the number of tourists visiting South Korea.

Unfortunately, the show’s second season was released on December 26 last year amidst the chaos of martial law and impeachment. While it quickly claimed the top spot in global viewership rankings, only Netflix celebrated, as the domestic market remained somber. During the ninth national tourism strategy meeting, presided over by then-acting President Han Duck-soo on the same day, the final annual forecast for inbound tourists was adjusted downward to 16.3 million from the initial target of 17 million. The martial law situation caused a sharp decline in visitors to South Korea in December, with a significant blow expected from China, the top source of inbound tourists, given the high political sensitivity in the region.

Instead of news about Chinese tourists anticipated during the year-end and New Year period, reports of Chinese companies entering the South Korean market have dominated headlines. Xiaomi, which has already captured the hearts of homemakers and secured the top spot in the domestic robot vacuum cleaner market with its “Roborock” brand, held an official press conference on Wednesday to announce the establishment of its South Korean subsidiary. BYD, the global leader in electric vehicle shipments, officially launched its passenger car brand in South Korea on Thursday. Meanwhile, in Daehak-ro, the Chinese equivalent of the popular dollar store Daiso, Miniso, which had withdrawn in 2021 due to the pandemic, reopened its store.

Reflecting on how South Korean companies such as Samsung, SK, Hyundai Motor, and LG ventured into the Chinese market two decades ago, lured by the 1.3 billion population, the dramatic reversal is striking. As U.S.-China tensions have become a constant risk, South Korean companies have steadily withdrawn their Chinese subsidiaries and factories. Chinese companies are now beginning to make inroads into the South Korean market.

According to a report released last year by the Korea International Trade Association, we are witnessing the “third wave” of Chinese companies’ overseas expansion. The first wave (2001–2008) involved strategic exports led by flagship companies such as Haier and Huawei. The second wave (2008–2018) focused on mergers and acquisitions with advanced foreign companies, such as Geely-Volvo and Haier-GE. Since 2018, in the ongoing third wave, Chinese companies including AliExpress and Temu have been expanding their domestic brands’ territory using soft platforms and even penetrating the South Korean market.

The issue lies in how South Korea’s prolonged low growth has fostered the “value for money” trend among domestic consumers—a new theory that anything, regardless of origin, is acceptable as long as it’s useful. Even more troubling is that Chinese products are rapidly catching up in technological competitiveness across industries, including smartphones and TVs.

The U.S., which has become South Korea’s new export market by choice or necessity, remains challenging to navigate due to its protectionist policies. Meanwhile, China is pushing into South Korea in a new, unfamiliar way. Industry insiders might dismiss this as limited to the mid-to low-priced market or point to lingering aversion to Chinese products. However, we must remain vigilant, questioning whether this complacency is gradually eroding our domestic market—the last line of defense.

_{Images are for reference only.Images and contents gathered automatic from google or 3rd party sources.All rights on the images and contents are with their legal original owners.}