The golden age of South Korean electronics in China may be over, according to recent figures that show a whopping drop of more than 50 percent in sales from 2015 to 2017.
Data released by Korea International Trade Association (KITA) in February 2018 indicate that sales of South Korean electronic and electrical goods in the People’s Republic plummeted from $1.6 billion to $757 million in the two-year period.
Goods from South Korean companies like Samsung Electronics and LG Electronics once dominated store shelves in China. But from the late 2000s, domestic players such as Xiaomi and Huawei started flexing their muscles, wielding unmatchable amounts of capital and aggressive R&D strategies.
For now, Samsung Electronics, South Korea’s biggest company, remains by far the largest smartphone brand worldwide, shipping 317 million units in 2017. But the company “is under pressure from Chinese rivals in some major markets, like China and India,” according to market research firm Strategy Analytics.
KITA analyst Mun Byung-ki pointed out that many South Korean companies had relocated their factories to other countries such as China and, more recently, Vietnam, further pushing down export figures.
South Korean home appliances accounted for 10.4 percent of the Chinese market in 2016. Regardless, it seems that South Korean companies may have to embrace a new norm of declining overseas sales: Television and washing machine exports to China declined by 60.9 and 36.6 percent, respectively, in 2017, according to Mun.
Samsung and LG account for slightly over 10 percent of the TV market in China, which is largely dominated by local players such as TCL and Hisense.
A further factor denting sales of South Korean goods in China is anti-Korean sentiment generated by the dispute over Terminal High Altitude Area Defense (THAAD), a U.S-made missile defense system deployed in South Korea in 2017 amid strong protest from China.
Luckily for South Korean companies, Chinese electronics makers are still less of a threat at the upper end of the scale. “Even in China’s domestic market, where Chinese companies have such a strong presence, the premium electronics segment is entirely dominated by foreign companies,” wrote Zhao Yu, an analyst at LG Economic Research Institute.
Cover Photo: Chinese models posing in front of Samsung TV. (Source: Samsung Newsroom)