NRI Papers
No.67   August 1, 2003
  The China Strategies of Korea's Winning Companies  
CHOI Chang-hee
       When Korean companies began to make their way into China, their principal aim was to secure low-cost manufacturing centers. However, Chinese companies became competitive much faster than anyone had predicted. They soon caught up with their Korean counterparts, forcing the Koreans to alter their strategies and start viewing China as a strategic market rather than a production base.
       Under its new strategy of "selection and concentration," the Samsung Group is making great effort to differentiate itself from other companies by focusing on products and services targeted at those in the top five percent of the population in terms of annual income. The LG Group has adopted a "bipolar" strategy whereby it offers high value-added digital home appliances to the high-income cohorts in the coastal regions, and low-priced general household appliances to people with more moderate income levels living in the interior. The SK Group is actively pursuing localization and employing Chinese personnel, from the CEOs down to the ranks of ordinary employees, to run its business in China.
       Case studies of these three groups highlight certain commonalities: their efforts to localize, their commitment and willingness to invest for the long term, and their determination to succeed at all costs. In other words, they have set high-level strategic goals and are displaying firm leadership in their long-term efforts to achieve them.
Contents
I The Changing Significance of the China Market for Korean Companies
II Samsung's "Five-Percent Strategy" Based on Selection and Concentration, and Second Headquarters Structure
  1 Changes in Samsung's China Strategy
  2 The Samsung Group's New China Business Strategy
III The LG Group's "Bipolar Strategy" and the LG Beijing Towers
  1 Changes in the LG Group's China Entry Strategy
  2 LG's Second-Phase China Entry Strategy
IV SK Group: Business of the Chinese, by the Chinese, for the Chinese
  1 Learning from the Failure of Its Initial China Entry Strategy
  2 Thoroughgoing Localization Strategy to Create "Another SK"
V Common Characteristics in the China Strategies of Winning Korean Companies

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