As the Chinese government’s expansionary measures are driving their growth, Korean firms including the major high-tech companies are taking advantage of the opportunities and act upon them accordingly.
Korean display maker, LG Display (formerly LG Philips LCD) has landed new deal with Guangzhou City to construct G8 (8th Generation) LCD fab. This means that China will begin producing LCD panels domestically for the first time, which will be another major step for China. China is the largest television market in which over 20 million flat panel TVs were sold last year.
Meanwhile, Samsung is reportedly considering building a semiconductor production line in China.
This move by Korean firms demonstrates the strategic shift in Chinese market. China is Korea’s largest trading partner: Korea’s trade volume with China was over 168 billion USD last year. Until now, China has been a base of exports to other countries, utilizing cheap labor production. 93% of Korea’s total shipments to China are comprised of parts and equipment for manufacturers. Currently, only 25% of products manufactured in Korean factories there are sold in Chinese market while about 75% of them are shipped off to other countries. Korean firms are setting up production facilities there to target China’s potentially profitable domestic market.
Interestingly, a Chinese official, Lou Jiwei, chairman of the sovereign wealth fund, China Investment Corp., seems to be reassuring Korean firms about their strategies for the Chinese market: “Both China and America are addressing bubbles by creating more bubbles and we’re just taking advantage of that. So we can’t lose.”
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