The Korean media outlet reported this week that Korean chaebols like Samsung, LG, and Hyundai are investing in the Chinese market as a key export market.
Hyundai hint at a plan to build a third factory in China to meet surging demand. Hyundai’s car sales has soared by 89% YOY.
Samsung is also reportedly setting up a large-scale LCD panel plant in Suzhou, China. Samsung has about 40% of the global manufacturing facilities in China.
In the mean time, LG is also planning to invest in a TV/LCD panel factory in Guangzhou, China.
Korean chaebols’ strategic focus on China has shifted from regarding China as a manufacturing base to be shipped off to other overseas markets to directly targeting the Chinese market as its domestic demand grows.
As I’ve recently noted, increasing trend of moving manufacturing facilities to China by Korean chaebols leads to the loss of manufacturing jobs in Korea.
According to the Korean major news outlet this week, Korea’s consumer spending has increased while income has dropped this year.
The same question goes to China: Where does the domestic consumption expansion of China come from?; Is it based on real income growth or credit?
Overconsumption with borrowed money was the culprit behind the U.S. economic crisis.
Korean chaebols has had a pretty good track record of making strategic bets in emerging economies. As other countries’ MNCs make similar investments based on the notion “Let’s take advantage of reinflated bubbles while they last,” one can’t blame Korean chaebols’ strategic move in China.
And yet, it wouldn’t make some concerns go away.
The central governments and MNCs seem to understand bubbles for a period.
However, the question is: Are the ordinary people intelligent enough to be informed politically and economically?
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