A China Strategy for Innovative Korean Businesses:Focusing on Chongqing and the Liangjiang New Area
|Author||Young-sam Cho, Changyong Han, Ji-yeon Kang||Date||2016.02.01||Page||30|
The Chinese government’s new paradigm for economic growth is characterized by the launch of massive development projects in the Midwest and the fostering domestic market growth through urbanization. As a result, businesses and governments of advanced economies have been looking to seize new business opportunities in China. These businesses and governments are especially focusing on latecomers to industrialization.new towns and cities under development that offer much greater potential for growth.rather than well industrialized cities.
Korean industries need to outgrow their dependency on a conventional, conglomerate-centered China strategy and adopt new strategies that cater to the new wave of industrialization and growing demand for technological advancement in the country. The structures of direct investment in and trade with China need strategic approaches to manage its paradigm shift on economic growth.
The central subject of this study, then, is how innovative Korean businesses might enter the expanding Chinese market more effectively and successfully. We focus on innovative companies for two reasons. First, leading brand-name Korean companies have been struggling on the Chinese market in the recent years and their prospects for future success are limited. Notwithstanding the signs of growing volatility in the Chinese economy and the slowdown of the pace of its growth, China is still the only major market in the world that can continue to grow at five percent or more each year. China is no longer a mere “factory of the world,” thriving on cheap labor but is rapidly becoming the world’s biggest market thanks to the significant rise in income levels. So it is impossible to envision the future of the Korean economy without taking into account this massive market. Korea desperately needs an alternative strategy that will succeed where the struggling large Korean conglomerates in China have failed.
Second, innovative Korean companies face a decreasing number of opportunities and prospects on the limited Korean market, and they need to globalize in order to ensure their further and sustainable growth. However, it is nearly impossible for these businesses to pioneer new markets in North America and Europe. They would enjoy much better prospects on the emerging markets, of which China offers the most favorable conditions for our businesses. Local Chinese governments pursuing late industrialization policies and the relative vulnerability of the private market economy in China present new opportunities for innovative Korean businesses today.