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Methods for Advancement of Major Products into Chinas Domestic Market: Focusing on Future Growth Engines

Author Donghyeok Seo, Sanghun Kim, Dongwon Choi, Wonsik Hwang, Seungmin Kim, Ujung Shim, Hyerin Jeong Date 2016.02.01 Page 14
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The wearable device industry in 2015 showed rapid growth year on year and is drawing attention as a new growth engine industry in the future. In particular, as Chinese companies including Xiaomi have been growing exponentially, there are ongoing arguments
that Korean companies should respond to the situation in an urgent manner.
As of now, the wearable device market, similar to the other IT industries, is composed of the high-price and high-end markets led by global large enterprises and the low-cost distribution markets where Chinese companies are strong. However, when it comes to the wearable device industry, unlike the global industrial development patterns of the existing IT industry, Chinese companies are growing rapidly in the low price distribution market starting from the initial stage of the industry, and now it is needed for Korean companies to make changes in their success strategies. In terms of China’s wearable device industry, centered on the clusters densely located in the Hunan region, the companies manage the entire process of raw material, design, processing and manufacturing, and in Shenzhen more than 1,000 companies are manufacturing wearable devices.
When it comes to Korean companies, they maintained their market share through swift responses centered on large corporations in the introduction period of the wearable device industry, but starting from 2015 the competitiveness of Korean companies has weakened as they lagged behind Apple and Chinese companies.
Accordingly, in order to be competitive in the wearable device industry, which is anticipated to grow rapidly in the future, it is needed to consider the following factors. First of all, it is required to come up with strategies to increase the global market share by preoccupying the Chinese market. Along with this, it is necessary to build up Korea’s own production system different from the existing one while enabling Korean companies to be more competitive under the changing global competition environment. Third it is urgently needed to prepare for a basis for growth to create an ecosystem in the wearable device industry. Fourth, it is needed to make plans to facilitate the convergence among industries as well as large businesses and small and medium sized enterprises. Lastly
it is required to provide policy supports enabling a mutual coexistence,
while escaping from the existing structure of the industry centered on large corporations.