This undated file photo shows Hyundai’s No. 1 Beijing plant. (Yonhap)
SEOUL, Sept. 6 (Korea Bizwire) — Chinese subsidiaries of South Korean firms saw their sales sink nearly 7 percent in 2020 from four years earlier due to their dropping market share in the world’s second-largest economy, data showed Monday.
Combined Chinese sales of 30 out of South Korea’s top 100 companies came to 117.1 trillion won (US$101 billion) last year, down 6.9 percent from 2016, according to the data from the Federation of Korean Industries (FKI), the lobby for the country’s family-controlled conglomerates known as chaebol.
Samsung Electronics Co., Hyundai Motor Co. and 28 other large businesses saw the ratio of Chinese sales to their total top line dropping to 22.1 percent in 2020 from 25.6 percent four years earlier.
Amid slumping sales, South Korean firms’ direct investment in China tumbled approximately 23 percent in 2020 from a year earlier due to waning local demand for Korean products and intensifying competition with Chinese companies.
Falling sales also led to weaker profit margins. Chinese subsidiaries of South Korean firms saw their combined profit margin decline to 2.5 percent in 2019 from 4.6 percent in 2016.
South Korean companies sinking sales and profit margin in China came as autos, smartphones, cosmetics products and other major goods suffered sinking market shares in the world’s most populous country.
The market share of South Korean cars declined to 4 percent in the first nine months of this year, from 7.7 percent in 2016, with that of cosmetics goods tumbling to 18.9 percent from 27 percent.
The figure for South Korean smartphones has plunged to less than 1 percent from 4.9 percent in 2016.
The FKI said government-private efforts are needed to tackle hurdles confronting South Korean firms operating in China, and Seoul and Beijing should strike a deal on the service and investment sector of a bilateral free trade agreement.
(Yonhap)
