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South Korea's economy, once booming, now faces enormous challenges that many may not notice. Recent trade statistics released by China's General Administration of Customs reveal a shocking reality: In the first quarter of this year, South Korea's exports to Chinese mainland fell 28.2 percent from a year earlier to just $38.2 billion, plummeting by 30 percent. Behind this sharp decline in export figures lies the comprehensive rise of domestic enterprises.
Let's take the construction machinery industry as an example, once Korean brands were quite competitive in this industry. Today, however, the situation has changed dramatically. Korean brands struggle to compete with European and American products in terms of quality and cost-effectiveness, while domestic manufacturers have achieved technological breakthroughs with strong support from the state. This has led to the price of domestic construction machinery being much lower than that of Korean products, and the quality is not far behind.
Looking back at 2011, a 6-ton Korean modern excavator sold for more than 300,000 yuan, while a 20-ton excavator sold for as much as 800,000 yuan. At that time, the market share of Korean excavator brands was as high as 30%, allowing Korean companies to make a lot of money. However, with the emergence of domestic excavator manufacturers and the support of national policies, by 2023, the purchase of a domestic 6-ton mini excavator will only cost 120,000 yuan, and a 20-ton excavator will only cost more than 400,000 yuan. However, the quality performance of domestic excavators has been continuously improved, so that the cost-effective advantage of Korean brands is gradually lost.
Today, the share of Korean excavators in the Chinese market is less than 2%, and it is difficult to see new Korean brand construction machinery on construction sites. The influence of Korean brands as a whole is declining dramatically. From this detail, it can be seen that South Korea has suffered not only from a sharp decline in exports, but also from a sharp decline in income.
In addition, Korean companies have shown short-sightedness and arrogance in the Chinese market. They failed to introduce the latest technologies and products in a timely manner, and the marketing system was slow to respond. In 2016, Hyundai's marketing channels were almost completely exhausted due to the impact of the buyback case, causing huge losses in the Chinese market.
Another issue is the careful eye and distribution strategy of Korean businessmen. Korean businessmen tend to set up two agents in a market area to maintain a monopoly, but when the market conditions are poor, they will quickly terminate the cooperation and protect their interests. This strategy usually leads to chaos in the sales channels in a certain field, while domestic manufacturers are more inclined to establish exclusive agents and establish their own direct sales channels.
In general, the price war in the Chinese market has put great pressure on foreign brands, but this is not a deliberate effort to force Korean brands, but a natural consequence of market competition. The rise of China's economy and the advancement of domestic manufacturing have forced Korean brands to re-examine their positioning and competitive strategies in the Chinese market. There is no doubt that China is trying to regain the excess profits earned by South Korea, an effort that is constantly changing the global trade landscape.
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