A South Korean Company that Operates in China Essay -- Asian Economics

A South Korean Company that Operates in China This report address’s the requirements at hand to select a South Korean company that has operations in China Executive Summary: In 1992, Samsung Electronics adopted the form of a wholly owned subsidiary as the entry mode into China. It’s entry into China was in order to maintain growth due to the tough competition in Korea. China was selected in order to take advantage of its low wages for the mass production of low to medium priced products. The initial manufacturing ground was at Tianjin due to its costal location hence making it easy to export abroad and to major locations in China. The original focus of producing low cost products resulted in a cheap image of Samsung in China and led to a loss of US$210,000 in 1998 for its Suzhou division. The 1997 Asian economic crisis led to Samsung shifting its focus towards higher quality products. Samsung realised they could not compete with the Chinese manufacturers in terms of low priced products. In order to remain competitive in China, Samsung shifted its marketing strategy to one based on â€Å"selection and concentration†. After 1997, the focus was on the 10 major cities in China including Beijing, Tianjin, Suzhou, Shanghai and Guangzhou. Samsung came up with the â€Å"5% strategy†, targeting their products at the top 5% earners in China. The intensity of their Research & Development (R&D) in China grew with the expansion of their plant at Suzhou. Recently, there appears to be a shift in their operations from the Pearl River Delta to the Yangtze River Delta. This allows Samsung to take advantage of the better skilled personnel and infrastructure available for R&D. Samsung also set up a second Headquarters in Beijing which is responsible for marketing, personnel recruitment and for shaping of Samsung’s long term ambitions in China. Introduction: The Samsung group has 116 subsidiaries in 67 countries and received sales revenue from local subsidiaries of US$29billion. Over the last 5 years sales and net income have increased 1.6 times and 45 times, respectively. Sales in 2010 are anticipated to be 1.9 times that of 2002, with pre-tax profits expected to increase 2.1 times. Samsung is a heavily diversified company, and in order to best demonstrate its market entry to China, the report will look at the electronics arm to demonstr... ...eman, E., 2003. "Can the Pearl River Delta region still compete?", in The China Business Review, 30(3): 6-17, pages 53-63.  · Skopal, A. and C.J.Zhu, 2002. "An evaluation of entry strategy development in China?", in The 4th International Symposium on Multinational Business Management Proceedings, Nanjing, China, May 19-21, pages 65-73  · New York Times, 1991, (cited 9 May 2005) ‘Korean Companies in China’, late edition (East Coast), New York, pg. D20,  · Christian Science Monitor, 1992, (cited 9 May 2005) ‘High-Tech Giant Gears for Future The president of Samsung Electronics Company’, pre-1997 Full text, Boston, Mass, pg. NOPGCIT,  · Strategic Direction, 1999, (cited 9 May 2005), ‘Samsung Electronics play the China Card’, Bradford: Jul/Aug, Vol.15, Iss. 7, pg. 24  · Sender H., 2003, (cited 9 May 2005) ‘World Business (A Special Report); Back From the Brink: Samsung Electronics got into trouble by being like many Asian firms; It survived by being different’, Wall Street Journal (Eastern Edition), New York, Sep. 22, pg. R.5  · Lee, B. J., 2004, (cited 9 May 2005) ‘Gotta Be Chinese’, Newsweek New York: Jun 28, Vol. 143, Iss. 26, pg. E8