I was in Seoul this week as a number of companies I met with were preparing for President Xi’s upcoming visit. China’s continued economic growth creates an increasing sense of opportunity and threat for many South Korean business leaders. Opportunity, given the relative size and faster growth rate of the Chinese economy. But also threat, given the increased scale and capability of Chinese companies in export markets.
In everything from mobile phones to nuclear power plants, South Korean companies find themselves competing with Chinese producers. The challenge of how to sustain distinctiveness, how to avoid the fate of many Japanese companies, squeezed out of their historic international markets, comes up over and over.
Indeed, many are looking for ways to leverage Chinese capital to stimulate growth in South Korea. South Korean companies often have excellent IP, operating efficiencies in international projects that Chinese companies cannot match, and an established international brand/reputation to go with it. Partnering with Chinese capital and cost structures may well be a good way forward for some.
For the Chinese business leaders coming on the trip, some will be looking for much more than partnership. Outright acquisitions will be on their mind. Real estate, high tech and even healthcare companies may be looking for opportunities to diversify into South Korea. For some of the new private hospitals in China, owning a famous South Korean plastic surgery chain could create significant synergies. Real estate companies have diversified extensively into Jeju island already with good results, and they may be ready to do more.
I also expect announcements on increasing the two-way flow of students between South Korea and China, and on an increase in the number of Chinese cities that you will be able to fly to directly from South Korea.
Image credit: US Army Garrison Yongsan / Flickr