Once upon a time, Korean products were incredibly popular in the Chinese market.
From Hyundai and Kia cars to Samsung smartphones, from Korean cosmetics to fashion apparel, nearly every Korean product was favored by Chinese consumers.
However, since 2022, South Korea has seen its first-ever trade deficit with China, amounting to $18 billion, which has attracted widespread attention from South Korean media.
What exactly happened? Why have once-popular Korean products started to perform poorly in the Chinese market?
In 1992, South Korea and China officially established diplomatic relations. Since then, South Korea’s dependence on the Chinese market and China’s demand for South Korean products have both continued to grow.
In the early 1990s, the demand for South Korean products among Chinese consumers seemed almost endless.
Whether it was cars, smartphones, cosmetics, or apparel and electronics, Korean products almost became mainstream in the Chinese market.
At that time, the Chinese market seemed like an inexhaustible treasure trove for South Korea.
From 1993 to 2021, South Korea consistently reaped substantial profits in its trade with China.
Particularly between 2003 and 2018, South Korea’s economic interests in the Chinese market reached a golden period, with stable exports and huge trade surpluses fueling the South Korean economy.
During this period, South Korean companies gradually occupied multiple sectors in the Chinese market.
In this golden era, South Korean brands performed exceptionally well in China.
Hyundai and Kia cars could be seen everywhere on the streets, Korean cosmetics were abundant in shopping malls, and Samsung held a dominant position in the smartphone market.
Meanwhile, Korean dramas and variety shows almost became the staple of family entertainment in China, and the influence of Korean pop culture permeated all aspects of Chinese society.
Whether it was consumer shopping habits or cultural trends, Korean products had almost become an integral part of modern life in China.
However, South Korea’s market advantage didn’t last long.
Although South Korean products dominated the Chinese market for several decades, things began to change after 2018, particularly in 2022, when South Korea’s trade with China saw a shockingly large deficit of $18 billion.
Since 2018, the competitiveness of South Korean products in the Chinese market has gradually declined, and in recent years, the downturn in South Korean products has become more pronounced.
Once dominant players like Hyundai and Kia in the Chinese car market have now been replaced by new energy vehicle brands such as BYD and Tesla, with their market share shrinking significantly.
In the smartphone sector, Samsung’s market share has also dropped to less than 1%, almost completely overtaken by domestic brands like Xiaomi, OPPO, and Vivo.
Moreover, on October 24, 2024, the Bank of Korea released data showing that the country’s economic growth is well below expectations, with exports also experiencing negative growth.
The stock market has been sluggish, and analysts generally believe that South Korea’s exports are unlikely to recover in the short term.
Behind all this is a sharp decline in China’s demand for South Korean products, which has led to South Korea’s economic stagnation.
What’s even more problematic is that South Korea is increasingly dependent on China in certain sectors.
Whether it’s manufacturing semiconductors or batteries, South Korea needs to import a large amount of raw materials and components from China.
In other words, while South Korea once earned substantial profits through the Chinese market, today, it must invest large sums of money in purchasing raw materials from China, creating a certain "dependency cycle."
This phenomenon has caused considerable anxiety for the South Korean government. With South Korean products declining in China, the government has begun seeking alternative markets, particularly in Southeast Asia and India.
However, the consumption power in these emerging markets is far less than that of China, and competition is becoming increasingly fierce, with companies from Japan, the U.S., and Europe also actively expanding in these markets.
What’s more complex is that South Korea’s diplomatic position is now in a dilemma.
On one hand, with the U.S. imposing restrictions on China in areas like semiconductors and other high-tech fields, South Korea is forced to choose between China and the U.S.
On the other hand, China remains the world’s second-largest economy, and its vast market still holds strong appeal for South Korea.
This predicament has made South Korea’s handling of relations with China and the U.S. quite passive.
Against this backdrop, South Korea’s situation has become increasingly awkward.
On one hand, facing the contraction of the Chinese market, South Korean companies and the government are eager to find alternative markets.
On the other hand, the rise of Chinese domestic companies has continued to shrink South Korea’s market share.
The once-confident attitude towards South Korean products no longer works.
Now, Chinese consumers have more choices, and the competitiveness of South Korean products is no longer as strong as it once was.
Chinese consumers' attitudes have also undergone a noticeable shift.
Many netizens have commented, "This is Korea’s own fault. During the THAAD incident, they were arrogant, and now they’re finally facing the consequences."
Others recall the Samsung Galaxy Note 7 battery explosion incident, criticizing Samsung’s double standards in the Chinese market.
Meanwhile, domestic phones now offer better value for money than Samsung, and brands like Xiaomi, OPPO, and Vivo have become mainstream in the Chinese market, posing overwhelming competition to South Korean brands.
As South Korea’s difficulties in the Chinese market intensify, the comments from Chinese netizens are filled with sarcasm and criticism.
Some netizens pointed out that the potential of the Southeast Asian market is nowhere near that of China, and it is almost impossible for South Korea to make significant strides in these markets.
Others directly criticized South Korea for wavering between China and the U.S., emphasizing that such a double-faced approach can only lead to a situation where neither side benefits.
One netizen bluntly said, "South Korea now clearly knows that today’s Chinese market is not the same as it was 30 years ago. It’s no longer possible to make money in China using the same old methods."
The sharpest comments pointed out, "South Korea must be regretting deeply now. If they hadn’t made those wrong choices with the U.S., things might be different today. But it’s too late to regret now; they have to walk the path they chose, even if it’s painful."
From the glory of South Korean products in the Chinese market to the current market contraction, South Korea’s predicament reflects the rapid changes in the Chinese market.
The former strong player, now the "abandoned one," this market transformation undoubtedly serves as a wake-up call for South Korean manufacturing.
Although South Korea still hopes to recover economic growth by tapping into other markets, in the face of increasingly fierce global competition and a complex international situation, South Korea’s future development remains uncertain.
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