Beijing: The business presence of South Korean companies in China has significantly declined in recent years as they face increased competition from local firms and a slowdown in domestic demand. This trend has been observed by industry experts who have been closely monitoring the situation.According to Yonhap News Agency, in a notable move, LG Display Co. recently sold its liquid-crystal display (LCD) factory in Guangzhou to a local company for approximately 2 trillion won (US$1.43 billion). This sale marks the end of operations for South Korean LCD manufacturers in China, following a similar decision by Samsung Display Co. Similarly, Samsung Electronics Co. closed its last remaining smartphone factory in Huizhou, Guangdong Province, in 2019. Once a leading player in the Chinese market, Samsung's smartphone market share has dwindled to near zero, leading the company to shift production to Vietnam and India.Hyundai Motor Co. has also scaled back its operations in China. From an original five production ba ses, only two remain. The company sold its Beijing manufacturing facility in 2021 and its Chongqing plant earlier this year for 300 billion won. Operations at its Changzhou plant have been halted, with plans to sell it underway. A decade ago, Hyundai and its affiliate Kia Corp. commanded a combined market share of around 10 percent, but this has now fallen to roughly 1 percent. The automakers are now focusing on using their Chinese factories primarily as export hubs.The retail sector has been hit hard as well, with Lotte Group experiencing significant setbacks due to a diplomatic dispute between Seoul and Beijing over the deployment of a U.S. anti-missile system, THAAD, in South Korea in 2017. Lotte Group is looking to sell a retail complex development project in Chengdu, which was halted post-THAAD. Completion of this sale would mark Lotte's complete exit from China after 30 years. At its peak, Lotte Mart operated 112 stores in China but exited the market in 2018. Lotte Department Store ended its Chinese o perations in June with the closure of its Chengdu branch.Cosmetic giant Amorepacific Group is another South Korean company losing ground to local competitors. This has led to the withdrawal of its Hera and Etude House brands from the Chinese market. The company reported a 42 percent year-on-year decrease in sales through its Chinese subsidiary, amounting to 75 billion won in the third quarter of this year, resulting in an operating loss of 30 billion won.Overall, South Korea's direct investment in China plummeted 78 percent year-on-year to $1.87 billion in 2023, making China the seventh-largest destination for Korean investment. A report by the Korea Institute for International Economic Policy (KIEP) attributed this decline to rising labor costs and reduced incentives for foreign investors in China, prompting Korean companies to seek opportunities in other regions.Choi Ji-won, a researcher at KIEP's China research team, highlighted the growing competitiveness of Chinese companies as a significant threat to South Korean firms. He noted that many Chinese companies excel in manufacturing and offer strong price competitiveness depending on the product. An industry insider from a company that has scaled back Chinese operations remarked that the era of securing large sales volumes in the Chinese market has ended, and there is a need to find profitable structures even with smaller sales.Chung Yeon-seung, a business professor at Dankook University, emphasized the importance of approaching the Chinese market conservatively. He noted that China is a country where political logic is strong, and businesses cannot rely solely on economic logic when considering China as a business partner. Implementing response measures is crucial for navigating the market effectively.
- October 12, 2026
