Chinese affiliates of South Korean companies saw sales drop nearly 7% in 2020 from four years earlier due to declining market share in the world’s second-largest economy, data showed on Monday.
Combined Chinese sales of 30 of South Korea’s top 100 companies hit 117.1 trillion won ($ 101 billion) last year, down 6.9 percent from 2016, according to federation data of Korean Industries (FKI), the country’s family lobby. -controlled conglomerates known as chaebol.
Samsung Electronics Co., Hyundai Motor Co. and 28 other major companies saw the ratio of Chinese sales to total revenue drop to 22.1% in 2020, from 25.6% four years earlier.
Amid declining sales, direct investment by South Korean companies in China fell by around 23% in 2020 compared to the previous year due to the drop in local demand for Korean products and the increased competition with Chinese companies.
Lower sales also resulted in lower profit margins. Chinese subsidiaries of South Korean companies saw their combined profit margin decline to 2.5% in 2019, from 4.6% in 2016.
South Korean companies have lost sales and profit margins in China as automobiles, smartphones, cosmetics and other important goods have lost market share in the world’s most populous country.
The market share of South Korean cars fell to 4% in the first nine months of this year, from 7.7% in 2016, while that of cosmetics fell from 27% to 18.9%.
The South Korean smartphone figure plunged to less than 1% from 4.9% in 2016.
The FKI said government and private efforts are needed to overcome the obstacles facing South Korean companies operating in China, and that Seoul and Beijing are expected to reach a service and investment sector agreement as part of the process. a bilateral free trade agreement. (Yonhap)