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

A South Korean Company that Operates in ChinaThis report addresss the requirements at wad to select a South Korean company that has operations in ChinaExecutive SummaryIn 1992, Samsung Electronics adopted the form of a whole ownedsubsidiary as the entry mode into China. Its entry into China was inorder to maintain growth due to the tough rivalry in Korea. Chinawas selected in order to take advantage of its low wages for the massproduction of low to medium priced products. The initialmanufacturing ground was at Tianjin due to its costal location hencemaking it easy to export abroad and to major locations in China. Theoriginal revolve around of producing low cost products resulted in a cheapimage of Samsung in China and led to a loss of US$210,000 in 1998 forits Suzhou division. The 1997 Asian economic crisis led to Samsungshifting its focus towards higher quality products. Samsung realisedthey could not compete with the Chinese manufacturers in terms of lowpriced products. In orde r to remain competitive in China, Samsungshifted its selling strategy to one based on selection andconcentration. After 1997, the focus was on the 10 major cities inChina including Beijing, Tianjin, Suzhou, Shanghai and Guangzhou.Samsung came up with the 5% strategy, targeting their products atthe top 5% earners in China. The intensity of their Research &Development (R&D) in China grew with the expansion of their plant atSuzhou. Recently, on that point appears to be a shift in their operations fromthe Pearl River Delta to the Yangtze River Delta. This allows Samsungto take advantage of the better skilled personnel and infrastructureavailable for R&D. Samsung likewise set up a second Headquarters inBeijing which is responsible for marketing, personnel recruitment andfor shaping of Samsungs long term ambitions in China.IntroductionThe Samsung group has 116 subsidiaries in 67 countries and receivedsales revenue from local subsidiaries of US$29billion. Over the last 5years sales and interlock income have increased 1.6 times and 45 times,respectively. Sales in 2010 are anticipated to be 1.9 times that of2002, with pre-tax profits expected to increase 2.1 times. Samsung is a severely diversified company, and in order to bestdemonstrate its market entry to China, the report will look at theelectronics arm to demonstr... ...eman, E., 2003. Can the Pearl River Delta land 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 apprehension 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 Directi on, 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