[News] Nearly 40% of South Korean Companies in China Plan to Downsize Within Five Years

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According to a report by The Chosun Daily, a recent survey conducted by the Korea Institute for Industrial Economics and Trade, the Beijing Office of the Korea Chamber of Commerce and Industry, and the Korean Chamber of Commerce in China revealed that 37% of South Korean companies operating in China are considering withdrawing, relocating, or downsizing their Chinese operations within the next five years. Of these, 31% plan to take action within the next two to three years.

The survey, conducted between July and September and involving 500 South Korean companies, found that 67% of respondents believe China’s domestic business environment is deteriorating. Key factors include shifting market demand (24%), Chinese government policies (21%), rising production costs (18%), political sanctions (15%), restrictions on foreign businesses (11%), and unfair competition (11%).

In a significant move, LG Display, a South Korean panel manufacturer, sold its Guangzhou LCD factory to TCL for RMB 10.8 billion in September, marking South Korea’s complete exit from China’s LCD TV market. Similarly, LG Group and SK Group have both sold their Beijing headquarters buildings in recent years.

As competition from Chinese companies intensifies, 28.3% of South Korean firms cite this as a reason for considering relocation, alongside other factors such as the U.S.-China trade dispute (24.5%) and rising local production costs (17%). Among those planning to relocate, 36% are eyeing Southeast Asia as their next destination.

Against a backdrop of global challenges, South Korean companies in China identify the U.S.-China conflict (35%) as their top business concern, followed by geopolitical crises (24.2%), tensions on the Korean Peninsula (23.6%), supply chain shifts (6.8%), and currency fluctuations (5.6%).

(Photo credit: LG)