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Since the full implementation of China’s Hallyu (Korean Wave) Ban in 2016, it has been revealed that a total of 46 Chinese subsidiaries of South Korean corporations have been sold or liquidated. The total revenue scale of these companies is approaching 20 trillion won.
On July 5, CEO Score, a corporate data research institute, revealed that revenues from 113 Chinese manufacturing subsidiaries of the top 500 South Korean companies had decreased by 13.1% (16.68 trillion won or US$12.78 billion) from 2016 until last year. Total revenue in 2016 was 127.72 trillion won, but last year it was a mere 111.42 trillion won. During this period, 30 Chinese production subsidiaries were sold and 16 were liquidated.
In particular, excluding businesses related to batteries and semiconductors, where revenues in China are rapidly increasing, the revenue of Chinese manufacturing subsidiaries of large South Korean companies decreased from 117.23 trillion won in 2016 to 73.44 trillion won last year, shrinking by 43.78 trillion won (37.3%).
CEO Score stated, “Despite the intensification of sanctions against South Korean companies due to the Hallyu Ban, domestic businesses in China have continued to retreat due to ongoing complex crises such as the U.S.-China trade conflict, supply chain crises, and the Russia-Ukraine war.” They added, “Major Korean companies, especially in the automobile and electronics sectors, which used to be strong in China, are losing their footing, while sectors such as batteries and semiconductors are growing due to the expanding market within China.”
Over the last six years, the most significant decrease in revenue from Chinese manufacturing subsidiaries was seen by Hyundai Motor. The revenue of Beijing Hyundai Motor, Hyundai Motor’s Chinese subsidiary, dropped from 20.12 trillion won in 2016 to just 4.9 trillion won last year, a sharp decline of 15.22 trillion won. Among South Korean companies, Beijing Hyundai Motor is the only company that saw a reduction in revenue exceeding 10 trillion won.
Samsung Electronics also saw a 43.5% decrease in the revenue of its Chinese production subsidiaries last year, down to 9.67 trillion won from 17.12 trillion won in 2016, largely due to a contraction in the smartphone and home appliances sectors. The liquidation of its Chinese production subsidiary in 2021 is interpreted as having a direct impact on the decrease in revenue.
On the other hand, companies in the battery and semiconductor sectors recorded significant growth as demand within China exploded. Specifically, LG Energy Solution, Samsung SDI, and SK innovation, the three leading South Korean battery companies, posted record-breaking performances in China.
LG Energy Solution’s Chinese subsidiary saw its revenue skyrocket by 431.6% (10.42 trillion won) to 12.84 trillion won last year, up from 2.41 trillion won in 2016. Over the same period, the revenue of Samsung SDI’s Chinese subsidiary expanded by 483.5% (4.49 trillion won) from 929.8 billion won to 5.42 trillion won.
The sales growth of South Korean semiconductor companies is also notable. Samsung (China) Semiconductor, one of Samsung Electronics’ semiconductor manufacturing subsidiaries in China, saw its revenue increase by 133.1% (5.52 trillion won), from 4.15 trillion won in 2016 to 9.67 trillion won last year. Last year, the revenue of SK hynix’s Chinese manufacturing subsidiary also increased by 4.54 trillion won, from 3.06 trillion won in 2016 to 7.54 trillion won.