In the following interview with Chosun Biz, one of Korea’s most influential media, Teng Bingsheng, Associate Dean of Cheung Kong Graduate School of Business, suggests ways in which Korea can maximize its competitive advantages. While highly appreciating Korean companies’ technology and branding strategies, he diagnoses that the competition between global brands and Korean brands in China will become much more fierce.
Q: What is the hottest trend in the Chinese market these days?
A: The most notable trend is O2O (online to offline). Young people in China are familiar with the internet environment as they grew up with online games and SNS. Hence, their consumption habits are closely connected to online. Last year’s number of O2O applications surged to 44% of the whole smartphone application market, up from 27% at the starting point of the year. The diversified tastes of consumers are also notable. People in China nowadays prefer niche brands that can show their individuality and personality.
Q: The competition between Korean and Chinese companies has become intense. Do you think there are chances to cooperate together?
A: The two countries are competing in the worldwide market, not only in their own countries, because their major industries overlap. The race will be strong as the Chinese government strives to promote their exports through the ‘One Belt, One Road’ initiative. However, certainly there are parts to work on together. Korean enterprises are more mature and experienced than Chinese companies in technique, branding development and globalization. Culture and entertainment businesses can be a promising area for both countries to develop together.
Q: What is the Chinese government’s strategy to stimulate domestic demand and consumption?
A: Real estate played a big role in boosting consumer demand since economic shrinkage in the 1990s. However, there is a limit in raising consumer demand only through real estate development. Fostering internet industry and welfare expenditure are considered as additional breakthroughs for the government.
Q: A great deal of capital has flowed into the Chinese stock market as well as the real estate market. How do you forecast the market condition after the recent period of instability?
A: I think that the market will settle down sooner or later. The P/E ratio of stocks is getting back to sustainable levels compared to a month before the crash. At the time, people wanted to gamble, despite a very risky situation. However, I guess the stock market crisis made people think more realistically.
To read the original article in Korean, please click here.