[Interview] ‘The Expert in Strategic Alliance’, CKGSB Professor Teng Bingsheng: “Leading Korean and Chinese Companies Can Dominate the World Market through a Proper Alliance”
April 2, 2014

Li Ka Shing, CEO of Cheung Kong Group, is known as one of the richest people in Asia. CKGSB, founded by the Li Ka Shing Foundation in 2002, has made a great leap in becoming one of the best business schools in China. Professor Teng Bingsheng is one of CKGSB’s world-class faculty members with a reputation as an expert in Strategic Alliance. In an interview with Economy Chosun, Prof. Teng suggested that the ‘Strategic Alliance’ between China and Korea would enhance ‘incorporative competitiveness’ in the global market.

Prof. Teng pointed out Beijing Hyundai Motor Company (Hyundai Motors and Beijing Automotive Group) to be the most successful cross-country strategic alliance. He said “Hyundai Motors was late coming into the Chinese market but stepped up as the second runner through the strategic alliance.” As he advised, China and Korea can potentially collaborate in many ways. However, since the key businesses of both countries by and large overlap, both countries are likely to compete with each other. Prof. Teng commented that Chinese companies cannot take advantage of low labor costs anymore, and instead must focus on managing a business.

Many Chinese companies including Lenovo have acquired advanced global companies which were then undervalued due to the global credit crunch and European economic crises. Prof. Teng explained that Chinese companies are well-aware that their technologies are relatively lower in quality compared to those of the advanced companies. M&A is an effective means of narrowing down such technology gap. Chinese companies normally choose to be ‘followers’ and take the safe-side strategies. However, Chinese companies are increasingly attempting to be the first movers. Prof. Teng pointed out Chinese electric car manufacturer, BYD, to be a representative case who is reforming to become the leading company in hybrid car industry from the global leading battery manufacturer.

China has been continuously making economic developments in the last 30 years. Meanwhile, China has been benchmarking the growth model from the developed economies including Japan, US and Korea in turn. Prof. Teng said “Korea has been keeping the balance among the industries including heavy industries, IT, entertainment as well as the ‘New Economy’ industries and this is what China wants to benchmark. The entertainment industry is a good proxy of Korea’s soft power. Although China has become one of G2, China is still not able to export its own culture in a global context. To get the true meaning of ‘Global Power’, China needs the soft power and is focusing on Korea’s strategy in that perspective”.

Since Xi Jinping’s government was constituted, China has changed its economic growth model, which used to focus on investment and export only. The new growth model now focuses on expanding the domestic consumption market. Prof. Teng forecasted that this big change would bring a new market paradigm. He said “the Chinese government is intensively fostering B2C industry such as consumer goods and service sector. The Chinese domestic market will lead to huge growth in the next 10 years. Therefore, B2C will rise as China’s next promising industry. Companies may find many business opportunities in the industries associated with consumption.”

Read [Interview] ‘The Expert in Strategic Alliance’, CKGSB Professor Teng Bingsheng: “The Leading Korean and Chinese Companies Can Dominate the World Market by a Proper Alliance” on the Economy Chosun website

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