Beyond Wangjing

By Ma Jingjing Source:Global Times Published: 2017/8/13 17:33:40

S.Korean firms pursue other areas in and around Beijing, but encounter local competition along the way




 

A robot displayed by ROBOTIS China in Wangjing Thursday. Photo: Ma Jingjing/ GT



Wangjing, the famous Korea Town in Beijing, is a place where many South Korean companies are located. But as more South Korean businesspeople become increasingly familiar with other areas in or bordering Beijing, some are considering moving their offices or starting their businesses in these areas to pursue low costs. But wherever South Korean companies are located in Beijing, they inevitably face increasing competition from local firms, especially in the Internet sector.

Wangjing, known as Beijing's Korea Town, is no longer the only choice for South Korean companies to start their businesses in the Chinese capital city.

ROBOTIS China, a branch of South Korean robot manufacturer ROBOTIS, was established in September 2016 in Wangjing and sells actuators and servos that enable the creation of various robots and kits.

"The President of our Chinese branch, Noah Kim, has deep love and familiarity of China as he frequently comes to China to learn and do business. So our parent company chose to start the business branch in Wangjing," Xie Luo, General Manager of ROBOTIS China, told the Global Times Thursday.

Over the past year of development, the company has become bigger in business scale and has established many business partners in cities such as Beijing, Shanghai and in East China's Jiangsu Province. It has also opened a chain store in Changying, a rising suburb located at the southeastern part of Wangjing.

In the past year, Xie has felt growing competition from the company's Chinese counterparts. "As the domestic robotics industry and local brands rapidly develop, we are feeling heavy pressure," she said, noting that the company now has to step up efforts in the research and development of products and needs to improve services to win over more Chinese customers.

In Wangjing, two small South Korean companies engaged in medical facilities and liquid crystal display installation services both told the Global Times in separate interviews last week that they almost folded, but they did not want to disclose the factors that lead to this failure.

Xie said ROBOTIS China will consider moving its office to other areas in Beijing that are conducive to their development, such as places near its chain store in Changying.

"As familiarity with our Chinese chain increases, we will attach more importance to lowering costs to develop the market," she said.

'Second Korea Town'

As operation costs rise in Wangjing, many South Korean companies are reportedly choosing to establish businesses in regions neighboring Beijing, especially Yanjiao, a bordering town in North China's Hebei Province.

Convenient transportation, industrial parks and low labor costs make Yanjiao the first choice for South Koreans to develop "the second Korea Town," The Beijing News reported on August 6.

"Dubbed as 'Small Wangjing,' Yanjiao is also home to many South Koreans and ethnic Koreans. That's why we chose to start our business in the area," a staff member of a South Korean Internet firm in Yanjiao told the Global Times Friday on condition of anonymity.

Many people in China can speak Korean and labor costs are comparatively lower here than they are in South Korea, she said.

Besides Yanjiao, many South Korean companies are setting up offices in areas such as the Haidian and Shunyi districts of Beijing, information from cn-kr.net shows, a job-hunting website for Korean speakers in China.

The manager of a China-South Korea joint venture told the Global Times Friday on the condition of anonymity that the company's business has been seriously impacted by Terminal High Altitude Area Defense deployment tensions and has accordingly made some business adjustments to improve operation. "We reduced imports from South Korea and laid off six South Korean staff members at the beginning of this year," the manager said.

The joint venture, located in the Beijing Economic-Technological Development Area in Yizhuang, Daxing district, sells food products imported from South Korea.

A South Korean man surnamed Kim, who is a swimming coach at a fitness club in Wangjing, told the Global Times that many of his South Korean friends and colleagues have moved back to South Korea because of Beijing's rising living costs, such as higher rent prices, or because they can find better jobs in their home country.

Local rivalry

According to Xie, the majority of South Korean companies have faith in pursuing business projects in China, but they often struggle to gain access to the market.

"For example, among 40 corporations that wish to expand their businesses in China, only four or five of them will survive," she said, citing rising local competition and different modes of thinking among businesspeople.

Domestic companies' vitality is effectively stimulated and their competitiveness has improved, the National Development and Reform Commission (NDRC) said Thursday.

According to a statement on the website of the NDRC, the number of newly registered companies in China grew 11.1 percent year-on-year, reaching 2.91 million in the first half of 2017.

Different modes of thinking between South Korean and Chinese businesspeople also make it difficult for South Korean companies to develop in the country's market, Xie said.

For example, two kinds of marketing strategies may be enough to gain customers in South Korea, but 10 marketing strategies may be needed to effectively expand a business in China, considering the country's huge population and vast territory, she said.

To avoid headwinds while entering the Chinese market, ROBOTIS President Byoungsoo Kim and Noah Kim made considerable preparations when introducing ROBOTIS' products to China, such as staff training.

Xie noted that the company hopes to continue bringing high-quality robot products to China.

Three other companies that were reached by the Global Times all said their businesses in Wangjing are doing well and have no intention of moving to other areas. But it seems that it is becoming more difficult for small South Korean companies in the area to gain a foothold these days due to a new round of economic competition.

As China's Internet sector continues to boom, an increasing number of domestic Internet companies have entered Wangjing in recent years.

Chinese Internet firms account for 90 percent of the total amount of firms that have set up offices in Tower 3 of Wangjing SOHO, a mixed-used office complex of three towers, the Xinhua News Agency reported.

However, there is only one or two South Korean companies in the tower, a guard of the tower told the Global Times, which echoes the concerns of Xie regarding challenges faced by South Korean companies.



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