Places for Korean firms in China

looking for a viable international division of labor in 1990-2010

Keun Lee, Mihnsoo Kim, Jooyoung Kwak

Research output: Contribution to journalArticle

5 Citations (Scopus)

Abstract

In the past decade, increasing economic integration with China has offered vast business opportunities to Korean firms. Given the changing industry map in East Asia, Korean firms have been seeking a new international division of labor with Chinese firms via foreign direct investment. During the last two decades, Korean firms in China attempted to create business models that implemented either a full set of business activities (full model) or a partial set of business activities (partial model). We have found that the competitiveness of Korean firms in China experienced drastic changes, which changed the viability of specific models, namely the partial model, for Korean business in China. Our cases have indicated that both full and partial models evolved responding to environmental changes in the host market. The central reason for such changes is that as Chinese firms accomplished a technological catch-up, they began to replace the roles of Korean firms in China at a rapid rate, which obsolesced the bargaining power of Korean firms in China in their relations with their Chinese partners. Our study implies that Korean firms going to China, when seeking for a viable business model, should deliberately consider the possibility of Chinese firms' catching-up with Korean firms within the industries.

Original languageEnglish
Pages (from-to)4-21
Number of pages18
JournalJournal of the Asia Pacific Economy
Volume17
Issue number1
DOIs
Publication statusPublished - 2012 Feb 1

Fingerprint

international division of labor
firm
China
international division of labour
economic integration
bargaining power
bargaining
industry
foreign direct investment
direct investment
competitiveness
foreign investment
environmental change
viability

All Science Journal Classification (ASJC) codes

  • Geography, Planning and Development
  • Development
  • Political Science and International Relations

Cite this

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abstract = "In the past decade, increasing economic integration with China has offered vast business opportunities to Korean firms. Given the changing industry map in East Asia, Korean firms have been seeking a new international division of labor with Chinese firms via foreign direct investment. During the last two decades, Korean firms in China attempted to create business models that implemented either a full set of business activities (full model) or a partial set of business activities (partial model). We have found that the competitiveness of Korean firms in China experienced drastic changes, which changed the viability of specific models, namely the partial model, for Korean business in China. Our cases have indicated that both full and partial models evolved responding to environmental changes in the host market. The central reason for such changes is that as Chinese firms accomplished a technological catch-up, they began to replace the roles of Korean firms in China at a rapid rate, which obsolesced the bargaining power of Korean firms in China in their relations with their Chinese partners. Our study implies that Korean firms going to China, when seeking for a viable business model, should deliberately consider the possibility of Chinese firms' catching-up with Korean firms within the industries.",
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Places for Korean firms in China : looking for a viable international division of labor in 1990-2010. / Lee, Keun; Kim, Mihnsoo; Kwak, Jooyoung.

In: Journal of the Asia Pacific Economy, Vol. 17, No. 1, 01.02.2012, p. 4-21.

Research output: Contribution to journalArticle

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