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Places for Korean firms in China: looking for a viable international division of labor in 1990–2010

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  • Keun Lee
  • Mihnsoo Kim
  • Jooyoung Kwak

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.

Suggested Citation

  • Keun Lee & Mihnsoo Kim & Jooyoung Kwak, 2012. "Places for Korean firms in China: looking for a viable international division of labor in 1990–2010," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 17(1), pages 4-21.
    • Handle: RePEc:taf:rjapxx:v:17:y:2012:i:1:p:4-21
    DOI: 10.1080/13547860.2012.639998
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    References listed on IDEAS

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    1. Takatoshi Ito & Chin Hee Hahn (ed.), 2010. "The Rise of China and Structural Changes in Korea and Asia," Books, Edward Elgar Publishing, number 13760.
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    Cited by:

    1. Wang, Jue & Liu, Xiaming & Wei, Yingqi & Wang, Chengang, 2014. "Cultural Proximity and Local Firms’ catch up with Multinational Enterprises," World Development, Elsevier, vol. 60(C), pages 1-13.
    2. Keun Lee & Moosup Jung, 2015. "Overseas factories, domestic employment, and technological hollowing out: a case study of Samsung’s mobile phone business," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 151(3), pages 461-475, August.
    3. THORBECKE, Willem & Nimesh SALIKE, 2013. "Foreign Direct Investment in East Asia," Policy Discussion Papers 13003, Research Institute of Economy, Trade and Industry (RIETI).

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