China's rising display industry, threatening Korea
China's rising display industry, threatening Korea
  • By cheon tae-un (ctu@koreaittimes.com)
  • 승인 2014.07.26 01:33
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China's companies become a threat to Korea. They are closing the technology gaps with Korea in IT and electronics in particular and expected to almost catch up with its TV and smartphones. 

The world

 

The Wall Street Journal has recently reported that "China's companies previously acted as the world's factory are now leading IT trends armed with high technologies.”

Those in electronics industry are also saying “Chinese companies are taking advantage effectively as followers who do not have to go through trial and error of front runners.  ” They are actually applying the success cases of Korea's electronics, display and IT companies, their role-model, to themselves by copying their business strategies. 

One threatening example is TV. In CES 2014, China's electronics companies introduced the curved TV first revealed by Samsung Electronics and LG Electronics just a year ago in CES 2013. 

Haier of China

 

Haier, China's rising electronics firm, displayed 65 inch curved LED TV and 55 inch curved OLED products in front of its exhibit room. Hisense and TCL also showed 65 inch curved LCD TV and Chang Hong, curved TV, too. It is surprising that it takes about just one year to come up with the similar products with the world's renowned Samsung and LG. As of this first quarter, Hisense and Skyworth of China ranked 2nd (16.0%) and 3rd (13.5%) respectively following Samsung Electronics which ranked 1st in terms of global market share. 

While the curvature and resolution of China's curved UHD TV is much lagged behind that of Korea's, it has price-competitiveness, 30~50% lower. 

When it comes to OLED TV market, it is expected that Korea will be dominating it for a while as China dose not have the capability to produce OLED panels with its own technologies. Yet, Korean companies need to have more sophisticated strategies not to lose their market share as Chinese IT firms are aggressively following, for example, China's Renova, computer manufacturer, acquired Motorola ranking 3rd in the smartphone market.

The Korean government's strategies and large private funds of the 1990s have contributed to the development of its display industry. That is why it has finally become the world's leader beating the U.S. and Japan in the 2000s.

Yet, now China's firms are threatening Korea, the world's No. 1 display powerhouse. For instance, 3 to 4 years ago its technology gap with China in the AMOLED field was about 5 years but now just one year. Korea should take it seriously, not sitting idle.

In China, leaders have recently increased investment in R&D putting importance on science and technology. Battelle Memorial Institute in the U.S. reported that China's R&D investment would be reached at $284 billion (about 301.466 trillion KRW) this year, 22% more than in 2012. For the same period, the U.S.'s increase was just 4%.

Prof. Lee Sin-doo of Seoul National University's electric·information engineering department says, “while Korea has local display experts, China has scouted and funded the Chinese nationals with display knowledge abroad like Europe, the U.S., and Japan. If they come up with the innovative, new technologies Korea never imagines, the situation would be changed in China's favor.”

He pointed out that while in China, the government is being future-oriented, investing a lot in R&D, Korea is still hesitating. China is aimed at developing new technologies by its experts before Korea, rather than just closing the gap with it.    

Then, what should Korea do to continue to lead the display industry There is hope in the materials and parts industries whose development will increase the price competitiveness of end products' display, promote the growth of related SMEs, and have export competitiveness over the Chinese market.  

Prof. Lee said, “China will be more industrialized with its organic semiconductor and liquid crystal manufacturers and venture companies. Yet, Korea's materials industry is still promising with DONGJIN SEMICHEM, local company, and several global firms in Korea.”

Prof. Yoo Jae-soo, chemical new material engineering department of Chung-Ang Univerisity, said, “I can see a positive sign in the materials industry. I think the industry is the beneficiary of the government's best support measures. As a result, it becomes the biggest hope of Korea's display industry. Finally we start to see the fruits from the high value industry.”

He added, “the equipment industry can be promising but there is still a gap with Japan. China does not purchase Korea's equipment and Korea, itself, prefers that of Japan or Germany. To resolve this issue, conglomerates like Samsung, LG, etc. need to forge a partnership with small, materials·parts·equipment companies for both sides'  competitiveness increase.”

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