Second place is disappearing. Intensifying global competition has resulted in major manufacturing sectors being reorganized into the’one industry, one company system’. The pandemic called Corona 19 (a pandemic pandemic) has also accelerated the ‘2nd place expulsion’. This is not a winner-take-all. Another survival competition awaits, where only the’national representative company’ remains to compete for the real sword.
According to economics on the 14th, the domestic market’s competitive system has collapsed in major industrial fields after the pandemic. In the smartphone industry, only one Samsung Electronics remained as LG Electronics abandoned its business. The’yanggang system’ of the aviation industry, which has been around for over 30 years, also collapsed. Korean Air is expected to accelerate its acquisition and integration of Asiana Airlines through a paid increase next month. The domestic shipping industry has already been integrated into one HMM (formerly Hyundai Merchant Marine). In the automobile industry, only Hyundai Motors and Kia remained. The construction machinery industry was also integrated into one Korean company with the completion of Hyundai Heavy Industries Group’s acquisition of Doosan Infracore.
The surviving company is not the final winner. ‘National representative-level’ companies that have become number one in Korea are in a position to compete for survival with global leading companies. If Samsung Electronics loses the fight against Apple, and if Hyundai Motors is eliminated from the competition for future cars, the risk of the entire domestic industrial ecosystem disappearing also increased.
Overseas, it is common for the industrial base to collapse due to the exit of the market by a leading company. Britain, where the automobile industry was born, competed with the United States until the 1960s, but now it has no domestic car brands. It is also predicted that only four of the existing automakers, GM, Volkswagen, Toyota, and Hyundai Motor Group, will survive in the future car sector.
Finland, which once dominated the global mobile phone industry, was unable to enter the smartphone market after the fall of Nokia. Japan, which dominated the global semiconductor market in the 1990s, suffered a collapse in the semiconductor industry as Elpida, Toshiba, Panasonic and others were pushed back in the market competition.
Experts pointed out that a major change in industrial policy is necessary. As it is now, there is concern that the base of the manufacturing industry may collapse with the judgment of’mistimely’ centered on the domestic market and the ad hoc response of supporting insolvent companies. Professor Lee Kyung-mook of the Department of Business Administration at Seoul National University said, “The cross-industry cross-industry and global winner-take-all will become a clear industry trend.” It must be able to enjoy the economic effect of the company.”
LG, which occupied 30% of domestic market share… ‘Tuk’ at 10% due to Samsung and Apple
Sales volume of’three middle-sized companies’ in the domestic sub-industry… Overtaken by Imports for the first time in history
A company that used to be one of the world’s top three mobile phone manufacturers just 10 years ago decided to close its business and is preparing a concrete plan. It is a company that once occupied 10% of the global market and 30% of the domestic market. This is the story of LG Electronics, which announced last month, “We will open all the possibilities, including the sale, and review the smartphone business.” When LG Electronics withdraws, only Samsung Electronics remains as a domestic smartphone maker. Ten years ago, five companies competed with blood.
Companies that showed their presence in the domestic and international markets several years ago are disappearing into history. Asiana Airlines, the second largest airline in Korea, is representative. Hanjin Shipping, one of the top 10 global shipping companies, has already closed its doors. Both Doosan Infracore and Daewoo Shipbuilding & Marine Engineering are in the process of being sold to Hyundai Heavy Industries Group. It is an analysis that most industries, such as aviation, shipping, construction machinery, and shipbuilding, are being converted into a’one company system’.
○“If there is no competitiveness to compete with the world’s No. 1 player, it will be cut off”
The primary reason that Korean companies disappear due to liquidation or mergers and acquisitions is the Corona 19 pandemic (a pandemic). As the global economy slumped, companies with poor market position or weak basic stamina were pushed out of the competition for survival. Until the first half of last year, Asiana Airlines was acquired by HDC Hyundai Industrial Development and was in a state of attempting a second leap forward, but as the aviation industry was staggered by Corona 19, the transaction was canceled and it was in a position to be integrated with Korean Air. Doosan Infracore, the number one construction equipment company in Korea, was sold as Doosan Group’s liquidity deteriorated in the wake of the Corona 19 crisis.
However, even without Corona 19, the analysis that the’one industry, one company system’ is an inevitable trend is dominant. It’s just a difference in speed, and the reason is that it is an environment where it is difficult for the 2nd and 3rd companies in each industry to survive any longer. This is because the global market is rapidly consolidating. In the past, there were 2-3 companies for each market in each country, but now 4-5 global companies are fighting over the global market. Seoul National University business administration professor Lee Kyung-mook diagnosed, “In the past, we could survive only in Korea to some extent, but now even if we are ranked No. 1 in Korea, survival is not guaranteed. If we do not have the competitiveness to compete with the world’s No. 1 companies, we will be cut off.” .
This means that LG Electronics’ smartphone should fight not only with Samsung Electronics, which is the number one in Korea, but also with Apple, which is the number one in the world. LG Electronics’ Korean market share fell from 30% to 10% compared to its heyday, and its global share fell from 10% to 1%.
A similar thing is happening in the automotive industry. The rivals of Hyundai Motor Company and Kia in the domestic market are no longer’three mid-tier companies’ such as GM Korea, Renault Samsung Motors, and Ssangyong Motors, but global premium brands. Last year, the domestic sales of the three mid-sized companies were 26,6783 units, behind imported cars (27,4859 units) for the first time. In 2016, four years ago, three middle-sized companies sold twice as much as Imports. Compared to Hyundai Motors and Kia, it sold about one-third, serving as a’substitute’, but last year’s sales fell to one-fifth of Hyundai Motors and Kia.
○ Ranked 2nd~3rd in China, the king of cost performance
The rise of Chinese companies is also one of the reasons that pushed the second and third largest Korean companies into a crisis. Chinese companies are being evaluated as having product competitiveness beyond just offering cheap products. In the smartphone market, Huawei in China ranked first in the global market in the second quarter of last year. Huawei is in the process of withdrawing due to US trade sanctions, but other Chinese companies such as Xiaomi Oppo Vivo occupy the vacancy.
Chinese shipbuilders are the most feared competitors of the world’s first to third largest Korean shipbuilders. Chinese companies offer prices that Korean shipbuilders, such as Hyundai Heavy Industries, Samsung Heavy Industries, Daewoo Shipbuilding, and Marine Engineering, are unprecedented, and the Chinese government provides massive financial support for them. The dominant analysis is that Hyundai Heavy Industries decided to take over Daewoo Shipbuilding in order to overcome Chinese companies’ checks. Hanjin Shipping, which was once the two largest shipping companies in Korea, disappeared into history due to competition with Chinese shipping companies.
There is also an analysis that the transition to one industry and one company is rapidly taking place as the’essence’ of each industry changes. Apple doesn’t just make smartphones well and take the top spot in the world. Rather, it is a company with software as a weapon. In addition, it has built a vast ecosystem to bind users. To build a software ecosystem based on a number of services and hardware ecosystems that are closely intertwined with each other such as’smartphone-tablet-smartwatch-PC’, it costs enormous cost. It is a reality that small and medium-sized competitors can’t even make it.
Cars are also turning into’moving mobile devices’. It means that you cannot survive simply by making the body well. Software, connectivity (a technology that connects the inside and outside of a vehicle via wireless Internet), and other mobility and connectivity must all be in place.
There is also a high possibility that a competitor that has not existed will appear. This is because the boundaries between industries are breaking down. Domestic automakers must face not only foreign automakers such as Volkswagen and Toyota, but also electric vehicle manufacturers represented by Tesla. In a few years, Apple may be its biggest competitor. The CEO of one of the top 10 groups said, “With the rapid convergence between industries, it has become a daily routine for global dinosaurs to jump into a business that they did not operate in the past.” “In the future, most industries will be converted to a’one-top system’. It is very likely.”
Byungwook Do/Seungwoo Lee/Jaekwang Ahn reporter [email protected]