Chinese companies are expanding their presence in the domestic market beyond low-cost consumer goods, venturing into advanced technology sectors such as smartphones, electric vehicles, and other industries. They are increasingly entering the Korean market, which is sensitive to trends, with products ranging from robot vacuum cleaners and smartphones to automobiles. Although this movement may not immediately impact domestic companies, there are concerns that it could have a long-term effect on the overall manufacturing and consumption ecosystem in the domestic industry.

According to industry sources on the 12th, the technology gap between South Korea and China is only 0.3 years. This means that China could catch up to South Korean industrial technology in just a few months. In particular, Chinese companies have made significant progress by leveraging government support and abundant human resources, narrowing the gap with South Korean technology. With this momentum, they are intensifying their efforts to target the Korean market.

Chinese companies, primarily in the electronics sector, are focusing on expanding their market share in South Korea.

Once called the "mistake of the continent," Xiaomi has now established a local subsidiary in South Korea to introduce products and services tailored to the local market. Xiaomi recently established Xiaomi Technology Korea, with a strategy to accelerate its market penetration by setting up the subsidiary this year, building on its staff who had been managing distribution in Korea since 2016. Xiaomi has expanded its product range from smartphones to air purifiers, robot vacuum cleaners, smart bands, and more recently, electric vehicles.

Robot vacuum company Roborock opened its second flagship store in South Korea on the 1st. As the market leader in robot vacuum cleaners in Korea, Roborock, a Chinese company, is building a premium brand image not only through its flagship stores but also by entering major department stores nationwide. In addition to its dominance in the domestic robot vacuum market, Roborock is now introducing washer-dryer products, putting pressure on major players like Samsung Electronics and LG Electronics.

The automotive industry is also in an uncertain situation. The current scenario is quite different from seven years ago when Chinese Dongfeng Motor entered the domestic market with cost-effective models but eventually withdrew. Now, with advancements in electric vehicle and autonomous driving technologies, the global standing of Chinese automakers has significantly changed.

BYD, which has formed a global electric vehicle duopoly with Tesla, has officially entered the South Korean market through BYD Korea starting in January this year. The company is currently building its sales network in Seoul, Gyeonggi, Incheon, Busan, Jeju, and other regions. This month, BYD plans to launch the mid-sized sedan 'Seal' and the compact SUV 'Atto 3.'

These models are expected to be priced 5 million to 10 million KRW cheaper than domestic competitors, when factoring in an 8% tariff, sales incentives, and electric vehicle subsidies. BYD's cost-effectiveness is based on securing cost competitiveness through economies of scale and in-house production of batteries, making it difficult for other brands to easily follow suit, according to analysis.

Additionally, Chinese electric vehicle brand Xpeng is also reported to be actively pursuing its entry into the South Korean market.

The finished vehicle industry believes that if Chinese companies with advanced autonomous driving and battery technologies enter the South Korean market, the burden on domestic automakers will significantly increase. In particular, if these companies succeed in penetrating the domestic market, it is expected to directly impact the global electric vehicle sales of Hyundai and Kia.

An industry insider expressed concern, stating, "In the past, Chinese companies targeted the domestic market by emphasizing price competitiveness, but now they are pressuring the market with products that also have strong technological capabilities." The insider added, "If we don't prepare for competition with Chinese companies, there is a high likelihood that we will lose our share of the domestic market."

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