Korean and Chinese cell phone in China

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Korean and Chinese cell phone in China

• Qiying Mu, Yadan Luo,
• Zhiyu Zhou

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Korean cellphone do well in Chinese Market!
Why?

• well appearance design
• successful promotion --- K-POP, TV short,
• Multiple product
• advance technology,multiple functions ......

But, what drive them do so well ??
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• SAMSUNG in China
• more than 54,000 employees in China
• 119 institutions in China
• In 2010, SAMSUNG was planed to product 2.69
  hundred million cell phones, and more than 60
  was produced in Chinese SAMSUNG factories.
• SAMSUNG factory in Tianjin, Dongbei area.

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Human Capital and Labour Force in China

• China-- World Factory!
• China huge amount and cheap labour
• Similar culture condition--- Neo-Confucianism

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Neo- Confucianism

• Confucius ??
• (551-479BC)
• Confucianism
• Benevolence(?)
• Justice(?)

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Confucianism in Korean

• About 190-180 BC, Confucianism was disseminated
  to Korea.
• Since then, Confucianism had developing in Korea
• Korean
• Confucianism.

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Confucianism affect in Korean

• the two most prominent Korean Confucian scholars
  of the Joseon Dynasty---
• Yi I (???? )(15361584)
• Yi Hwang (????)
• (15011570)

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Neo- Confucianism

• Let the king be a king, the minister (be) a
  minister, the father a father and the son a son
  ????,????

If a man in the morning hear the right way, he
may die in the evening without regret. ???????
The prince employs his ministers with propriety
the ministers serve their prince with good
faith. ?????, ?????
loyalty harmony
education knowledge
order
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• centralized leadership
• self-examination
• dedication
• self-discipline
• keep education

• Low transaction cost
• efficiency
• sustained economics growth

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Human resource

• comprador (??)--- a large number of Korean
  Chinese(??????)
• China has over
• 2 million Korean
• Chinese

Sourcehttp//baike.baidu.com/view/2743.htm
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Why Korean do well in China

Really? That is all? ??
culture human resource!!
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Koreas Growth Pattern

• Ignited and sustained by export

SourceByung-Nak Song,The Rise Of Korean
Economy,Oxford University,1990
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Why Export?

• Domestic Investment?Saving
• Need to import oil and other industrial raw
  materials
• ?
• Borrow From Foreigners

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Why Policy Priority?

• Investment resources were insufficient
• High defense expenditures spend much domestic
  saving

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How The Expansion Policy Impact On Korean Firms?

• Expansion of existing firms rather than
  increasing new firms
• ?conglomerates
• ?government support
• have the ability to expand overseas

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Source of Economic Growth

• Demand Side ADICG(EX-IM)
• Export (33) ?Domestic Demand (31) ?export-led,
  not investment-led (1963-1973)

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Source Figures for 1970-83 are the World Bank
estimates. World Bank, Korea-Managing the
Industrial Transition. A World Bank Country
Study, Vol.2, Selected Topics and Case
Studies,1987. Figures for 1983-1987 are updated
by Byung-Nak Song, The Rise of Korean Economy
,Oxford University,1990
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Source of Economic Growth

• Way to Export Successfully
• 1963-1975 resource poverty? exporting firm
  import raw material, part, machinery required for
  producing export goods? negative import
  substitution? BOP deficit
• 1986-nowexport orientation ?foreign capital
  inflow ?BOP surplus

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Source Based on information from United States
Department of Commerce, International Trade
Administration, Foreign Economic Trends and Their
Implications for the United States Korea,
Washington, June 1989 United States, Department
of Commerce, International Trade Administration,
Foreign Economic Trends and Their Implications
for the United States Korea, Washington, April
1990 and Korea Economic Institute of America,
Korea Economic Update, 1, No.2, Summer 1990, 4.
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Principal Trading Partners1986
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Principal Trading Partners1988
Source Based on information from Korea Trade
Promotion Corporation, How to Trade with Korea
1987--A Practical Guide to Trade and Investment,
Seoul, 1987, 20-26 and The Europa World Year
Book,1989, 2, London, 1989, 1574.
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Source of Economic Growth

• Supply Side Growth Accounting
• Y ALaKß (ß1-a)
• 1963-1986 labor? labor surplus economy
• Later period labor? labor shortage
• 1972-1982 foreign investment?capital
  inflow?contribution of A is not much

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Source Estimates for Korea for 1963-73 are from
Byung-Nak Song, 1984, and for 1973-86 were those
re-estimated by Byung-Nak Song. Estimates for
Japan are from E.F.Denison and William
K.Chung,1976.
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Technology in Korea

• mid-1960s Ministry of Science and Technology
  ?oversee all government research and development
  activities
• Korea Institute of Science and Technology?
  industrial research laboratory
• 1970sKorea Advanced Institute of Science?develop
  and offer graduate science programs

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Technology in Korea

• Human Resource
• lure back South Korean scientists and researchers
  who had emigrated abroad
• South Korea's younger scientists, technocrats,
  and economic planners in had received their
  graduate education in the United States.

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Distribution of value for iPhone
Source Kenneth L. Kraemer, Greg Linden, and
Jason Dedrick, Capturing Value in Global
Networks Apples iPad and iPhone ,University of
California, Irvine, University of California,
Berkeley and Syracuse University
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Distribution of value for iPad
Source Kenneth L. Kraemer, Greg Linden, and
Jason Dedrick, Capturing Value in Global
Networks Apples iPad and iPhone ,University of
California, Irvine, University of California,
Berkeley and Syracuse University
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Who own Samsung?
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LG Shareholder Composition
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South KoreaUnited States Relations
a classroom in the Korean Naval Academy
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The development of Chinese cell phone industry
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The development of Chinese cell phone industry

• 1999 2003 (Boom).
• Reasons
• 1.The growth of Chinese economy.

Grew very fast from 1999 to 2003
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The development of Chinese cell phone industry

• 2.Endogenous Growth Model
• The nine-year compulsory education Human
  capital.
• Government policy institutions.
• Imported technology instead of the old technology
  technical innovation.

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The development of Chinese cell phone industry

• 2003 2010 (Decrease)
• Reasons
• Without continued technical innovation.
• Lack of core capacity.
• More and more foreign competitors.

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Top 5 in Chinese market in 2011

• 24.3
• 19.6
• 12.6
• 11.1
• 7.5

Chinese brand
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One of the successful cell phone company

• Continuous technology innovation.
• Leader makes the rules and others follow them
  without conflicts.
• The employees work hard.
• Good after-sale services.
• Focus on harmony.
• Enter the market step by step.
• Never give up.

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The current situation of Chinese cell phone
industry

• Advantages
• Cheap.
• Familiar to Chinese market.
• Colorful.

• Disadvantages
• Quality.
• After-sale service.
• Lack of high tech, capital.

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The current Chinese market

• 1. Almost 100 million people have cell phone.
• Even in countryside, 90 has cell phone.
• But
• Profit is exists.

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China's population age distribution
The majorities will change their cell phones in
15 months.
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The current Chinese market

• 2. The majority need is for semi-high end and
  low-end cell phone(?????).

The price that Chinese people are willing to
spend on the cell phone.
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The Chinese society nowadays

• conspicuous consumption becomes an trend, a life
  style, which The U.S. , Korea, Japan have.
• Banks are encourage people to buy luxury goods,
  then the banks can get money faster.
• (For them, Huawei cell phones are not good.)
• But, conspicuous consumption in China can not be
  a big part of the market.

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The Chinese society nowadays
Per capita in China is 5184.
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The Chinese society nowadays

• The majority people are these people who live in
  rural areas and the middle class in urban.
• The majority people can not always afford the
  luxury goods because of the per capita GDP in
  China.
• For the majority people, Huawei cell phones are
  good.

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The survival way of Chinese cell phone

• Consolidate the small cell phone companies.
• Focus on the semi-high end and low end products.
• Pay attention to secondary cities and rural
  areas.
• Expand the market of the third world countries.

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The survival way of Chinese cell phone

• Try to be the top cell phone companies and
  provides the expensive cell phones.
• Do not ignore the majority, middle class people
  in China.
• Get the good balance and offer both the cheap and
  the luxury cell phones based on the harmony of
  the neo-Confucianism.

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The current supply chain

• Smiling curve

China
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?????

• Why Korean cell phone do so well in China?
• What should the Chinese cell phone companies do?
• It seems that the U.S. Supply chain works well,
  but will it live forever?????

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• Thanks for your listening!!!