[Reading Between the Lines] China Grabs a Ride from Vending Machines... 'Low-Value Manufacturing Country' Is a Thing of the Past

New Book 'The China'
China's Fintech and Facial Recognition Technologies Rapidly Growing... After Semiconductor Rise, Next Goals Are Brain and AI
Park Seungchan: "We Must Not Ignore China Due to Sinophobia... It's Completely Different from the China Known to Older Generations"

The China

[Asia Economy Reporter Wondara] While Koreans are enthusiastic about 'drive-thru' screening clinics, Chinese people are turning to 5G-based 'Ping An Good Doctor' instead of hospitals. While fintech and blockchain in Korea are idling due to regulations, in China, people pay subway fares with facial recognition and pick up cars from vending machines within 10 minutes. While Korean youth are focused on civil service exams, stock and real estate investments, 20,000 venture companies are born daily in China.

Is the poor performance of Samsung, LG, Hyundai Motor, E-Mart, and Lotte Mart in the Chinese market really due to the deployment of the Terminal High Altitude Area Defense (THAAD) system in Korea? Is Korea, a display powerhouse, losing the lead in the liquid crystal display (LCD) market to Chinese company BOE really because of technology leakage?

'The China' captures the vivid reality of China today. It contains information that companies and youth considering entry into China, as well as public officials formulating trade policies with China and domestic industrial policies, need to know.

The author emphasizes that today's China is completely different from the China known by the older generation. China used to produce low value-added products without independent technology, even for something as simple as a pen tip. However, since 2010, policies have shifted toward high value-added manufacturing methods and increasing self-sufficiency. It is transforming from 'Made in China' to 'Inside China.'

China has established a 'red supply chain' and is also carrying out the 'Made in China 2025' initiative. The red supply chain is a kind of vertically integrated system where China handles everything from raw material supply to finished product manufacturing. Made in China 2025 has also been the driving force behind China's semiconductor rise.

While we criticize China's 'talent poaching,' China has launched a 'talent attraction war.' It has promoted the Thousand Talents Plan (recruiting 100 outstanding young academic leaders from overseas), the Thousand Experts Plan (recruiting 1,000 key talents in technology and finance working abroad), and the Ten Thousand Talents Plan (selecting and nurturing 10,000 outstanding and young high-tech talents).

Huawei, a leading Chinese company engaged in a trade war with the U.S., has over 50% of its workforce in research and development (R&D) rather than production. Among Koreans who earned degrees in the U.S., 63% do not return to Korea. In contrast, about 80% of Chinese international students return home.

While less than 2% of Korean university students wish to start a business, 90% of Chinese students want to start one. Chinese authorities consider the startup period as work experience and recognize the payment of five major social security costs, including pension insurance, when re-employed. Job seekers with startup experience are also given extra points when taking civil service exams.

To promote venture investment, China has shortened the period to meet stock market listing requirements to 5-9 months. In the case of BOE, the government covers about 95% of investment costs. However, it requires cooperation with small and medium-sized enterprises within China, enabling co-growth between large and small businesses. This is very different from Korea's approach of simply renting out places like 'Creative Economy Innovation Centers.'

What is China's next move as it chases Korea's semiconductor and display sectors? Having caught up with most of Korea's key industries, China's future projects are now heading toward the 'brain' and 'artificial intelligence (AI).'

The author, who has observed Chinese companies for 30 years, warns, "We must not turn away in China phobia." If we do not face it now, Korea's Generation Z will struggle just to catch up with China's Generation Z. (The China / written by Park Seungchan / Korea Management Association Consulting / 19,800 KRW)