[Initial Insight] How the US and China Survive in the Tiger's Den

Between the U.S. and China, Companies Forced to Choose
The Dark Side of Localization: Strict U.S. Requirements
China's Enticement and Containment: Tug-of-War Over Technology
Only Irreplaceable Technology Guarantees Survival

Korean companies are continuing a breathless tightrope walk between the great powers of the United States and China. As strategic industries such as semiconductors, electric vehicles, and batteries come to the forefront, the global supply chain has become an extension of diplomacy. Governments around the world are strengthening their domestic-centered industrial strategies and effectively pressuring foreign companies to "take our side," while Korean companies are fiercely seeking balance amid complex calculations. In the absence of leadership from the Korean government, business leaders have become de facto private diplomats.

Recently, Chung Eui-sun, Chairman of Hyundai Motor Group, met with former U.S. President Donald Trump and announced plans to invest 31 trillion won in the U.S. over the next four years. Subsequently, Lee Jae-yong, Chairman of Samsung Electronics, and Kwak No-jung, President of SK Hynix, attended a global CEO meeting personally hosted by Chinese President Xi Jinping. Facing pressure from the major powers, Korean companies responded with large-scale investments in the U.S. and conciliatory messages at the executive level in China.

The problem is that both countries are demanding concrete actions from Korean companies. The U.S. wants not only localization but also the relocation of production bases. It requires companies to build factories within the U.S., produce products there, and create jobs. In addition, there are burdensome obligations such as demands for investment information disclosure and submission of supply chain reports, which are difficult for companies to handle.

Building factories in the U.S. cannot be seen as advantageous for our companies. Labor costs are high, and skilled technical personnel are severely lacking. Regulatory environments vary by state, making business forecasting difficult, and many regions lack adequate production infrastructure. While fulfilling the Trump administration’s political rationale of job creation, our companies gain strategic benefits such as market accessibility and stable relations with the U.S. However, this comes at the cost of sacrificing profitability and operational efficiency. The political logic pressuring investment and the corporate reality prioritizing profits inevitably clash.

Samsung Electronics Chairman Lee Jae-yong, who met with Chinese President Xi Jinping, is returning to Korea through the Gimpo Airport Business Aviation Center in Gangseo-gu, Seoul on the 28th. 2025.3.28. Photo by Kang Jin-hyung

China pressures foreign companies in a different way. While strengthening regulations and controls on semiconductor companies under the pretext of protecting its domestic industry, it reacts sensitively to capital and employment outflows. At the same time, it directly sends signals to “stay in China” by calling top executives to Beijing. This is a strategy that simultaneously employs containment and courting.

Korean companies are placed in a situation where they are forced to choose. Diplomatically, they may maintain strategic ambiguity, but business strategies ultimately require physical decisions such as where to build production bases and to whom to disclose technology. This is a time when strategies for survival, not simple balancing, are urgently needed.

In this reality, the words of the late Han Jong-hee, Vice Chairman of Samsung Electronics, come to mind again. During his lifetime, he said, "No matter how much we relocate production bases, there is no truly safe place for us." He said, "We must automate and robotize production lines so that we can survive even if we enter a tiger’s den. Our partners must do this together." In a situation where production bases must be moved due to pressure from various countries and risks must be managed, the ultimate answer that companies must hold onto is technological competitiveness. He clearly indicated the direction companies should take amid uncertainty by saying, "First is irreplaceable technology, second is irreplaceable technology, and third is irreplaceable technology."

Hyundai Motor Group Chairman Chung Euisun is taking a commemorative photo with Brian Kemp, Governor of Georgia, at the completion ceremony of 'Hyundai Motor Group Metaplant America' (HMGMA) held on the 26th (local time) in Ellabell, Georgia, USA. Photo by Yonhap News