Korean Conglomerates Shift Bases from China to U.S.
The shift of South Korean conglomerates’ overseas business hubs from China to the United States is directly connected to the rapidly changing international situation. In the past, China played the role of the ‘world’s factory’ based on cheap labor costs, but as the strengthening of U.S. protectionis
In recent years, South Korean conglomerates have been shifting their overseas business operations from China to the United States. This change is closely linked to the evolving international landscape. China used to be the "world's factory" due to low labor costs, but the rise of U.S. protectionism, coupled with tariff and subsidy policies, has made securing supply chains and local production in the U.S. crucial for these companies.
According to CEO Score, the number of U.S. affiliates for 28 major domestic groups (excluding HMM and Coupang) rose dramatically by 3.3 times from 394 to 1,308 in the last 10 years. Meanwhile, the number of Chinese affiliates dropped from 700 to 529. China once dominated overseas affiliates at 23.1%, but the U.S. now holds the top spot with 26.5%, a significant increase from the 10.7% share it held 10 years ago.
This shift is primarily driven by U.S. protectionist trade policies. As China's cost advantage in production diminished due to tariff pressure and stricter regulations on Chinese products, local production in the U.S. became a strategy to minimize tariff risks and ensure stable customer bases and supply chains. For instance, the top five groups – Samsung, SK, Hyundai Motor, LG, and Hanwha – saw a massive increase of 648 U.S. affiliates over the last decade, from 240 in 2016 to 888 in 2021.
Among these, Hanwha Group stood out with a 311% increase, from 63 affiliates in 2016 to 374 in 2021. This surge was fueled by the expansion of Hanwha Solutions' solar power production and sales, Hanwha Energy's energy storage systems, and the acquisition of Philly Shipyard and Hanwha Systems. Similarly, SK Group's U.S. affiliates grew from 40 to 243, driven by SK On's battery business and SK Pharmtech's pharmaceutical contract manufacturing, along with the acquisition of Key Capture Energy.
Samsung Group expanded its U.S. presence from 52 to 95 affiliates after acquiring Harman and investing in battery joint ventures with Stellantis and General Motors. LG Energy Solution and Samsung SDI are also aggressively targeting the U.S. ESS market. LG Group's affiliates rose from 30 to 64, while Hyundai Motor Group bolstered local production by building the Hyundai Motor Group Metaplant America in Georgia.
This shift has also led to business restructuring in China, with the number of Chinese affiliates for the top five groups decreasing from 330 to 269. For example, Samsung Electronics closed its smartphone production facilities in China, and LG Display sold its Guangzhou LCD plant. A business community official noted that despite political divisions within the U.S., there is bipartisan support for economic security, and this trend of U.S.-centric business reorganization will likely continue.
Written by urgent.news from BusinessKorea's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
