[ANALYSIS] Why Japan is closely watching how Samsung fares against Chinese rivals - The Korea Times
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[ANALYSIS] Why Japan is closely watching how Samsung fares against Chinese rivals

By Baek Byung-yeul

Japan had been a great benchmark for Korea as firms in the neighboring country have held competitive edges in every industrial sector ranging from consumer goods to high-tech businesses.

Samsung Electronics, a leading player in the semiconductor and IT device sectors, also used to benchmark Japanese firms such as Sony.

Japanese rivals remain highly competitive in the high-tech industry, securing source technologies in materials and components for displays, networks and semiconductors, while Samsung has surpassed its pioneering rivals in Japan by accurately assessing changing market trends and developing state-of-the-art production technologies.

Samsung has continued to show its dominance in the high-tech business, while Chinese rivals, capable of manufacturing cheap but increasingly competitive products, are catching up quickly.

Perceiving the 2020 Summer Olympics as a chance to leap forward again, Japan aimed to showcase its superb fifth-generation (5G) network and future car technologies to regain its fame. But it remains uncertain if the delayed Olympics can be held this summer due to the protracted coronavirus pandemic.

As the tables turned, Japan, which views Samsung as a reminder of its former corporate glory, is closely monitoring what the Korean company does to overcome growing market uncertainties while staying ahead of Chinese rivals.

In February, Nihon Keizai Shimbun, a Japanese economic newspaper, posted a series of articles reporting that Samsung has been struggling due to continued technology leaks to Chinese rivals as the Korean company faces a leadership vacuum. The group's Chairman Lee Kun-hee passed away in 2020 and his son Lee Jae-yong has been imprisoned on bribery charges.

The Japanese newspaper pointed out that it remains to be seen whether Samsung, which used to copy Japanese technology, will be able to transform itself to further expand its leadership in the tech industry.

The Japanese daily said technology leaks to Chinese companies could become the biggest risk for Samsung. Last year, the National Intelligence Service (NIS) said it detected and blocked 123 technology leaks to overseas countries from 2014 to 2019 and 83 of those leaks involved China. Most of the leaked technologies were related to displays, semiconductors and shipbuilding where China remains less competitive than Korea.

Lee Suk-geun, a business school professor at Sogang University, said there is a chance that Samsung Electronics could follow the same route that Japanese firms took given Chinese rivals are improving their capabilities rapidly in the tech industry.

"We've already seen how Chinese firms are encroaching on Samsung Electronics' territory. It's an ongoing thing. Compared to the Chinese firms, Samsung is losing its competitiveness in pricing and the Korean tech giant is increasingly sandwiched by China and Japan," the professor said.

But one of the biggest differences between Samsung and Japanese firms is achieving globalization, he added. "As they had shown their dominance over the long run, Japanese firms were less aggressive in globalizing their business structures. This is different at Samsung, which has tried to transform itself to fit into a global standard."

The professor stressed that Samsung is also required to shift its business strategy from focusing on quantitative growth to qualitative improvements to further boost its technological edge over Chinese competitors.

"In the end, Samsung Electronics has to make a decision to outsource smartphone manufacturing, excluding phones made using next-generation technology like foldable phones. When it comes to thinking about its future business model, Samsung should focus more on achieving qualitative growth," he elaborated.

Baek Byung-yeul baekby@koreatimes.co.kr


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