China’s largest electric car manufacturer, BYD, officially launched its sedan brand in South Korea on January 16. The Chinese Communist Party’s dumping of excess production capacity has put pressure on the South Korean economy, prompting the South Korean government to suggest imposing taxes on Chinese electric cars to protect Korean businesses.
In various key industries such as automobiles, steel, chemicals, and secondary batteries worldwide, China’s surplus production capacity poses a threat to the global economy. With the European Union and the United States imposing anti-subsidy tariffs on Chinese electric cars, Chinese companies, including BYD, are now looking to explore other markets like South Korea.
Due to its heavy reliance on exports to China, South Korea has been affected by weak domestic demand in China, leading to a sluggish economy last year. In 2024, domestic car sales in South Korea hit a 16-year low, with electric car sales decreasing by 21.2% compared to the previous year. The South Korean domestic automobile market is expected to remain sluggish in 2025.
Against this backdrop, BYD officially introduced its sedan brand in South Korea on January 16. BYD has already selected six dealers and established a sales network in Seoul, Gyeonggi, Incheon, Busan, Jeju, and other regions of South Korea.
The South Korean automotive industry predicts that BYD will offer small SUVs, midsize sedans, and compact sedans at much lower prices than Hyundai and Kia. The prices of these vehicles in the Chinese domestic market are more than 10 million Korean won cheaper than comparable models from Hyundai and Kia, approximately $6,800.
With BYD entering the South Korean market, it is expected that the import volume of Chinese-made electric cars in South Korea will further increase. According to data from the South Korean Ministry of Industry and Trade and the Korea Trade Association, in the first seven months of 2024, the import volume of Chinese electric cars into South Korea reached $848 million, accounting for 65.8% of the total electric car imports and ranking first.
In 2024, China’s low-cost dumping has caused severe crises for South Korea’s two major export industries, steel and petrochemicals, which have long relied on the Chinese market. In an effort to protect these industries, the South Korean government announced plans to implement anti-subsidy taxes on imported Chinese electric cars following BYD’s official announcement of entering the South Korean sedan market in November 2024. The government specified that it would follow the European Union’s experience in conducting anti-subsidy investigations on Chinese electric cars.
According to a source from the South Korean Ministry of Industry and Trade in December 2024, the South Korean Tariff Law includes provisions for imposing anti-subsidy taxes, taking reference from the European Union where the tax rate on (Chinese) electric cars exceeds 10%. The government has also established investigation procedures, allowing the Trade Commission to conduct investigations if companies file anti-subsidy investigation applications.
In recent years, due to the economic slowdown in China, South Korean companies operating in China have faced challenges and many have chosen to withdraw or downsize their operations. Meanwhile, numerous Chinese brands have entered the South Korean market, but many Chinese products have faced controversies due to safety issues.
In the electronics sector, Xiaomi plans to open physical stores in South Korea in the first half of 2025 and focus on selling REDMI and POCO low- to mid-range smartphones.
Xiaomi’s investment in Stone Technology’s robotic vacuum cleaners has held the top market share in South Korea for three consecutive years. In the first half of 2024, the market share of the robotic vacuum cleaner in South Korea was 46.5%.
However, concerns about security have arisen surrounding Chinese robotic vacuum cleaners due to risks of hacking and controversial components in detergent, resulting in doubts about their reliability in the South Korean market. To overcome this challenge, Chinese robotic vacuum companies have initiated discount promotions.
In the e-commerce sector, Alibaba’s global platform, AliExpress, entered the South Korean market in 2018 and has grown rapidly, with an active user base ranking second only to South Korea’s leading e-commerce platform, Coupang, as of December 2024. Temu ranked third.
However, South Korean quality inspection reports have revealed that nearly 60% of products sold on Chinese e-commerce platforms contain harmful substances.
A quality inspection report on overseas e-commerce platforms in Seoul in May 2024 highlighted that 5 out of 9 products sold on AliExpress and Temu tested positive for hazardous substances.
Moreover, Miniso entered the South Korean market in 2016 with over 70 stores at its peak. The brand exited the South Korean market in 2021 but reopened a store in Seoul in December 2024.
Chinese milk tea brands have also entered the South Korean market, with Chatime and Xicha opening stores in Seoul, and Chagee revealing plans to enter the South Korean market.
Additionally, Chinese wind turbine manufacturer Mingyang Smart will enter the South Korean offshore wind power market. In 2024, Mingyang Smart formed a joint venture with South Korean wind energy machinery company UNISON to establish a factory in Sichuan Province with an investment of approximately 150 billion Korean won (around $100 million), expected to be completed by 2026.
Independent commentator Zhu Ge Mingyang believes that the current political turmoil in Korea is seriously impacting the country’s economy. If pro-China opposition parties take control of South Korea, its politics and economy could be at risk of being engulfed by China and North Korea.