Lwinter has descended on Seoul. The cold is polar and intense snowfalls block the roads, making traffic chaotic, as has already been the case in Japan since the beginning of the week. The Korean economy is also freezing. The Bank of Korea indicated, Thursday, January 26, that the gross domestic product had contracted over the last three months of the year 2022 by 0.4%. A first since the start of the pandemic. Inflation and rising prices have undermined consumption and slowed production. Even kimchi, the spicy pickled cabbage that accompanies any Korean dish, has become overpriced.
And since bad news rarely comes alone, the other Korean specialty, telephones, is also in very poor shape. With Samsung, the country is the world leader in this specialty. But in 2022, according to analytics firm IDC, global smartphone sales have crashed. They tumbled 18.3% in the last quarter of last year. The largest drop of all time in a now mature global market with 1.2 billion units sold in 2022. Samsung narrowly retains its crown for the whole of 2022, but loses it in the last quarter. the eternal rival, Apple, passed in favor of the Christmas holidays. But neither can boast. They both saw their quarterly sales drop by more than 15%. In question, of course, inflation, the price of raw materials, the rise in interest rates, but above all China.
Chinese reopening
Once again, we see the systemic effect of China’s zero Covid policy on global trade. The main factories of Apple and Samsung are in China, although both are redeploying their production device to Vietnam and India. But it is also the Chinese consumer who has failed. Xiaomi, the world’s third-largest smartphone manufacturer based in Beijing, saw its sales collapse by 26% in the last quarter of 2022. We understand the virtual panic of the Chinese authorities who brutally reopened their market at the risk of a major health crisis. Samsung, which produces not only telephones but also memory chips or screens for its competitors, is logically the firm most affected.
China’s reopening, even hampered by US boycotts, is expected to boost the economy and phone sales. But, as with televisions, another specialty of the country of the Morning Calm, the level of saturation of the world market is now as established a fact as the consumption of kimchi in Korean homes.