| The economy has its ups and downs, industries have their boom and bust cycles, and economic cycles never wait for anyone.

Traffic is getting more expensive, competition is intensifying, and growth is becoming increasingly difficult—this is a sentiment shared by nearly all entrepreneurs today. But the question is: why are some companies still performing steadily during this downturn, and even growing against the odds? What are they doing right?

In mid-May, Huazhi International took a group of entrepreneurs on a trip to Seoul. It wasn’t a vacation; they were there to find answers.

Why choose South Korea? Because the South Korean market entered an era of low growth and intense competition earlier than China did. The cyclical ups and downs they have experienced are exactly what we are going through now. Yet even in this environment, the country has produced companies that have weathered economic cycles, such as Chong Kwan Jang (a century-old brand), SM Entertainment (a leader in the fan economy), Samsung (a tech giant), and Shinsegae (a discount retailer that staged a remarkable comeback).

During the four-day trip, the entrepreneurs visited five leading companies, observing, asking questions, and taking notes along the way. Everyone agreed that there were four “keys to weathering economic cycles” that were most worth bringing back.

When the economy is booming, any brand can sell well. But as soon as the economy turns downward, the first brands consumers cut back on are those they “don’t trust.” Trust is the lowest-cost moat during economic cycles.

Chong Kwan Jang, a state-owned brand established in 1899, has survived for over 120 years, weathering Japanese occupation, wars, financial crises, and industrial transformations… How did it manage to survive?

It faced the same challenge as China’s time-honored brands: young people viewed it as “something their parents eat.” How did it overcome this? Chong Kwan Jang took three key steps.

First, lowering the barrier to entry. By transforming traditional red ginseng into the stick-pack format “EVERYTIME,” we shifted from “simmering a decoction” to “tear open and drink.” This wasn’t about changing the product itself, but about changing the consumption scenario—making nourishment readily accessible. Second, adding value. Through collaborations with Kakao Friends and a partnership with Park Bo-gum, we transformed a century-old brand into a trendy one without compromising on core quality. Third, upholding standards. With seven rounds of testing, designation as an official Olympic health supplement, and government endorsement—we’ve never compromised on the trust that defines our brand.

When expanding overseas, K-Ongjang’s channel selection is particularly interesting. In the U.S., they use Amazon and Costco, while in China, they rely on Tmall and private domains. Rather than covering every channel, they focus on “platforms that locals naturally trust.” Trust can transcend borders, but you need to find the right bridge.

Dr. Lee may not have a century of history, but it has turned its status as “Korea’s National Dermatologist” into its brand’s strongest asset. In the skincare category, trust matters more than functionality. During economic downturns, consumers are even more reluctant to take risks and are more inclined to trust “expert recommendations.”

When expanding overseas, the brand did not build its own team; instead, it used brand licensing and a Chinese master distributor to directly enter over 300 Watsons stores in Hong Kong and Macau. By leveraging others’ trust and established channels, it rapidly expanded its reach.

These two examples reveal an ironclad rule that transcends economic cycles: established brands must safeguard trust, while new brands must borrow it. Without trust, even the lowest prices won’t drive sales; with trust, even in the coldest of economic cycles, customers will follow. Trust is the “ballast” that prevents a company from being abandoned by users during downturns.

Many companies focus solely on one-time conversions and pay little attention to customer retention. But when the market is in a downturn, the cost of acquiring new customers skyrockets, and repeat purchases from existing customers are the key to survival.

Many people view SM Entertainment as nothing more than a star-making machine. But its true ability to weather market cycles lies in turning fans into “part of the family.” From H.O.T. to TVXQ to EXO and aespa, generations of idols have come and gone, yet SM has consistently remained at the top of the industry. How has it managed to do this?

SM’s value chain is clear: artists attract followers through content (public domain) → offline check-in experiences (conversion) → the Bubble private community (retention) → repeat purchases of limited-edition merchandise. It isn’t selling products; it’s selling “identity” and “a sense of belonging.”

What all businesses can learn from this is that SM doesn’t treat users as mere “traffic,” but as “fans.” Fans actively spread the word, actively support the brand, and actively make repeat purchases. Moreover, SM’s offline experience stores serve as advertisements in themselves—fans take photos and post them on social media, helping the brand attract new customers for free. A system built on “nurturing relationships” has allowed SM to transcend the typical lifespan of an idol.

Professor Kim Ran-do of Seoul National University’s research provides a theoretical foundation for this strategy. He proposed the “fast, accurate, and economical” consumption logic of the MZ generation: they want speed, precision, and savings all at once. While this may seem contradictory, it is the true decision-making model of young people. Moreover, this model becomes even more pronounced during an economic downturn—users become more discerning, more rational, and place greater emphasis on “value for money.”

Professor Kim particularly emphasizes that trends should not be met with mere excitement followed by inaction. Every macro-level insight must be broken down into concrete actions regarding product selection, pricing, channels, and messaging. For example, “fast” corresponds to logistics efficiency and customer service response times; “accurate” corresponds to recommendation algorithms and product matching; and “cost-effective” corresponds to price perception and membership benefits.

Companies that have weathered economic cycles know this: users aren’t just numbers; they’re relationships. When relationships are nurtured, customers won’t leave easily during an economic downturn. This kind of bond is more effective than any promotional campaign.

Technological advancements come rapidly, and market cycles are highly volatile. However, the truly successful tech companies—those that can weather these cycles—are not merely focused on R&D; they understand how to turn their technology into a brand story that users are willing to pay for.

Samsung is a global benchmark in this field. From an early technology follower to today’s global leader, it has weathered countless industry cycles—from the wild swings in memory chip prices to the shake-up in the mobile phone market and the evolution of display technology—yet Samsung has consistently remained at the forefront.

Its strength lies not only in substantial R&D investment, but also in its ability to turn “cold technology” into “hot selling points.” With foldable screens, it’s not about the specs—it’s about the upgraded experience of “turning a phone into a tablet.” With AI, it’s not about algorithms—it’s about “cameras that understand you better.” Users aren’t buying technology; they’re buying “a better version of themselves.” This is what it means to brand technology—translating cutting-edge tech into language that consumers can understand and are willing to buy.

Samsung has another best practice worth emulating: its C-Lab internal entrepreneurship program. Having incubated a total of 959 projects, it helps large companies maintain their entrepreneurial spirit. This isn’t a matter of luck, but of a well-designed system—one that provides resources, allows for failure, and offers exit strategies. This mechanism ensures that even when the core business faces a downturn, new growth opportunities can emerge from within the company.

For Chinese tech companies, the biggest pitfall is getting carried away with their own ideas. Samsung has shown us that no matter how impressive the technology is, users must feel that it’s relevant to them. Otherwise, when market conditions change, the first investments to be cut are those that people can’t see the point of.

When the economy slows down, most companies focus on cutting costs. But the true masters find opportunities for growth in others’ pain points.

The New World Factory Store was a stop on this trip that left many people exclaiming, “I never expected this.” In 2025, New World Group’s operating profit surged by 584%, and this discount retail format was the biggest contributor to that success. Yet that year was precisely when consumer spending in South Korea was sluggish—so how did it achieve counter-cyclical growth?

The off-price model isn’t about selling off inventory at rock-bottom prices. Its core lies in: curated selections by professional buyers + year-round discounts of 30%–80% + a membership system. This makes consumers feel like they’ve “scored a bargain without compromising on quality.” For Shinsegae, inventory isn’t a burden—it’s the raw material for another business.

Digging deeper: During an economic downturn, excess inventory is a major headache for brands. Shinsegae alleviates this anxiety for them while satisfying consumers’ desire for the “thrill of saving money.” With both sides benefiting, the company grows naturally.

The lesson for Chinese e-commerce is clear. Clearance sales don’t necessarily require rock-bottom prices; “member-exclusive discounts” and “limited-time flash sales” can maintain price integrity while clearing inventory. More importantly, during an economic downturn, cost-cutting isn’t the only path forward. Identifying others’ challenges and turning them into your own business is the true weapon against economic headwinds.

The four-day trip was brief, but every entrepreneur returned with ideas to put into practice back home.

What Huazhi International has always done is take people to the front lines to find answers—not just theorizing on paper, but seeing firsthand what companies that have weathered economic cycles have done right. South Korea was just one stop on the journey; others include Japan, Germany, the United States, and Southeast Asia… It’s not just about observing; it’s about going with questions and returning with answers.

Cycles will never disappear. But the ability to navigate them can be learned.

We are currently recruiting for the next entrepreneurs’ study tour to South Korea.

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