Earlier this year, China-based Xiaomi took the crown in its local market as the biggest smartphone supplier, replacing Samsung Electronics.
What's more surprising is that China's major smartphone makers have outpaced Samsung and LG in terms of global market share.
And experts say manufacturers in Korea are not just facing risks coming from China, but also Japan which is introducing aggressive marketing strategies because of the weak yen.
They add that the overall competitiveness of the Korean manufacturing sector is on the brink of a sharp downward spiral in the face of an aging population and low birth rates.
But some pundits say Korea should turn the crisis into an opportunity so that the local manufacturing sector can make another big leap forward.
Take the United States for example.
The government has developed 45 research centers aimed at bringing innovation into the domestic manufacturing industry.
The Korean government also announced a plan to breathe new life into the manufacturing sector in June, calling it the manufacturing industry 3.0 innovation strategy.
But the detailed plans that the government promised to lay out by the end of this year have not come yet, while local companies hesitate to make investments amid a sluggish domestic economy.
Hwang Ji-hye, Arirang News.