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Chinese Domestic Market to Be Key to Increase Exports

The Korean government plans to support Korean small- and medium-sized companies penetrating the Chinese domestic market as a measure to increase Korea’s exports in the second half of this year. The three Chinese domestic markets that Korean companies will target are consumables, advanced parts and materials and the central and western market.

To penetrate a local consumable distribution network, stores exclusively for small- and medium-sized companies will be established. The Korean government also plans to enter the Chinese advanced parts and materials market by increasing the number of global partners. A milk run will be built so that Korean automotive parts can be easily supplied to Chinese automobile manufactures.

Information on Chinese provinces and cities will be provided to Korean companies that plan to enter China’s western and central market. In October, a group will be dispatched to investigate the investment environment in China.

The Korean government will also endeavor to tear down non-tariff barriers, including customs clearance and test certifications, which are the largest obstacles Korean companies face when entering the Chinese market.

The Korea International Trade Association (KITA) noted that the Korean economy’s exports to China should shift their focus rapidly from the processing industry to the domestic market, in its report on Chinese market trends and their implications, released last month.

Due to the global economic slowdown, China’s exports are recovering slowly and labor costs are rising. Loss of competitiveness in the processing trade is unavoidable. As China’s growth strategy is also adjusted toward the domestic market, KITA stressed that Korea should increase its share in China’s domestic market.

The reported added that Korea should facilitate a bilateral free trade agreement (FTA) between Korea and China. Early signing of the Korea-China FTA will enable Korea to dominate the Chinese market and create new export opportunities.

Lee Bong-geol, a senior researcher at KITA, noted that import duties in China are 9.7 percent on average, adding that a Korea-China FTA will help enhance the competitiveness of Korean products and that Korean small- and medium-sized companies will have a chance to export to China.

Lee also said that Korea should focus on China’s urbanization projects. He emphasized that Korean companies need to concentrate on China’s housing and infrastructure projects, including construction equipment, steel and low carbon industries in the short term, and focus on the IT product, clothing, food and beverages and tourism industries in the long term.

Source Text

Source: Newsis (July 11, 2013)

** This article was translated from the Korean.

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