Xi’s visit oozes opportunities
“After President Xi’s visit, the trade ministries of the two countries will set a detailed timetable for the FTA negotiations,” said Deputy Minister Choi Kyung-lim of the Ministry of Trade, Industry and Energy after a briefing Monday.
The Korea-China FTA has been discussed since 2005, with slower-than-expected progress. Official negotiations began in May 2012, but there remain wide differences, especially involving sensitive items like agricultural products.
The Korean government expected some progress when President Park Geun-hye met with Xi in Beijing last year, but not much has been done since then due to the focus on multilateral trade deals like the U.S.-led Trans-Pacific Partnership and the Regional Comprehensive Economic Partnership with China and 10 Asean countries.
After the 10th FTA talks in Meishan, Sichuan Province, in late May, the two countries reached an agreement on opening the online commerce sector and a series of competition regulations. With this, the two ministries verbally agreed to conclude negotiations this year.
The negotiation session in mid-March made almost no progress due to conflicts over so-called supersensitive products each country wants to protect. Korea has long wanted agricultural and fisheries products on the supersensitive list, while China has pushed for petrochemicals, steel and machinery products.
Since diplomatic ties began in 1992, trade between China and Korea has grown about 19 percent every year. China is the largest market for Korean exporters, accounting for 26.1 percent of total exports last year. Korea is China’s fourth-largest trading partner, according to the Hyundai Research Institute.
“The FTA negotiations need to be conducted in a way that foresees expected changes in major industries of the two countries,” said Han Jae-jin, a research fellow at the institute. “In some industries like aerospace, steel, machinery and shipbuilding, China has equivalently competitive or better technologies than Korean rivals, so the FTA negotiations need to account for technological changes in order to increase the benefits of free trade.”
Competition is intensifying globally with Korea accounting for 3.1 percent of world exports and China 12.1 percent, according to the institute
According to data from the Export-Import Bank of Korea, 818 Korean companies invested about $5.1 billion in China last year. That was a noticeable increase, considering that annual investment hovered around $3.6 billion each in the previous three years.
Samsung Group had invested a cumulative $16.8 billion in China as of last year. The largest Korean smartphone maker first made inroads into China in 1992. As of June, Samsung employed about 120,000 Chinese, according to the company.
The Chinese Academy of Social Sciences selected Samsung Electronics as the best performing foreign company operating in China last year.
“It is certain Samsung will continue investing in China,” said a company spokesman. “Sales are on the rise and it is a crucial market for Samsung.”
According to a Samsung Electronics sustainability report, China accounted for 18 percent - 40.1 trillion won, or $39.8 billion - of revenue last year, more than any single country.
About 170 Korean business leaders are expected to participate at the Korea-China Business Forum, hosted by the Korea Chamber of Commerce and Industry and the Korea-Trade Investment Promotion Agency (Kotra), tomorrow at the Shilla Hotel, central Seoul.
Along with some 250 Chinese business delegates - including Huawei Chairman Ren Zhengfei and Alibaba Chairman Ma Yun - Xi also will make an appearance.
Although Samsung Electronics Chairman Lee Kun-hee is hospitalized, his heir Jay Y. Lee will meet with Xi to discuss business opportunities.
The Samsung Electronics vice chairman first met Xi during a 2005 visit to the company’s Suwon factory The two also met at the Boao Forum in Hainan, China, in April 2013.
In May, Samsung completed a $7 billion chip-making plant in Xian, Shanxi Province, Xi’s hometown, which will produce 10 nano-class NAND flash memory chips.
Hyundai Motor Group Chairman Chung Mong-koo will also meet Xi and is expected to discuss Hyundai’s fourth Chinese plant in Chongqing, which is awaiting government approval. If Hyundai gets the green light, it would have an annual production capacity of 2.3 million units in China.
LG Group Chairman Koo Bon-moo, who met Xi in 2005, is expected to discuss about possible deals involving electronics and batteries.
One of the group’s core affiliates, LG Chem, yesterday said it signed a memorandum of understanding with the city of Nanjing for an electric vehicle battery plant.
Kumho Asiana Group Chairman Park Sam-koo will have a key role in Xi’s visit as chief of the Korea-China Friendship Association since 2005. Park is expected to discuss the move of Kumho Tire’s Nanjing plant and expanding Asiana Airlines routes to China.
SK is expected to ink a cooperative deal with Amer International Group, while its affiliate SKC is expected to sign a deal with TCL Group regarding parts for electronic devices.
Posco, nation’s largest steelmaker, is expected to sign an MoU with Chongqing Iron and Steel to build a steel mill using its new steelmaking technology.
A number of Chinese businesses have their eyes on Korea, too, expanding their investment in their neighbor every year.
In the first half of this year, foreign direct investment from China surged 670 percent to $766 million, almost double the $481 million last year, according to data from Kotra.
Today, as many as 123 Chinese business leaders and government officials who are to visit Seoul with Xi will hear a presentation by Kotra on the changing investment conditions in Korea.
BY SONG SU-HYUN, JOO KYUNG-DON [email@example.com]