[Editorial] Alarms from the export front with China

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[Editorial] Alarms from the export front with China

China, Korea’s largest trade partner, is shutting down its doors fast. Following a rapid decrease in exports of intermediary goods such as semiconductors amid the tense Sino-U.S. competition over technology hegemony, Korea is rapidly losing its strength in consumer products on the frontline of the Korean wave. According to a recent survey by the Korea International Trade Association (KITA) on the Chinese consumer trend since the pandemic, only 43.1 percent of the Chinese have purchased Korean products like cosmetics, food and clothes over the past five years.

At a glance, the number may look promising. But the opposite is true, as the figure shows a whopping 35.6 percent drop from 78.7 percent in 2020, shortly before the pandemic. The situation in Beijing and Shanghai — the two megacities leading the consumption trend in China — is more serious. The ratio of consumers in those cities having bought Korean products fell to 40.2 percent and 41.3 percent, respectively, each representing a 46.8 percentage-point and 45.7 percentage-point plunge from 2020.

Reasons for the unpopularity of Korean products are threefold: hostile product reviews by Chinese consumers on online shopping malls after purchase (35.9 percent); the image they have of Korea (34.6%); and a lack of competitiveness for Korean products (33.6%). As the first two are related to subjective and emotional factors, the third poses a more serious challenge as it is directly related to the quality of products. In the same survey, 58.2 percent said they would choose Chinese products over their Korean counterparts. There was also a simultaneous increase in the number of Chinese consumers preferring European or U.S. products over Korean ones. Korean products are squeezed between their European or American rivals.

China is the largest export market for Korea, more than its exports to the U.S. and Vietnam combined. For an economy relying on exports for 80 percent of its GDP, it is a big problem if Chinese consumers are increasingly shunning Korean products. Korea may end up losing its largest consumer market overseas amid the turbulent shift in the international order.

China is recovering from its slowed consumption from the pandemic. The IMF forecasted its economy to grow 5.2 percent this year to give impetus for the global economy for a rebound. But the disturbing developments in China sound loud alarms for the Korean economy. As KITA advised in its report, the government must improve the Korean brand by first promoting the entry of well-prepared companies to the Chinese market and providing effective support for other companies to help them sell their competitive products through attractive marketing strategy.
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