Chinese Turn Back on Korean Products
Korean products are increasingly sidelined in the country's top export market, China, as subsidized manufacturers there grow increasingly competitive.This trend is reflected in the numbers. Korea's trade balance with China, which had been in the black since 1993, posted a deficit of US$1.1 billion in May this year and $1.2 billion in June and reached $1.54 billion in the first 20 days of this month alone.Korea managed to achieve an overall trade surplus in the last 30 years by making up for a deficit in trade with Japan through a surplus in trade with China, but those times are gone.LG, the world's No. 2 TV maker, accounted for just a 0.1 percent share of China's TV market last year. In 2009, LG eyed a 5.6-percent share, but last year it only sold around 30,000 TVs there.One industry insider said, "Considering the size of China's population, that probably means only Korean expats bought them."Samsung, the world's leading TV maker, also accounted for just a 4.1-percent share in China to rank ninth.One the other hand, China's share of Korea's market for intermediate goods is increasing quickly, surging from 2.9 percent in 1996 to 39.7 percent last year.Cheong In-kyo at Inha University said, "We need to emerge from the current structure of relying on China for trade and actively diversify both markets and sources of raw materials."
Questions:1. Describe how lucrative China is as an export market for South Korea.2. How come this trend is fast changing?3. What does this change mean for the Korean companies?4. Do you think Korean brands can still gain the foothold and maintain its lead in the market? Why or why not?5.Share your personal thoughts on Chinese products and brands.
