Chinese domestic market key to expanding exports: gov't

By Lee Joon-seung
SEOUL, Jan. 20 (Yonhap) -- Expanding a domestic market presence in China is key
to arresting the sharp drop in South Korean exports to the country, the
government said Tuesday.
China is South Korea's No. 1 overseas market, accounting for 21.9 percent of all
outbound products as of last year, but the global economic crunch has caused
export growth to contract starting in October, the Ministry of Knowledge Economy
said.
It said after posting on-year growth of 25 percent in the first nine months of
last year, exports plummeted 32.9 percent on-year in November and 32.3 percent in
the last month of 2008.
Overall, the ministry in charge of the country's industrial and trade policies
said there was a 13.4 percent increase in exports last year, although conditions
are expected to deteriorate this year, making it imperative to change tactics.
Kwon Tae-kyun, head of the ministry's trade and investment promotion office, said
in a meeting with South Korean exporters that efforts must be made to grab a
larger portion of China's domestic market instead of relying on Korean
subsidiaries operating in the country and multinational firms that import parts
and materials for assembly so they can be sold abroad later.
This strategy had worked well so far, but the downturn in the global economy has
severely hurt worldwide trade.
Roughly half of all exports go to South Korean companies operating in China, with
another quarter going to multinationals. Only the remaining 25 percent are
products that are sold directly to Chinese consumers.
"Beijing has said it will inject about 4 trillion Chinese yuan (US$585.09
billion) to revive domestic consumption until 2010 that could help South Korean
exports," the deputy minister said.
The policymaker said smaller-sized companies need to better meet local Chinese
market conditions and try to make greater inroads by using large retail networks.
For larger companies, it may be best to concentrate on social infrastructure
building projects, like electric power plants, and to target specific markets and
industries.
In the case of Shanghai, automotive parts are in high demand, while
shipping-related items can be sold in Dalian.
He said more efforts should also be made to take part in the 2010 World Expo in
Shanghai and formulate strategies to enter the less-developed interior of China.
yonngong@yna.co.kr
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