According to the finance ministry of South Korea, the country needs to focus more on higher sale of final consumer goods to China as a measure of tackling the problem of declining exports to its largest trade partner. The answer to South Korea’s falling exports problem lies in the expanding consumer market of China.
By 2020, it is expected that China would become a $10 trillion consumer market, which is why the finance ministry located in Seoul has suggested that Korea should concentrate more on exporting consumer goods to China in the forthcoming years.
According to a report of the finance ministry, the share of Korean consumer goods exports is marginal in the booming consumer goods market of China.
A major cause of concern for Seoul’s policy makers is the declining Korean export shipments to China because almost 50% of the growth of the Korean economy is driven by exports out of which about one fourth go to China. The finance ministry also pointed to the fact that of the total exports to China from Korea, 24% are capital goods, 72% are intermediate goods like electronic parts or vehicle components and only consumer goods account for only 3%.
The ministry has also stated that it would extend the necessary assistance to the Korean exporters to export quality goods ranging from fishery and organic agricultural items to popular Korean films and soap operas and even high standard medical services. For this, Korea plans on seeking business collaboration between the domestic wholesale-stores chains of China with Alibaba, a popular e-commerce giant.
Hitherto, Korean firms have mostly been exporting semi-finished products to China, where they are assembled into finished products. Chinese companies today are concentrating more on manufacturing those intermediate goods and relying lesser on exports of such items.