Export to China Has No Substance

Korean enterprises have recently rushed to Chinese market but the staple export to China has no substance because the Korean companies have concentrated on the simple processing of the raw materials or on the general-purpose consumption goods.

Therefore, experts indicate that, if the Korean business sector do not increase their manufacturing competitiveness by developing high quality products, the later-launched Chinese manufacturers would take over not only the Chinese market but also eventually the markets of the advanced countries including the U.S., Japan, and the EU.

According to the analysis of the Korea Economic Research Institute, `Competitiveness of Korean Manufacturing Industry in China,` the major export of Korea to China in 1999 was the oil product (1.1 billion dollars), which Korean oil industry had processed from the Middle East crude oils.

The major exports mostly included the low technology products, for example, the paper products and the dyed fabrics ranked at the 5th and 9th respectively.

The result of the research betrays the general misconception that Korea may export such high tech electronic products as the semi-conductors and digital electric home appliances to China.

Researchers Han Kyong-Ryon and Park Seung-Rok explained that `China has imported Korean oil because the oil refining facilities are not prepared enough to supply the oil consumption drastically increased in the process of the economic development. Once completing the investment in the oil refining facility, China would less consume the Korean oil.

Even though the exports of the electronic high tech products ranked high, such as the cathode ray tubes (at 2nd) and the semi-conductors (at 4th). The major Korean products are mostly the low priced oil-chemistry goods that have been suffering over-supply.

With the rigorous competition for the Chinese market, the competitiveness of the Korean products in China has been decreasing.

For the ranks by products of the Chinese import, Korea ranked at the top for oil-chemistry products, followed by semi-conductor (4th) and diode and transistor (5th).

Except for the wireless phone ranking at the top, Korea stood behind the U.S., Japan, Taiwan, and Sweden in the IT industry.

The report of the KEIR pointed out that ``the surplus items of Korean exports are included in the fields where China is planning to develop the alternative industries. Korean companies have to establish measures immediately to correspond the structural change of the Chinese market.

Park Won-Jae parkwj@donga.com