Business circles: "Need to reduce dependence on China through 'China+α strategy'"

The 1st 'KCCI Trade Forum' Held
"Global Supply Chains, Regional and Diversified Restructuring"

Woo Tae-hee, Executive Vice President of the Korea Chamber of Commerce and Industry, Park Tae-ho, Director of the Trade Research Institute at the law firm Kwangjang, and experts from government, academia, and industry held the "1st Korea Chamber of Commerce Trade Forum" on the morning of the 12th at a restaurant near Seoul City Hall to discuss prospects for the global trade environment in the post-COVID-19 era.

[Asia Economy Reporter Dongwoo Lee] Since the outbreak of the novel coronavirus disease (COVID-19), there have been calls to diversify production bases to mitigate the risk of collapse in the global value chain. In particular, it was emphasized that Korean companies should establish a ‘China+α’ strategy to reduce dependence on China.

The Korea Chamber of Commerce and Industry (KCCI) held the ‘1st KCCI Trade Forum’ on the morning of the 12th at a restaurant near Seoul City Hall, jointly with the law firm Bae, Kim & Lee International Trade Research Institute, to discuss prospects for the global trade environment in the post-COVID era.

Senior Research Fellow Cheol Jeong of the Korea Institute for International Economic Policy (KIEP) argued at the forum that the global industrial structure in the post-COVID era will experience both regionalization and multi-polarization simultaneously.

Senior Research Fellow Jeong analyzed, “As a result of the COVID-19 pandemic, deglobalization is accelerating, promoting a slowdown in the global value chain. Governments and companies are placing more weight on stability than efficiency, adjusting by domesticating or dispersing production processes of core industries.”

He explained that movements to manage value chain risks overly concentrated in China, especially among advanced global countries, are being detected worldwide. Senior Research Fellow Jeong forecasted, “With the activation of the non-face-to-face economy and intensifying technological hegemony competition, the global value chain will be reorganized.”

In fact, since the COVID-19 outbreak, the global supply chain has been reorganizing into two forms: regional and diversified. The strategy is to secure business partners near production and consumption areas to reduce dependence on specific countries and disperse risks.

Korean companies also agreed on the need to strategically adjust dependence on China considering health risks and geopolitical risks like the COVID-19 crisis. However, they acknowledged the difficulty of immediately securing alternative supply sources to China in major industries, agreeing on the necessity of a mid- to long-term ‘China+α’ strategy to secure diverse production bases.

Woo Tae-hee, Executive Vice Chairman of KCCI, said, “Due to the COVID-19 crisis, countries around the world are intervening in their economies for security reasons or arbitrarily interpreting trade norms. Proactive responses from our trade authorities and meticulous strategy formulation by companies are necessary.”

Meanwhile, Choi Seok-young, Advisor at Bae, Kim & Lee, predicted that US-China trade conflicts could intensify again. Advisor Choi explained, “In response to the COVID-19 pandemic, countries took unilateral, domestic-oriented measures such as restricting foreign entry, controlling medical equipment exports, and providing subsidies to domestic companies. The weakening of multilateralism and expanded government market intervention could shift the issue to a responsibility dispute between the two countries over COVID-19 damages.”

The forum was attended by 12 experts from government, academia, and industry, including the hosts Korea Chamber of Commerce and Industry and Bae, Kim & Lee International Trade Research Institute, as well as Ye Han-gu, Director General of Trade Negotiations at the Ministry of Trade, Industry and Energy, Professor Ahn Deok-geun of Seoul National University Graduate School of International Studies, Executive Director Lee Hyung-woo of Samsung Electronics, Vice President Kim Kyung-soo of Hyundai Motor Company, and Han Soo-mi, Head of Strategic Business Planning at SK E&S.

This content was produced with the assistance of AI translation services.