[Inside Chodong] Government Must Take the Lead in Opening the 'Post-China' Market

Korea's Position Shrinks Amid China's Policy Shift
Discovering South Asia as an Alternative to China
Government Must Lead with New Export Strategies

"As exports to China slump, there are growing calls to discover a 'post-China' market, but government efforts in this regard remain insufficient. The government must take the lead in opening new paths, rather than relying solely on companies."

A recent official from a national research institute, meeting amid the structural downturn in exports to China, criticized the lack of a national strategy at a time when discovering new markets to succeed China is of utmost importance. The reopening effect of China's economy has fallen short of expectations, and as China, which used to import intermediate goods from South Korea, increases its self-sufficiency, exports to China have hit structural limits. However, the government has not actively sought alternatives. South Korea, which had benefited from China's rapid growth, now faces new challenges due to the Chinese economy.

As US-China tensions escalate, China is rapidly changing its strategy. China is pursuing a 'dual circulation policy' that focuses on domestic consumption over exports, striving for localization not only in intermediate goods such as semiconductors and auto parts but also in consumer goods. South Korea's position in this market is shrinking. With Chinese incomes rising sharply and consumer expectations increasing, Korean consumer goods are losing popularity. A Korea Trade Association official pointed out, "Korean cosmetics, which were doing well in China, are struggling. They are being squeezed by high-end European luxury brands and rapidly emerging domestic brands, forcing a repositioning." Especially recently, the spread of the ‘Guochao (國潮)’ phenomenon, meaning patriotic consumption, has caused difficulties for global consumer goods companies operating in China.

The problem is that China's changes are just beginning. With expectations that the US will continue its efforts to contain China's growth for a long time, global investors are withdrawing from China. Sequoia Capital, the world's largest venture capital firm, recently separated its China business. The Wall Street Journal (WSJ) evaluated this as representing the US-China competition for advanced technology supremacy, noting Sequoia’s reputation for investing in startups like TikTok.

President Yoon Suk-yeol departed yesterday for a 4-night, 6-day tour of France and Vietnam. He will visit Vietnam on the 22nd. Vietnam, considered a post-China market amid US-China tensions, was South Korea’s largest trade surplus partner last year, making it a strategically important market. This is why the largest economic delegation of 205 people since the Yoon administration is accompanying him. Another strategic key point is India. This year, India surpassed China to become the most populous country, attracting strong interest from global companies. Although the government officially announced the 'Indo-Pacific Strategy' at the end of last year, there has been no concrete follow-up. Recently, Samsung Electronics, Hyundai Motor, and Kia have been performing well in Vietnam and India, but the atmosphere is tense. There is ongoing implicit pressure to contribute more to their home country, which suffers from trade deficits.

Experts advise that unlike Southeast Asia, where companies lead and the government supports market entry, South Asia, including India, requires the government to take the lead in formulating export strategies. This year marks the 50th anniversary of diplomatic relations between South Korea and India, making it a meaningful year. Rather than just talking about 'post-China,' the government must sincerely open the door to enable companies to actively enter new markets.

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