Chinese Market Entrants Say "Recovery Is a Matter of Time... Leaving China Is Not Easy"

Martial Arts 'Beijing-based Korean Businessmen Meeting'
"Exports from China to ASEAN and Europe Inevitable"

Korean businesspeople operating in China argued that the recovery of the Chinese economy is only a matter of time despite the default crisis of real estate companies. There was also skepticism that relocating facilities and supply chains within China is not easy.

The Korea International Trade Association announced on the 6th that Vice Chairman Jeong Manki held a meeting with Korean businesspeople stationed in China in Beijing on the 5th.

The businesspeople said that since the lifting of lockdown measures in China, there has been a trend toward expanding market openness, and thus the Chinese economy will recover. They acknowledged that while the Chinese government has implemented the Anti-Espionage Law, it has not given up on attracting foreign companies. The Chinese government extended the tax exemption period for welfare expenses of foreign expatriates by one year at a time and recently extended it to four years, applying until 2027. The CEO of Company A said, "Foreign expatriates are enjoying an effect of about a 30% increase in income due to the extension of the tax exemption."

Although China is facing a default crisis in real estate companies, Korean businesspeople in China responded that the recovery of investment and consumption in China is only a matter of time. The head of Company B’s China branch said, "The Chinese government will not just stand by regarding real estate," and added, "The economy will not sharply decline because of real estate."

They said it is difficult to predict the timing of consumption activation. The head of Company B’s branch said, "The Chinese government recently lowered the one-year loan interest rate for businesses but did not lower the five-year loan interest rate for personal real estate acquisition," adding, "It is difficult to predict the timing of consumption recovery."

There was criticism that the central government is less proactive in attracting foreign investment than local governments. A director of Company C, which has made three to four investments including in Inner Mongolia coal mines over the past 15 years, said, "Local governments are actively attracting investment and providing many benefits," but added, "They prohibit foreign companies from owning rare earth mines and allow investment but do not permit them to become major shareholders."

Jung Manki, Vice Chairman of the Korea International Trade Association (fifth from the right), and Korean entrepreneurs in China pose for a commemorative photo after the "Korean Entrepreneurs Meeting in Beijing" held on the 5th in Beijing, China.
[Photo by Korea International Trade Association]

There was also an opinion that decoupling from China is not easy. The president of Company D said, "Korean companies need to use Chinese supply chains to lower parts procurement costs, but in doing so, they face a dilemma of having to give up products from partner companies that entered China together," adding, "It is inevitable to use Chinese supply chains to export to ASEAN and Europe."

Their argument is that exchanges with China should be increased and uncertainties reduced. A company official participating in the meeting said, "Domestic companies are worried about whether they can continue investing in China due to geopolitical risks such as concerns over worsening Korea-China relations," and added, "Companies operating there are focusing more on managing existing investment assets rather than increasing investment."

Vice Chairman Jeong said, "Considering market size and geographical location, Korea should expand practical economic relations with China," and added, "In the future, the Korea International Trade Association will thoroughly investigate changes in the Chinese market through dispatching market development teams and expanding exchanges between Korean and Chinese businesspeople, support the expansion of transactions by Korean companies, and if necessary, pursue government proposals."

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