A crisis that could worsen the trade deficit between South Korea and China.

I think the Korean market is at a disadvantage in many ways A company that is really competitive in Korea…How many are there??? As I read the text, I’m at a loss. I wonder if there’s a solution. [Reading China] “The valley is empty.”

It’s almost like a ‘bombing’.

We bought about 4.8 trillion won worth of goods through overseas direct purchases between January and September this year. About half of them, or about 2.22 trillion won, were bought from China. More than doubled from the same period last year. Our biggest direct overseas destination is now China, not the United States. Ali beat Amazon. Korean consumers are enthusiastic about China’s “Shuangshui” shopping festival (November 11).

Why can Chinese products penetrate the Korean market so easily?

Because the market is empty. In other words, there is no Korean product line that can compete with China’s cost-effective products. Take an electric shaver as an example.

Brown, Phillips, Panasonic… Most popular products in Korea are foreign brands. They cost more than 100,000 won if they want to be useful. The high-end version costs 400,000 won and 500,000 won. There is no mid- to low-priced brand made by Korean technology (the occasional Korean brand product is also ‘Made in China’).

AliExpress (Ali), a Chinese purchasing site, is different. When I type “electric shaver” in the search box, I can see a lot of Chinese products worth 10,000 won. The “Xiaomi” product, which is said to be a bit luxurious, is also priced at around 30,000 won. “Nonsense quality, but ridiculous price”. The market is being dug up by Chinese cost-effective products.

The mid- to low-priced market is a place where brand awareness is low, but quality must be confronted. It is a small and medium enterprise area. However, Korean small and medium-sized enterprises have little interest in the domestic market. Rather, they are more sensitive to the movement of large companies. This is because the structure of subcontracting large companies and SMEs is the main stream of the industry. This is why there are not many small and medium-sized domestic companies in the household goods sector.

However, the domestic market is too small for large companies to make all-out efforts. So it’s empty. The goalpost is empty.

The bombing has no choice but to be helpless. This is because the product cost itself is not competitive. Chinese companies can sell more because they have a huge continental market, and they can reduce costs by that amount. It’s an economy of scale. Domestic companies cannot meet the cost, so they have no choice but to give up the market. This is why the saying “Korea is easy” came out.

“Shouldn’t our company also go to the Chinese market?” You can say this. In other words, we should reverse the continent’s “economy of scale.” It used to be possible. Our companies sold a lot of products such as refrigerators, air conditioners, computer monitors, and TVs. But now China makes it better. Moreover, China’s sophisticated domestic product protection policy has made it more difficult to enter the continental market. The technology is in limbo, and the threshold has been raised, so I can’t go anymore.

Chinese companies dominate Korea’s “empty market” with cost-effective products, but Korean companies cannot go to China. Therefore, they are unilaterally subjected to ‘cost-effectual bombing’.

There are many voices worrying about dependence on China. It relies on China for key materials and relies on China for intermediate goods exports. Now, not only production but also consumption will have to depend on China. This is a phenomenon that occurs when the Korean consumer market is incorporated into the continent’s “economy of scale.”

One way to overcome it is innovation. Only technological innovation and industrial structural reform can beat the “economy of scale.” Is it possible? Rather, Chinese companies are more innovative these days. Someday, there may be a day to order a cost-effective BYD electric vehicle from Alli.

If the goal is empty, the goal is bound to work!!

Korean beef duck
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