KITA and the Ministry of Trade, Industry and Energy jointly recently held the “Public-Private Central Economic Cooperation Commission”.

After the summit diplomacy in June, last year, the cooperative mood has been developed between Korea and the Central Asia and the Public-Private Central Economic Cooperation Commission was established in September, last year. In the Commission, KITA is in charge of two countries, Turkmenistan and Azerbaijan, the Korea Chamber of Commerce and Industry works with Uzbekistan, Kyrgyzstan and Tajikistan, and the Federation of Korean Industries takes care of Kazakhstan. KITA takes on the secretariat of the commission and has supported the operation of task force for each country as well as advisory committ ee for each area.

Seventy people, including Vice-Minister Moon Jae-do of MOTIE and Vice Chairman Kim Jung-kwan of KITA, the members of Economic Commission from fi ve countries and offi cials from the companies who have entered into Central Asian countries, participated in the event. During the meeting, presentations on ▲the achievements of economic cooperation with Central Asian countries and how to run the Economic Cooperation Commission in the future (by KITA) ▲ success stories of business expansion into Central Asian countries (by GS E&C, HS International and Sigong Tech) and ▲ the economic cooperation strategies with Central Asian countries and entry measures were delivered followed by expert discussions. Through the presentation on the achievements of economic cooperation with Central Asian countries and how to run the Economic Cooperation Commission in the future, KITA shared the outcomes of entry into Central Asian countries such as dispatching public private joint delegation, holding intergovernmental joint committ ee, supporting activities to receive orders, etc.

As success stories, GS E&S shared the UGCC gas project, which the company received the order in 2012, and MTO project that the company signed the MOU when President Islam Karimov of Uzbekistan visited Korea in May, this year. HS International shared its experience how they overcame the weakness as an SME by identifying the characteristics of Central Asian region and taking advantage of them. Sigong Tech introduced its success story of receiving the national museum construction order from Kazakhstan by tackling the niche market.

Professor Yoon Sung-hak at Korea University suggested public-private joint projects by taking advantage of the current status of Central Asia and international relations, joint entry with China and Russia and PPP strategy as entry measures into Central Asia during his speech on the economic cooperation strategies with Central Asian countries and entry measures. Professor Park Sang-nam at Hanshin University, PhD. Na Hee-seung at the Korea Railroad Research Institute, Ph.D. Je Sung-hoon at the Korea Institute for International Economic Policy and Ph.D. Oh Young-il at POSCO Research Institute took part in the expert discussion session and discussed the expansion of economic cooperation with Central Asian countries and development of entry foundation as well as the private and public collaboration measures.

Vice-Chairman of Kim Jung-kwan of KITA stated in his opening speech “Central Asia has high entry barriers with immigration visa issue, limited information about the countries, payment problem, etc. However, it can be a blue ocean in which the competition with the third countries is not severe.” He also mentioned “KITA will actively carry out supports, such as resolving diffi culties for Korean businesses, implementing B2B consultation sessions and providing market information based on the discussion results from the Central Economic Cooperation Commission for Korean companies to make inroads into Central Asian countries.”

 
 
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China’s importing structure is moving towards domestic consumption from processing trade. However, it appears that Korea’s competitiveness is weakening as its market share in China’s domestic market for manufactured goods declined last year. The Institute for International Trade (President, Kim Geuk-soo, htt p://iit.kita.net) of Korea International Trade Association issued a report titled “An Analysis on China’s Import Market of Manufactured Goods.” According to the report, China’s imports of manufactured products from Korea increased by 3.9 percent but the imports for domestic consumption accounted for only 1.6 percent. In addition, Korea’s share in the market dropped to 10.6 percent last year from 11.0 percent. By country, market shares of Korea (-0.4%p) and Japan (-0.6%p) declined while Taiwan (0.7%p), Germany (0.8%p) and Britain (0.3%p) did well in China’s domestic market expanding their shares.

Korea, China’s third largest importing partner of manufactured goods for domestic consumption, has lost ground in Shanghai (4th → 6th), Zhejiang Province (2nd → 3rd) and Fujian Province (4th → 6th) in terms of export ranking. Korean exporters also saw their ranking slide below top-ten in fi ve provinces out of twelve inland provinces in the Middle and Northwestern regions indicating that their exports to those areas are still behind. In addition, Korea’s market share fell in the cities such as Kunshan (Jiangsu Province), Weifang (Shandong Province) and Shenzhen (Guangdong Province) in which the imports have been dramatically increased. Also, Korean exporters’ shares in consumer goods markets in Hangzhou (Zhejiang Province), Wuhan (Hubei Province) and Shenyang (Liaoning Province) dropped and it is required for Korean companies to make active eff orts to promote exports to those regions. However, since the portion of Chinese private companies’ imports from Korea is bigger than other major countries while the imports of foreign investment companies are insignifi cant, the business network between the private companies in the two countries and the foundation for Korean companies to make inroads into China are good. Furthermore, the report states that Korea has made positive achievement in consumer goods market in China as China’s imports of consumer products (except for cars) for domestic consumption rose by 10.3 percent and Korea’s market share increased from 6.6 percent to 6.7 percent last year.

By item, it is expected that Korea’s exports will continue to expand in the markets that Korea has secured its competitiveness such as car parts, memory chips, camera modules, lithium-ion batt eries, metal machine tools, plastics, high-speed steel zinc, etc. as China’s imports of those products for domestic consumption are signifi cantly increasing. Moreover, China’s imports of consumer goods, including juicer, non-alcoholic beverages, diapers, air purifi ers and refrigerators are dramatically growing and Korea’s shares in these markets are high. Therefore, Korea will be able to expand its exports to those markets in China.

Jang Sang-shik, senior research fellow at KITA said “China’s imports of manufactured goods for domestic consumption continues to grow. In order for Korean companies to tackle the decrease in exports, they need to aggressively focus on China’s domestic market.” He also stressed “It is necessary for Korean exporters to enhance competitiveness of intermediate goods and capital goods as Korea is losing its market share in those areas, bridge the market share gap between Korea and the advanced countries in the high income cities such as Shanghai and actively make inroads into the consumption hub in the Midwest region.”

 
 
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