Research Reports
Effects of the Chinese Economic Growth on Korean Agriculture and Strategies to Boost the Agricultural Export to China
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AuthorKwon, Ohbok
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Publication Date2004.12.01
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Original
ABSTRACT
Effects of the Chinese Economic Growth on Korean Agriculture and Strategies to Boost the Agricultural Export to China
This study aims to find the answers to the following questions: Will the Chinese economic growth boost the Korean agricultural export to China? Which strategies are needed to increase the Korean agricultural export to China? To this end, a market research was conducted by visiting some supermarkets in Shanghai, China, and the SWOT of the Korean agricultural export was analyzed. Based on the research results, strategies to expand the Korean agricultural export were suggested.
Chinese economy is forecast to grow continually at an annual rate of 7%. In 2013, per capita GDP of China, calculated based on purchasing power, is expected to reach US$ 13,000. Such economic expansion of China would be a chance for Korea to enhance its agricultural export including agricultural input materials, such as agricultural machines, and agricultural products. Futhermore, China might benchmark Korea's know-how in agricultural marketing. Among these effects of the Chinese economic growth on the Korean agriculture, boosted agricultural export to China will directly contribute to increasing farm household income.
The Korean agricultural export to China has a few characteristics: Firstly, processed agricultural products account for a major portion of the export. Secondly, the Korean agricultural export mainly targets ethnic Koreans living in China, not ethnic Chinese. Thirdly, some promising Korean agricultural products have been replaced with Chinese counterparts, and lastly, a variety of products are exported in a small volume, so that there are no major export items.
Chinese consumers with high income tend to consume high-quality agricultural products including vegetables and fruits. When buying foods, they put more emphasis on quality such as taste and food safety. As their income grows, demand for beef, milk, fresh vegetables and fruits are expected to rise. Korea can try to export such products to China.
The results of the market research show that Japanese apples are sold for about 4,500 Korean won ($4.0) apiece in the Chinese market, which is more expensive than those of Chinese apples. Japanese pears are found to be priced at 4,200 Korean won apiece in the Chinese market. This implies that Korean agricultural products with high quality can be exported to the Chinese market. In fact, price discrimination is very distinct in the Chinese imported agricultural market. The rule is: the higher quality, the more expensive. Plus, there are evidences proving that Korean agricultural products with high quality could perform well in the Chinese market.
To take advantage of this opportunity, Korean farmers need to produce high quality products. Appropriate and systematic export promotion programs should be implemented in the Chinese market as well. The Korean government should support export promotion activities including participation in international agricultural exhibitions.
Researchers: Oh-Bok Kwon and Chung-Gil Chung
E-mail address: obkwon@krei.re.kr
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