China and South Korea's textile industry staged a new change in the industry in the “new hand in hand era”

With the implementation of the China-ROK FTA, Chinese and South Korean textile companies will face a common market with a population of 1.35 billion and a GDP of up to 11 trillion U.S. dollars. This will bring huge business opportunities to the textile and garment industry in both China and Korea. It will undoubtedly also promote the rapid development of the industry in both countries.

New changes in industry complementarity

After the implementation of the China-ROK FTA, China’s exports of goods such as textiles, clothing, non-ferrous metals, steel, machinery and equipment to South Korea will be further reduced, while Korean companies such as machinery and equipment, chemicals, and liquid crystal displays will also be able to Share China's business opportunities well. Since 2005, China has been South Korea's largest textile and apparel export market. By 2013, China has become Korea's largest export destination country. This year, although this situation has changed, the huge potential of the Chinese market still attracts Korean textile companies. According to South Korean industry figures, Korean companies will get rid of export models based on textile materials, develop and expand market strategies for apparel exports, and in particular, actively use Korean elements such as Korean drama and K-pop to conduct apparel marketing to enter the Chinese apparel market. Solid foundation.

Although the proportion of textile and apparel trade between China and South Korea accounts for a small proportion of total trade volume, and the trade deficit between South Korea and China has always existed, the textile and clothing trade between the two countries is complementary. From the data point of view, in 2013 South Korea's exports of textiles and clothing to China amounted to 2.73 billion U.S. dollars, and China's textile and clothing imports amounted to 6.32 billion U.S. dollars, a deficit of 3.59 billion U.S. dollars. In 2002, after a deficit of 410 million U.S. dollars in the textile and apparel trade with China, the deficit continued for 12 years. South Korea’s deficit in the textile and apparel trade with China has exceeded US$2 billion in mid-2000 and increased to 2.63 billion, 3.54 billion, and 3.11 billion US dollars from 2010 to 2012, respectively. In the first five months of this year, South Korea’s exports to China amounted to US$1.04 billion, while imports amounted to US$2.47 billion. The deficit amounted to US$1.43 billion. The reason for the deficit was mainly due to the fact that the export volume of Korea's chemical fiber and clothing was far lower than the import value of yarn, cotton products and wool products, which was also due to the different structures of textile industries in the two countries. Another important reason is that due to the rapid increase in labor costs in China, South Korean apparel companies have moved their factories in China to Southeast Asia. As a result, Korea’s exports of textiles and apparel-related materials to China have decreased substantially. This has also led to the The overall export of clothing has shrunk.

There are prerequisites for integrating resources

In the eyes of Korean companies, the significance of signing a free trade agreement lies not only in increasing the volume of trade between the two countries, but also in integrating resources and expanding their trading partners to Europe and the United States. Li Yuanyou, chief representative of South Korea's Huizhou Shihseung Department (China), stated: "We are optimistic about China's future market and we are also finding that more and more companies are paying more attention to products. We are willing to work with these companies wishing to make good products. Establish a benchmark for product quality and enable more products from China to become global."

However, Li Yuanyou also proposed that the prerequisite for realizing this dream is that the Chinese textile industry must be transformed. Chinese companies must pay more attention to product quality. He said: "We not only do the Chinese market, the European market is also the core business expansion of the company. For the European and Chinese markets, we feel that the European market is centered around products, and the Chinese market is focusing on prices. This is the main difference between the two. The European market attaches great importance to product quality, and has strict requirements on product quality and performance, and it can be very difficult to become their supplier, but once it becomes their supplier, it will not be easy to change. Therefore, South Korea's Huiwei Shi is relatively stable in the European market. In China, fabric companies are overly concerned about prices. Most companies are fighting a price war, but they are not particularly concerned about the performance of the products. In addition, too many fabric companies are trying to reduce costs, so the overall quality is not as good as in Europe."

Li Yuanyou believes that the calculation of costs by Chinese customers is too simple. Only sensitive to the number of tons per ton, and forgetting issues such as yield and processing efficiency. In fact, if the customer can effectively reduce the defective rate in production, and greatly increase production efficiency, it can also reduce costs without affecting the quality of the finished product.

“The Chinese market is in a transitional period. Although it is more difficult to reverse the current business climate, we still hope to see changes in the Chinese market and are willing to grow together with the Chinese market.” Li Yuanyou said.

*** Settlement will be universal

With the increase of trade volume between China and South Korea, the use of settlement methods has also been valued by the industry in both countries. The business opportunities brought by Chinese tourists have enabled Korean merchants joining UnionPay cards to increase year by year. UnionPay cards have now become the most international card available in Korea for ATMs. In order to attract Chinese tourists, the South Korean government has actively promoted settlement in addition to further relaxation of visa conditions. In regions where Chinese tourists are more concentrated, the government has strongly encouraged businesses to accept settlement. According to a local media report, since making Chinese tourists pay more conveniently and quickly, sales of clothing and cosmetics have doubled since the establishment of a famous Korean department store.

For the textile and garment industry in both countries, the continuous expansion of the trade scale will also increase the frequency of the use of *** settlement. According to Li Fengjie, chief researcher of the Korea International Trade Research Institute of the Korea International Trade Association, South Korea's trade is developing rapidly, and the use of *** settlement has brought convenience to the two countries' businesses. At the same time, it has also reduced costs and reduced risks. In the past, the trade settlement between the two countries was dominated by the U.S. dollar, which caused a double exchange burden. The settlement amount was also affected by the U.S. dollar exchange rate, which also increased the cost. At present, the cooperation between China and South Korea in the financial sector has been further strengthened, and there is room for further improvement in the proportion of trade settlement between the two countries.