China’s WTO entrance deepens Chinese/Korean competition

Export markets will be tougher with severe competition between Korea and China after China's entrance to the World Trade Organization (WTO).

The Korea Development Institute (KDI) pointed out in a report titled "Emerging China and hints from its WTO entrance" that Korea must seriously investigate the competitive relationship between Korea and China, the long-term effects, and look into measures to maintain competitiveness.

According to the KDI, export items competitive with Chinese products rose to 17.1% in 2000 from 15.6% in 1999 and 12.7% in 1998 over all export products. It predicted that the ratios would likely increase as China continues to grow economically and has already entered the WTO. The KDI, however, didn't expect that the Korean economy will shrink because of rapid Chinese economic development and its surpassing the Korean economy. The KDI took into consideration that China sports superior light industry capabilities while Korea has clearly better heavy industry.

The KDI stressed that Korea needs to aggressively conquer Chinese markets through localized strategies and to expand research and development especially in the area of industrial design in order to prepare for future competition with Chinese products.