Recently, the central parity rate of 100 yen against the yuan fell below 5, hitting a new low in 13 years.
Let’s not talk about the impact of the depreciation of the yen on Japan’s domestic economy and Sino-Japanese trade. In fact, South Korea has been more seriously affected by the depreciation of the yen. As we all know, tourism has been a pillar industry of South Korea’s economy in recent years, and shopping consumption during tourism has played a role in promoting South Korea’s GDP growth. However, after the devaluation of the yen, the number of Chinese traveling to South Korea alone decreased by one-third. According to statistics from South Korea’s Lotte Group, the average spending per person by Chinese tourists here also dropped from 900,000 won in 2013 to 580,000 won from January to April this year. Coupled with the recent spread of the MERS epidemic, South Korea’s tourism industry will suffer a more severe blow.
So, where did the lost tourist crowd in South Korea go? The latest statistics show that the number of Chinese tourists traveling to Japan has increased significantly in recent days.
Judging from the current situation, the price of the same product, especially luxury goods, is about 15% higher in South Korea than in Japan. Take the purchase of a Louis Vuitton handbag as an example. The price in a Korean duty-free store is 1.84 million won; in Japan, the product is only 1.52 million won, which is 17% cheaper than in South Korea. The distance from Japan and South Korea to China is about the same, so Chinese consumers will definitely choose places with cheaper prices when shopping abroad. Even in South Korea, consumption of Japanese goods is increasing day by day.
From a corporate perspective, in industries such as steel, petrochemicals, and semiconductors that compete fiercely with Japan, Korean companies have issued calls for “reaching the limit of endurance.” In export trade to Europe and the United States, Korean companies are severely squeezed by Japanese companies. According to a survey conducted by the Korea Chamber of Commerce and Industry among 300 companies that export to Japan and compete with Japan overseas, 55.7% said that exports have suffered losses due to the lower yen.
At this time, the China-South Korea Free Trade Agreement was finally signed. According to regulations, more than 90% of products from China and South Korea will enter the zero-tariff era after the transition period, which is quite a life-saving straw for South Korea these days. After the implementation of the free trade agreement, China-South Korea trade will definitely grow. Korean products that have hit a wall in Europe and Japan will find a way out again. Going to China to expand the market should be the inner cry of many Korean companies.
In the field of textiles and clothing, China has become South Korea’s largest exporter as early as the year before last. Although this situation has not been stable in the past two years, after the signing of the China-South Korea Free Trade Agreement, the huge development potential of the Chinese market will firmly attract Korean companies that are trapped in jails.
Korean clothing has always been known as “small but beautiful”. With the popularity of Korean dramas, it has always been very attractive in the Chinese market. In addition, South Korea’s powerful functional fibers have always had a stable customer base in China. So here comes the question. Affected by the decline of the yen, Korean companies will find a breakthrough in the Chinese market. However, are Chinese companies ready to take over? Have Chinese companies found their own breakthrough point again?
Yuan falls, China-South Korea free trade agreement becomes “life-saving straw” for Korean goods
Recently, the central parity rate of 100 yen against the yuan fell below 5, hitting a new low in 13 years. Let’s not talk about the impact of the depreciation of the yen on Japan’s domestic economy and Sino-Jap…
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