While the signing of the China-South Korea Free Trade Area Agreement has brought about huge market imagination, it has also caused related domestic industries to face a new round of reshuffle. The reporter learned from recent interviews that some traditional manufacturing industries have accelerated their transformation, and some companies have begun to make plans in advance to increase the added value of their brands to connect with new markets.
“Unlike the Shanghai Free Trade Zone, which has been in operation for more than a year, the China-South Korea Free Trade Zone is two-way interactive.” A researcher pointed out that the Shanghai Free Trade Zone is mainly a free trade led by China itself, while China and South Korea The free trade zone is two-way, which means that the depth and breadth of this free trade is greater than that of the Shanghai Free Trade Zone, and the market capacity it brings will be more imaginative. In addition, the China-South Korea Free Trade Area will also be regarded as a benchmark pilot under the Northeast Asia free trade framework. If everything goes smoothly, the relevant agreement may be successfully implemented in the second half of this year.
The implementation of the China-South Korea Free Trade Area can be said to be the largest in history. According to the agreement, no later than 20 years, about 90% of the goods listed in the catalog will have zero tariffs. The scope of the agreement covers a total of 17 areas including trade in goods, trade in services, investment and rules, including “21st century economic and trade issues” such as e-commerce, competition policy, government procurement, and environment.
Data released by the Ministry of Commerce show that the bilateral trade volume between China and South Korea reached US$274.2 billion in 2014, 55 times that of 1992 when China and South Korea established diplomatic relations. China has become South Korea’s largest trading partner, largest export market and largest source of imports, and South Korea has also become an important source of foreign investment for China. In the long run, this huge market space will be shared by the respective industries and enterprises of the two countries, which can make the market cakes of the respective industries of the two countries larger. “But in the short term, the respective industries of China and South Korea will also face a new reshuffle.” The above-mentioned researcher pointed out.
In this regard, Song Zhiyong, director of the Asia and Africa Institute of the Institute of International Trade and Economic Cooperation of the Ministry of Commerce of China, once pointed out to the media that the free trade area will significantly reduce or eliminate tariffs and increase market openness, and the relatively disadvantaged industries of the two countries will be affected, such as China’s chemical industry, electronics, steel and service industries, etc., and South Korea’s agricultural products and light industrial products.
“In fact, the industrial added value of my country’s traditional industries is relatively low,” the above-mentioned researcher explained. The market imagination brought by the China-South Korea Free Trade Zone is huge, but to truly seize this market opportunity, companies need to work hard on their own. , especially in traditional manufacturing.
Take China’s popular “Korean Wave” consumer goods market as an example. In China’s current consumer sector, Korean cosmetics and Korean clothing mostly enter the Chinese market through purchasing agents. Their market value exceeds 100 billion yuan. If tariffs are reduced, they will Impact the domestic cosmetics market and clothing market with cheaper prices. In the field of cosmetics, if Korean cosmetics products enter the Chinese market through the China-Korea Free Trade Zone, the living space of local cosmetics brands will be even narrower. In terms of another mainstream textile and apparel market, China’s previous local apparel industry mostly relied on demographic dividends and land dividends to rise. Most of the Chinese manufacturing they brought relied on OEMs to survive. There were too few branded companies and poor product R&D and design capabilities. Poor, product competitiveness is weak.
However, some companies are aware of this shortcoming. According to the above-mentioned people, footwear and clothing companies including Dayang Chuangshi (600233.SH), Xtep International (01368.HK), China Lilang (01234.HK) and other footwear and apparel companies have successively purchased products from France, South Korea, Spain, Italy and other countries have introduced designers and design concepts to enhance brand added value. Among them, Dayang Chuangshi, the clothing company with the largest export volume of suits in China, is the most typical. Its design director is Caitlin Ivano, the world’s top menswear designer Giorgio Armani and chief designer. Prior to this, Dayang Chuangshi’s main business was mainly OEM, supplemented by its own brands. Its previous OEM customers included top international brands such as Amanni and Buerbury. The company is located in Dalian, and its foreign trade exports accounted for about 70%. It enjoys Export tax rebate preferential treatment. Among the previous export markets, South Korea was one of the important markets. In recent years, the company has begun to transform. Through its three brands “Chuangshi”, “Kaimen” and “YOUSOKU”, it faces three different customer groups, high, middle and low. While continuing to expand the export market, it also expands domestic sales. market, seeking a new round of transformation through the combination of domestic and foreign sales markets.
The same is true for China Lilang listed in Hong Kong. Since 2002, the company has teamed up with the well-known designer Ye Wenbo. The company’s products are positioned as business and casual men’s wear. Through the operation of Qilang LILANZ and sub-brand L2, it has become another classic case of branding for domestic clothing companies in recent years. George White (002687.SZ), which is positioned in the professional wear market, has joined the team of more than 40 designers and has worked hard on the brand in the current clothing market segment through the business idea of meeting the personalized requirements of customers to the greatest extent. .
“After the added value of domestic independent brands is increased, their competitiveness will be stronger, which can hedge against the reshuffle risk brought by Korean brands.” The above-mentioned person said frankly that among the companies benefiting from the new round of China-South Korea Free Trade Zone, in the early stage For traditional manufacturing companies that already account for half of the export market, the higher their brand value, the more likely they will be in the new round.The advantages in competition will be more obvious.