KITA News and Reports
  • Need Time for Chinese Consumers to Feel Warm Climate of Korea-China Ties
    2017-12-11

    Need Time for Chinese Consumers to Feel Warm Climate of Korea-China Ties 

    - KITA’s survey shows 63.1% of consumers who stopped buying Korean products will purchase Korean goods again when the THAAD issue is resolved -  

    -  Chinese consumers who have travelled Korea or experienced K-Wave are positive about Korean products -

     

    According to the report titled ‘A survey on the awareness of Korean consumer goods in China as the Korea and China relations improve,’ published by the Institute for International Trade (President, Shin Seung-kwan), the relationship between the two countries is expected to normalize rapidly after an announcement of the joint agreement on October 31. However, it is anticipated to take some time for Korean products to recover the confidence of Chinese consumers.

     

    In recent economic upturn, China's goods imports from the global market increased by 1.8 percent year-on-year until August 2017 whereas the country’s imports of Korean consumer goods plunged by 24.8 percent in the same period being neglected by Chinese consumers. As a result, in China's consumer goods market, the market share of Korean products also obviously declined from 5.0 percent in 2010 to 2.5 percent between January and August in 2017.

     

    According to the survey conducted by the Korea International Trade Association on 1,000 consumers in 10 major cities in three regions of the east, the middle and the west of China (from October 19 to October 30, 2017), 83.2 percent of the respondents said that the THAAD conflict had a negative impact on Korean products. However, 63.1 percent of the respondents who did not purchase Korean products due to the THAAD issue responded that they would buy Korean products again when the THAAD issue is resolved. 

     

    The survey demonstrated that the respondents who have experiences to travel or stay in Korea have a positive image about Korean products. In particular, 83.3 percent of respondents who have travelled to Korea have a positive image of Korean products. In contrast, only 27.4 percent of the participants who do not have any travel experience in Korea gave positive responses about Korean goods. 

    Therefore, from the mid-to-long-term perspective, it is expected that the sales of Korean consumer goods sales in China are expected to expand when the sales of Korean travel products and the broadcasting of Hallyu contents are resumed in China. 

     

     

    In this survey, the organization also surveyed the purchase rate and satisfaction level of each Korean consumer good. 87.1 percent of the respondents had experience of purchasing Korean products, and among the purchasing items, the products with the highest purchasing rate were beauty items. 71.1 percent of respondents with purchasing experience of Korean products purchased beauty items, followed by food and beverage (61.9%), fashion products (57.1%) and electronics (47.8%). The most satisfactory items of all Korean products were large home appliances scoring 4.25 on a scale of 5, followed by kitchen appliances (4.23) and baby products (4.21).

     

    Meanwhile, the report pointed out that, in order for Korean consumer goods to regain their foothold in the local market of China after the THAAD conflict is resolved, it is necessary to build strategies appropriate to the current level of Chinese consumers. First of all, the companies need to move away from marketing that depends entirely on Hallyu, and target the market with the products tailored to the trends of young consumers in China. In recent years, Korean S company's ‘Spicy Chicken Fried Noodles’, which has become very popular in China, has attracted the taste of Chinese consumers with its unique and sweet and spicy flavor. In addition, the sales of the product are rapidly increasing as the videos to promote the food have been widely broadcasted to the whole country through foodie tasting TV shows.

     

     

    Secondly, it is necessary to thoroughly prepare for the related areas such as customs clearance, labor, environment, and taxation along with the development of management activities in accordance with the local system. As it is expected that China will be more likely to emphasize laws and principles getting away from the relationship-oriented business manners of the past, Korean companies need to pay close attention to the changes in local institutions and regulations. Finally, in order to avoid direct competition with Chinese products, Korean companies need to seek product differentiation through the direct local market research. As the competition with Chinese consumer goods is more intensified, some companies are hedging their risks by diversifying their markets from B2C (business to consumer) to B2B (business to business).

     

    Park Jin-woo, senior researcher at the Institute for International Trade said Korean companies are getting ready to resume business in China as the Korea-China relations are recently improving. He added However, in order to regain the hearts of Chinese consumers who have been away from Korean products due to the THAAd issue, it is necessary for Korean companies to carefully plan the localization strategy in consideration of the characteristics of each region.

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