By Choi Sung-jin
Korea caught an economic cold virus if the U.S. economy sneezed for decades. China has now taken the place of America as the country that exerts greatest influence on the nation's economy.
Yet now is the time for Korea to reduce its undue dependence on the two giant markets, especially China, according to a number of economics experts.
The nation's largest trade group pointed in this regard to the so-called VIM markets – Vietnam, Indonesia and Myanmar – as the safety valve that could cushion the shock when shipments to China hit a snag.
"Korean businesses need to pay particular attention to these three countries at a time when the 10-member Association of Southeast Asian Nations launched an ASEAN Economic Community (AEC) on Dec. 31," said a booklet released by the Institute for International Trade, a think tank under the wing of the Korea International Trade Association.
The AEC is now the world's seventh-largest market with a population of 620 million and gross domestic product of $2.5 trillion, and the three countries have the biggest growth potential among them, it noted, saying, "Korean exporters should advance to these countries with a mid-to long-term perspective of at least three years or longer."
Vietnam, for instance, has emerged as Korea's fourth-largest export market, exceeding Japan, last year. The Southeast Asian country, a member of all three regional free trade agreements – Trans-Pacific Partnership, Regional Comprehensive Economic Partnership and Asia-Pacific Economic Cooperation – will enjoy high popularity as the new manufacturing hub, said the think tank.
Indonesia, which accounts for 33 percent of the 10-nation group's GDP, is another promising market, with a population of 250 million and abundant natural resources. Despite a global business slump since 2010, Indonesia's economy has grown at a steady rate of 5-6 percent.
Myanmar, which will usher in a new government in March, is called the "last frontier market" of Southeast Asia. Myanmar's labor costs, currently one-fifth of China's, and its natural gas and other resources make the country one of the most attractive in the world for investment, the think tank said, noting that its economy has also grown 7-8 percent over the past three years.
"VIM markets may not exactly replace China but can reduce Korea's excessive and risky reliance on the world's second-largest market," the book said. "Their impression of Korea is also good thanks in part to the hallyu, so Korean businesses should make efforts to preempt the market with a long-term strategy."
The nation's market diversification efforts may not necessarily have to be confined to Southeast Asia, other experts say.
They call six countries – India, Mexico, Iran, Italy, Spain and Vietnam – "the post-China six," noting they can become new promising markets for Korean exporters. The six countries sharply increased their imports of made-in-Korean products based on a favorable perception of the nation, they said. Together, they took up 11.5 percent of Korea's exports, almost as large as the 13.2 percent taken by the United States, the nation's second-largest export market.
"Korean businesses need to make the most of these countries as either new manufacturing bases or untapped export markets," said Yoon Won-seok, an official at the Korea Trade-Investment Promotion Agency, who leads a team responsible for providing trade information for exporters.
Korea caught an economic cold virus if the U.S. economy sneezed for decades. China has now taken the place of America as the country that exerts greatest influence on the nation's economy.
Yet now is the time for Korea to reduce its undue dependence on the two giant markets, especially China, according to a number of economics experts.
The nation's largest trade group pointed in this regard to the so-called VIM markets – Vietnam, Indonesia and Myanmar – as the safety valve that could cushion the shock when shipments to China hit a snag.
"Korean businesses need to pay particular attention to these three countries at a time when the 10-member Association of Southeast Asian Nations launched an ASEAN Economic Community (AEC) on Dec. 31," said a booklet released by the Institute for International Trade, a think tank under the wing of the Korea International Trade Association.
The AEC is now the world's seventh-largest market with a population of 620 million and gross domestic product of $2.5 trillion, and the three countries have the biggest growth potential among them, it noted, saying, "Korean exporters should advance to these countries with a mid-to long-term perspective of at least three years or longer."
Vietnam, for instance, has emerged as Korea's fourth-largest export market, exceeding Japan, last year. The Southeast Asian country, a member of all three regional free trade agreements – Trans-Pacific Partnership, Regional Comprehensive Economic Partnership and Asia-Pacific Economic Cooperation – will enjoy high popularity as the new manufacturing hub, said the think tank.
Indonesia, which accounts for 33 percent of the 10-nation group's GDP, is another promising market, with a population of 250 million and abundant natural resources. Despite a global business slump since 2010, Indonesia's economy has grown at a steady rate of 5-6 percent.
Myanmar, which will usher in a new government in March, is called the "last frontier market" of Southeast Asia. Myanmar's labor costs, currently one-fifth of China's, and its natural gas and other resources make the country one of the most attractive in the world for investment, the think tank said, noting that its economy has also grown 7-8 percent over the past three years.
"VIM markets may not exactly replace China but can reduce Korea's excessive and risky reliance on the world's second-largest market," the book said. "Their impression of Korea is also good thanks in part to the hallyu, so Korean businesses should make efforts to preempt the market with a long-term strategy."
The nation's market diversification efforts may not necessarily have to be confined to Southeast Asia, other experts say.
They call six countries – India, Mexico, Iran, Italy, Spain and Vietnam – "the post-China six," noting they can become new promising markets for Korean exporters. The six countries sharply increased their imports of made-in-Korean products based on a favorable perception of the nation, they said. Together, they took up 11.5 percent of Korea's exports, almost as large as the 13.2 percent taken by the United States, the nation's second-largest export market.
"Korean businesses need to make the most of these countries as either new manufacturing bases or untapped export markets," said Yoon Won-seok, an official at the Korea Trade-Investment Promotion Agency, who leads a team responsible for providing trade information for exporters.
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