Beijing, Seoul start new chap­ter

Un­der the new free trade agree­ment, South Korean cos­met­ics and ap­pli­ances will get cheaper and ubiq­ui­tous in China

China Daily (Canada) - - BUSINESS - By ZHU WEN­QIAN zhuwen­qian@chi­

Pop­u­lar South Korean cos­metic prod­ucts like cush­ion foun­da­tion, fa­cial masks and other food and con­sumer prod­ucts are go­ing to be cheaper and more widely avail­able in China.

From Dec 20, South Korea and China started im­ple­ment­ing their bi­lat­eral free trade agree­ment or FTA and re­duced taxes on ei­ther side. There will be a fur­ther tax cut on Jan 1, theM­i­nistry of Commerce in Beijing said.

In 20 years, China plans to elim­i­nate tar­iffs on 91 per­cent of im­ports from South Korea. For its part, South Korea will re­move taxes on 92 per­cent of im­ports from China, ac­cord­ing to the FTA.

From Sun­day, 20 per­cent of im­ports from South Korea have al­ready be­come tar­iff-free. Th­ese in­clude gin­seng, gas­tro­dia, oat­meal and soy­bean.

Only nine per­cent of im­ports from South Korea are not in­cluded in the FTA. Th­ese are mainly agri­cul­tural prod­ucts like rice, pep­pers, gar­lic, ap­ple and or­ange, since South Korea tends to pro­tect its agri­cul­ture.

Nev­er­the­less, pro­cessed foods that use th­ese prod­ucts as raw ma­te­ri­als can still have tar­iff re­duc­tions and ex­emp­tions.

KimWook, a trade re­la­tions pro­fes­sor at Konkuk Univer­sity in South Korea, told CCTV: “In the long term, the agri­cul­tural prod­ucts in both coun­tries will enjoy in­di­rect ben­e­fits. China and South Korea will fore­see sig­nif­i­cant room for growth in the agri­cul­ture sec­tor.”

Korean en­ter­prises, he said, may im­port cheap agri­cul­tural prod­ucts from China, and de­velop and process high-end prod­ucts, and then sell them back to China.

“Both sides can ben­e­fit from such trans­ac­tions,” Kim said. “There will be more prod­ucts for cus­tomers to choose from, and the com­pe­ti­tion be­tween Chi­nese and Korean en­ter­prises will in­ten­sify.”

In re­cent years, grow­ing de­mand for SouthKorean prod­ucts in­China has en­cour­aged some Chi­nese peo­ple to be­come over­seas shop­ping agents.

Iris Wong, a Hangzhou-based tour guide who of­ten shut­tles be­tween China and South Korea, said the FTA would not af­fect her busi­ness.

In March 2015, fash­ion gi­ant Chanel SA cut the prices of its three sig­na­ture hand­bags in Asia while rais­ing them in Europe. “Chanel low­ered the prices in both China and South Korea. South Korea still has a slight price ad­van­tage over China. Some peo­ple asked me to buy the bags for them, so I can still make money,” Wong said.

She said she also posts pic­tures of many SouthKorea-made clothes on WeChat, a so­cial me­dia plat­form op­er­ated by Ten­cent Hold­ings Ltd. “Most of them are fairly cheap, and cus­tomers buy them pri­mar­ily for their styles. My job is to pick out those well-re­ceived styles. I don’t think the free trade agree­ment will re­ducemy busi­ness.”

Among fast-mov­ing con­sumer goods, sham­poo, body wash and skin­care prod­ucts will get 20 to 35 per­cent of their tar­iffs re­duced in five years. Oral hy­giene prod­ucts, sea sedge, and 90 per­cent of seafood like cod­fish and frozen crab will be tar­iff-free in 10 years.

In ad­di­tion, some house­hold elec­tri­cal ap­pli­ances made in South Korea will be­come tar­iff-free in the next 10 years. They in­clude re­frig­er­a­tor, rice cooker, elec­tric fry­ing pan, elec­tric oven, elec­tro­mag­netic fur­nace, mi­crowave oven, mas­sage ap­pa­ra­tus and cos­metic ap­pa­ra­tus.

Cur­rently, well-known South Korean prod­ucts like fer­mented food kim­chi are sub­ject to 25 per­cent im­port tar­iff in China. Cloth­ing and hats in­vite 15 per­cent tar­iff. The tar­iffs will be grad­u­ally can­celed in 20 years.

Un­der the FTA, more high-qual­ity, rea­son­ably priced Chi­nese prod­ucts are ex­pected to find ac­cess to the South Korean mar­ket, too.

Sung Jong-Un, 21, an ex­change stu­dent from Seoul at Beijing Lan­guage and Cul­ture Univer­sity, said the FTA brought glad tid­ings for her as she has de­vel­oped a lik­ing forChi­nese snacks and condi­ments.

“When I went back home this year, I found­more­and­moreChi­nese food items at large Korean su­per­mar­kets. Hope­fully, the FTA will mean I’ll be able to buy more kinds of Chi­nese foods. That will makeme really happy,” Sung said.

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