“Expanding Export Markets through Cooperation
“We need to expand exports through an expertise-based differentiation strategy and in cooperation with all the organizations and people engaged in exporting Korean agricultural products.”
Mr. Kim Jae-soo, CEO of aT (Korea Agro-Fisheries and Food Trade Corporation), said this in an interview with <Korea AgraFood>. The interview took place at his office in the aT building located in Yangjae-dong, Seoul on December 16, 2014. Mr. Kim emphasized that the cooperation can be achieved using a shared software platform and that a differentiation strategy based on accumulated expertise is necessary to expand Korean agricultural exports. Mr. Kim discussed several issues regarding agricultural exports and his vision of Korean agriculture. He believes that the recently concluded Korea-China FTA (Free Trade Agreement) will provide Korean agriculture with an opportunity to leap forward. In his words, “Exports to China will be a great chance for the Korean agricultural exports to achieve a quantum jump (=leap).”
-Korean agricultural exports have been on a continued rise despite unfavorable conditions such as a worldwide economic downturn, a weak yen, tightened import regulations, and growing instability in the export environment. What is your evaluation of Korean agricultural exports in 2014?
The volume of Korean marine products exported to Japan decreased due to the continued weak yen. In addition, the export volume of the small fruits preferred by overseas consumers also went down due to a plentiful harvest of fruits in Korea. Because the embargo on Russia left European producers with a glut of agricultural products, the export conditions have been further aggravated by severe competition with European agricultural products in Asian markets.
On the other hand, a growing number of Chinese people now enjoy chi-maek (an amalgamation of chicken and the Korean word for beer, maekju) thanks to Hallyu (the Korean cultural wave). In addition, hangwa (traditional Korean sweets and cookies), yakgwa (deep-fried honey cookies), and gochujang (red pepper paste) have attracted huge popularity in China after the Chinese first lady, Peng Liyuan, purchased them when she accompanied the President of China, Xi Jinping, on his trip to Korea. In the meantime, aT has been supporting export insurance and group insurance.
We’ve also been trying hard to strengthen our ability to resolve customs clearance issues and to provide needed information. Further, we held K-Food Fairs in more regions than before in an effort to promote the image of Korean agricultural products as having premium quality. In the future, we will support participation in halal market exhibitions, conduct promotional events, and organize meetings with buyers in order to encourage the advancement of Korean agricultural products into the promising halal market of the Islamic world.
-What steps are planned to achieve the target of USD$10 billion in Korean agricultural exports in 2017?
We will diversify the export market, which is currently heavily tilted toward Japan, and offer support for exports to the US, Southeast Asia, and other markets where Korean agricultural exports have been continuously increasing. In particular, we will target the Chinese market, which, especially after the conclusion of the Korea-China FTA, has a great potential for expansion.
Through the aT center that opened in Chengdu in December 2014, we are planning to discover local distributors and buyers and to conduct various promotional events and export consultations In addition, we will strengthen the field support function to solve such problems as, for example, non-tariff barriers. To this end, aT plans to carry out the so-called “total solution project” that will help design strategies for Korean agricultural products to appeal to local consumers. It will be implemented in China, where the continued market expansion is expected, ahead of other regions.
There is a growing interest in Korea’s export policies and strategies toward China since the conclusion of the Korea-China FTA. Can you tell us more about them?
With the conclusion of the Korea-China FTA, it is anticipated that the costs of promoting Korean agricultural products in the gigantic Chinese market of about 1.4 billion people will be drastically reduced.
We will make extensive efforts to conduct marketing activities online through Alibaba, one the world’s largest online shopping malls and headquartered in China.
In addition, we will establish domestic infrastructure for the items that are expected to be in high demand in the Chinese market, so that the companies can mass-produce those items. Further, we need to create a structure in which dealing with Korean agricultural products becomes profitable for Chinese buyers. Through such efforts, we can prepare a foothold for the Korean agricultural exports to make a quantum jump.
-How meaningful is the construction of an aT Qingdao distribution center as an export base? And how do you plan to operate the distribution center?
After the construction of the Qingdao distribution center is completed, the facility will be used to relieve export companies of the burden of high distribution costs, to help them secure stable supply chains, and to provide a place for negotiations between Korean exporters and local buyers. There will also be a packaging center for online sales in China. What’s more, we plan to open a hall for exhibiting and promoting Korean agricultural and other food products, to inaugurate a consultative council for Korean agricultural exports in Shandong, and to conduct joint promotional events with resident companies and conferences for entry into large Chinese distribution stores.
-aT has been conducting B2B (business-to-business) and B2C (business-to-consumer) events at K-Food Fairs since 2013 and is achieving excellent results. What is the plan for the K-Food Fairs this year?
Since 2013, K-Food Fairs have been contributing to the increase in exports of agricultural and other Korean food products by raising the international awareness and the prestige of those products as well as by widening the overseas consumer base.
In 2015 (the third year of K-Food Fairs), we will strive in the Chinese market to penetrate the niche inland markets of the Middle West of the country―Xian, Chongqing, and other regions. We will also focus on Vietnam, Thailand, and Malaysia, which are emerging as major markets for Korean agricultural exports. The popularity of Hallyu in those places is continuing and the demand for K-Food is steadily increasing.
-Is there anything you’d like to say to Korean agricultural businesses, farmers, and related organizations about the expansion of exports?
In the food and agricultural sector, opening the market can bring a crisis but it can also be a boon as it opens many foreign markets for trade. What’s important is how we prepare for and respond to the opening.
China is currently the second largest trader of agricultural products and food with Korea, following Japan. But the country is predicted to emerge as our biggest partner in the 2020s.
Thus, consolidating the position in the Chinese market is essential for securing the global competitiveness of Korean agricultural exports. To this end, we need to focus on packaging, design, promotion, marketing, and branding; in addition to further upgrading the quality of Korean agricultural products and food safety.
Park Sung Eun firstname.lastname@example.org
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