Blue Ocean
The size of the food industry of the Asia-Pacific region reached US$1.8342 trillion in 2014, the largest in the world, while that of Europe totaled US$1.8025 trillion. The former is growing at a rapid pace these days, exceeding the sizes of the global automobile industry (US$1.6576 trillion) and the global steel industry (US$1.0453 trillion). As is well known, the number of the population in this region is more than two billion.
The Chinese market alone amounts to 1,000 trillion won and the Halal Food market in Asia is equivalent to a similar amount. In 2013, the global Halal Food market reached US$1.2910 trillion in size. The importance of the Asian food market further increases when Japan, the largest market for Korean agricultural product exporters, is taken into account.
Korean agricultural product and food exporters, well aware of the significance, are doing a good job in this region nowadays. Their exports to China are estimated to have reached US$1.048 billion last year while the amount had been US$556 million in 2010. The ratio of their exports to China to their total exports increased by four percentage points between 2010 and 2015, when the ratio of their exports to Indonesia, Malaysia and the six member countries of the Gulf Cooperation Council continued to increase to as high as 10.11% or so. As a result, their exports to China and the Halal Food market in Asia increased by 3.5% to a tentative amount of US$1.666 billion last year while the total food exports from Korea fell 1.1%. This is a stark contrast to the fact that Korea’s total exports declined 7.9% in 2015, too.
In 2014, China imported agrifood worth US$121.5 billion, 68.9% more than in 2010. The amount is likely to continue to increase with more and more Chinese losing trust in food produced in China and preferring imported food of high quality. Last year, Korea’s agrifood exports to China amounted to about US$1.048 billion as mentioned above, 17.2% of its total exports of the item. It was only 1.9 percentage points short of the exports to Japan.
Nevertheless, Korean agrifood took up just 0.7%, 20th in rank, of the imported food market of China in 2014, when each of Thailand, Indonesia and Malaysia recorded five to six times the exports from Korea. Fortunately though, it has been found that Chinese in general have a positive view on Korean food. According to the Korea Rural Economic Institute, Korea ranked first in its recent survey on Chinese consumers’ favorite agrifood-exporting countries by being selected by 29.3% of 750 respondents. The United States and Denmark were chosen by 14.3% and 9.7%, respectively.
At present, processed food accounts for 83% of Korea’s food exports to China and a lot of Korean exporters are finding it difficult to increase their exports of fresh fruit and vegetable due to price competitiveness factors. This means processed food is the key in the short term, and the Korea-China FTA can be an opportunity for them.