Domestic products are counterattacking Korean products!

Over the past year or so, the impact of the epidemic on the overseas offline economy and the advantages of Chinese manufacturing have brought a sudden wind to China's cross-border e-commerce, and the Russian, European and South American markets have all taken advantage of it.

In 2020, my country's cross-border e-commerce export value increased instead of decreasing

(Photo: Grispb / TuChong Creative)▼

Qiu Lei, a young man from Anhui Province who is engaged in cross-border e-commerce in South Korea, believes that this trend came earlier in South Korea, and the epidemic has made it blow more fiercely. In the past year or so, the growth of AliExpress, the Chinese e-commerce platform where he works, in the South Korean market has exceeded 60%.

"In fact, as early as around 2015, Koreans' consumption trend had shifted to 'value for money', and Chinese products began to be popular," said Qiu Lei. Value for money is a mild and neutral term, but what it reflects is the cautiousness of the mainstream consumer group: spend money prudently and use as little money as possible to exchange for the best possible life.

Buy good quality instead of expensive, increasing revenue and reducing expenditure is the top priority

(Photo: shutterstock)▼

Chaebol Economy: A Burden Young People Cannot Bear

Koreans are not actually short of money. In 2020, South Korea's per capita GNI (gross national income) exceeded US$30,000, surpassing Italy, a developed country in Western Europe, and almost twice that of China.

But Koreans are short of money. After two conservative governments, South Korea's economic growth rate has been lingering at a low level for many years, with an annual growth rate of about 1.5% at its highest and only 0.7%-0.8% at its lowest. In 2020, the COVID-19 pandemic made the South Korean economy even worse, with GDP growth of only 0.3%.

Reduced income, layoffs, unemployment

The epidemic has dealt a heavy blow to the already sluggish Korean economy

(Photo: shutterstock)▼

The impact of the two financial crises in 1997 and 2008 has made South Korea's economy look old: in Seoul, almost all infrastructure was built before 1997, and in the more than 20 years since then, no more than two new subway lines have been built.

Young people in South Korea are basically powerless to this structural downturn, after all, the root cause was planted long before they were born. After the war, South Korea was seriously injured, and the political turmoil that lasted for more than ten years after the war made South Korea's already fragile economic foundation wither. In order to achieve its rise in a short period of time, South Korea has relied on the power of other countries to a considerable extent - whether it was in the early stages of the "Han River Miracle", sending troops to Vietnam in exchange for a large amount of financial and technical support, or by taking over Japan's high-tech industries that had to be transferred due to the "Plaza Accord" and the "US-Japan Semiconductor Agreement", the United States played an important role in it.

For decades, this place has been unable to get rid of the presence of a certain big country

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But there is no such thing as a free lunch. In 1997, the Asian financial crisis broke out, and the Korean economy fell into a desperate situation. It had to cede part of its economic sovereignty in exchange for harsh assistance from the International Monetary Fund (IMF). This also led to a large amount of its economic autonomy falling into the hands of the United States. Today, many Korean companies are controlled by Wall Street investors, including some large chaebols such as Samsung and Hyundai.

Through Samsung, Hyundai and other Korean chaebols

Wall Street can indirectly influence Korean society

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In turn, these chaebols control the country's economic lifeline and have become "too big to fail" behemoths. After grabbing a large amount of social wealth, they will inevitably desire political privileges. Looking at the Korean political arena, it is rare for presidents in recent decades to have a good end. One important reason is that the chaebols interfere in politics. Reformists who tend to fight against the chaebols and conservatives who choose to cooperate with the chaebols take turns to come to power. The result is the incoherence of the country's major policies and the vacillation of diplomatic postures.

A typical "successful" life for a young Korean generally starts with a job in one of these chaebols. The top 10 chaebols in Korea can provide a limited number of jobs each year, and the competition for a single-plank bridge is even more intense than that of China's national civil service exams. There may be some "institutional" jobs at the end of the single-plank bridge, but whether it is a chaebol or a grassroots employee in the system, the future is in sight.

Live like this for 30 years until the building collapses

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With their upward mobility being drastically reduced, more young people are choosing to “lay low”. On the 9th of this month, the Korean JoongAng Ilbo reported that according to statistics released by the Korea Real Estate Research Institute, the proportion of people under 30 buying homes in Seoul has reached a historical high. In addition, since the income and loan amount of people under 30 are not enough to buy a house, more and more young people are starting to rely on their parents to buy real estate.

When young people in South Korea buy houses, they also have to empty the wallets of the elderly

(Agency filled with housing information)

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On the other hand, South Korea's fertility rate had already dropped to below 2.1 in 1983, which is required to maintain normal population reproduction. According to statistics from 2020, South Korea's fertility rate has dropped to 0.84, the lowest level in the world. A Japanese-style "low-desire society" has emerged in South Korea, with a large number of young people choosing not to fall in love or get married, and their demands for material life are decreasing year by year.

Consumption has become a matter of careful calculation. The other side of high income in South Korea is the high prices of daily necessities such as the "food basket". Therefore, people have to spend more time and energy on "shopping" for various non-essentials. Around 2015, Xiaomi, a representative of cost-effectiveness, became popular in South Korea. Some Chinese brands impressed Koreans with similar quality and low prices. This is not only true for young people who have just entered society, but also for the "elite" class with high incomes. Goods from China and cross-border e-commerce have become their common choice.

After a long period of intense consumerism

Koreans’ consumption concept has also entered the Buddhist “sage time”

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The disappearance of Korean Wave: the Chinese core

Currently, Chinese products with rich varieties and good quality at low prices are going global, and South Korea is not an isolated case. Around 2014, Chinese e-commerce platforms had achieved a phased victory in the process of entering the Russian market. At that time, a large number of parcels from China poured into the north, even causing the collapse of the Russian postal system. Eventually, the Russian government was forced to replace the head of the Russian Post and make drastic changes to improve the Russian Post system.

AliExpress warehouse on the streets of Moscow in 2017

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Unlike Russia, where infrastructure is weak, South Korea is already a major e-commerce country, and even started earlier than China. The e-commerce penetration rate in South Korea is nearly 70%, and 31 million of its 55 million people have at least one online shopping experience.

At the turn of the century, when most Chinese people still didn't know what the Internet was, South Korea had already seen the emergence of an e-commerce platform "Musheng" that focused on the second-hand market and a self-operated platform "In the Park". In order to compete with eBay, "In the Park" directly brought fire to Dongdaemun, which was once famous in the Chinese Hallyu circle.

In the era when Korean Wave represented fashion

Many people came to Dongdaemun through e-commerce.

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Another important change around 2015 took place in Dongdaemun, Korea’s fashion frontier.

Qiu Lei would go to Dongdaemun from time to time for work. It was once a fashion mecca for young people in Asia, with a constant stream of purchasing agents.

"But now, if you go to the back warehouses of some clothing merchants in Dongdaemun, you will see that their packages are all written in Chinese: Hangzhou Sijiqing, Guangzhou Baimacheng. Before 2015, some of Dongdaemun's clothes were designed in South Korea and produced in China; but now, the design process has also moved to China. China designs and manufactures them, then sends them to Dongdaemun in South Korea and sells them to Koreans; or through purchasing agents, and then sells them back to China."

The dazzling array of bags may come from China

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The economic base determines the superstructure. As the economic situation in China and South Korea reverses, the discourse power of cultural trends also shifts. In fact, in the fields of fashion, electronic products, daily consumer goods, etc., the demand for Chinese manufacturing in the Korean market is increasing day by day.

Take Qiu Lei's AliExpress platform as an example. During the Double 11 shopping festival in 2020, AliExpress completed last year's sales in 1 hour in 32 minutes, and exceeded last year's sales for the whole day in 7 hours and 37 minutes. The total transaction volume of goods on Black Friday increased 15 times. Moreover, among Korean users who buy Chinese goods through AliExpress, young women account for an increasing proportion; maternal and child products, beauty products, and clothing products are growing rapidly. The reverse export of Chinese clothing and beauty products to South Korea has become a new trend.

Behind the massive export of culture and goods

It is a reflection of the soft power of China's economic development

(A huge Chinese advertisement on the streets of South Korea)

(Photo: Yitu.com)▼

This trend reversal was unimaginable in the past. Although the geographical distance between China and South Korea is not far, the trade chain was once quite long. A few years ago, Koreans often jokingly called shopping on AliExpress "buying a gift for yourself" because it took more than 30 days from placing an order to receiving the goods. "I forgot about it after placing the order, and suddenly received it a month later, which was like a surprise for myself," said Qiu Lei.

The acceleration of logistics has become the basis for the accelerated change of trends, and "surprises after a month" have become a thing of the past. Just 42 hours after the opening of Double 11 in 2020, Mr. Lu, a user in Pyeongtaek, South Korea, signed for a food sealer. This is because the border warehouse set up by AliExpress in Weihai has greatly shortened the logistics time. Most Korean users can pick up their packages within 5 days, and some areas can even arrive in just 3 days, which is almost the same as the domestic logistics experience.

A huge road network for logistics

Connecting people across borders

(Photo: 4045 / TuChong Creative)▼

The physical distances of Northeast Asia have been “reduced” by information technology and logistics infrastructure. On this basis, everything, including the integration of Northeast Asia, has begun to accelerate.

Eastern Power, Integrating Northeast Asia

Although Chinese products are very popular in South Korea, in fact, in recent years, there has been a considerable trade deficit between China and South Korea, which is increasing year by year, reaching US$60.2 billion in 2020. However, as the "Korean Wave" gradually fades, the economic and cultural discourse power in East Asia has gradually shifted to China.

A Chinese logistics truck driving on a bridge in Busan

(Photo: Yitu.com)▼

Under the leadership of China, many international organizations have been established in the Asia-Oceania region, the most representative of which is the Regional Comprehensive Economic Partnership (RCEP). RCEP is a regional economic plan initiated by the ten ASEAN countries in 2012. In addition to the fifteen countries that have signed it, India is also a country of interest. If RCEP can be implemented as planned, it will become the world's largest free trade zone - covering a population of more than 3.5 billion, accounting for 47.4% of the world, a GDP of 32.2% of the world, and a total foreign trade of 29.1% of the world.

Under the complex international checks and balances, the advancement of RCEP was once slow and stagnant, but the COVID-19 pandemic in 2020 opened the valve for acceleration. Quite a number of countries are eager to get rid of the economic recession caused by the COVID-19 pandemic, and the free trade zone plan that has been stagnant for many years has suddenly made a breakthrough. China became the only major economy in the world to achieve positive economic growth in 2020 amid the COVID-19 pandemic, and many countries hope to catch this "ride", so the launch of RCEP seems natural.

After this wave of epidemic, all countries should understand

Strengthening economic and trade exchanges with China is the top priority

(Photo: Good Ice Cream/TuChong Creative)▼

For China, the significance of the establishment of RCEP goes far beyond this. In a sense, the launch of RCEP can be seen as the beginning of the integration of the Northeast Asian regional economy led by China.

Some scholars pointed out that the implementation of RCEP will not only greatly increase China's export volume to South Korea and Japan, especially the export of high-quality and high-priced goods, but the reduction of tariffs will directly improve customs clearance efficiency and significantly reduce the cost of consumers in various countries to buy products from other countries. If countries promote new technologies to facilitate customs, trade standards tend to be unified and mutually recognized, logistics efficiency will be greatly improved, and borderless e-commerce trade between China, Japan and South Korea may be realized in the near future.

The ancients' beautiful wish of "different mountains and rivers, the same moon and sky"

It will be reflected in e-commerce trade based on RCEP

This view may be just one person's opinion, but the role of e-commerce in promoting closer trade ties among the three East Asian countries is obvious to all. By then, the huge trade deficit between China and South Korea may be alleviated or even reversed to a large extent - this is another expectation of the industry for RCEP.

Technology brings change. When the power of technology penetrates into every corner of our lives, the changes it can bring are worth each of us to wait and see.

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*This content is provided by the author and does not represent the position of the Earth Knowledge Bureau

Cover image from Yitu.com

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The Korean Wave

Author: Xiaobei

Proofreading: Chao Qian / Editor: Xian Daiyu

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