Asia Times: China's WTO entry boon for Korean IT


	November 27, 2001	atimes.com

The Koreas

China's WTO entry boon for Korean IT

SEOUL - South Korea's trade surplus to China in the field of information-technology (IT) products should increase by nearly US$400 million a year because of China's entry into the World Trade Organization (WTO), according to a South Korean IT think tank.

The Electronics and Telecommunications Research Institute (ETRI) reported on Monday that South Korea's exports of IT products to China would increase by $587 million a year on average with China's entry into the WTO, while IT product imports from China would grow $191 million a year on average, for a trade-surplus increase of $396 million.

The ETRI said that China's WTO membership is likely to be a challenge as well as an opportunity for the IT industry, but there is a high possibility that it will work to South Korea's advantage in both the short and long terms.

As for positive effects, the ETRI noted that IT product exports will expand because of the fall in Chinese tariff rates and non-tariff trade barriers, increased demand for IT products in China and greater investment and business opportunities there.

Negative aspects include tougher competition in China's IT market, an enhanced competitive edge for China's IT industry and a slowdown in foreign investment in South Korea, the ETRI pointed out. The research institute also noted that South Korea's IT industry will have to compete with Chinese rivals overseas after China's IT industry is substantially strengthened by government policies that require foreign IT firms doing business in China to share technology with domestic IT firms.

The ETRI said South Korean IT firms need to develop strategies based on research and development programs in order to minimize the negative factors. It recommended that Korean IT firms upgrade their product lines and set up close cooperative relations with Chinese counterparts. Korean IT firms will have to study the Chinese IT industry thoroughly and secure more Chinese experts. They will also have to seek partnerships with Chinese IT firms in Hong Kong and other parts of the world if their entry into China hits a wall.

(Asia Pulse/Yonhap)