South Korea Looks for Economic Bulwark Against China’s Whims in SE Asia

SEOUL, Nov. 13 (Korea Bizwire) — Despite news continuing to filter out about South Korea and China’s mending relationship post-THAAD disagreement, the political and business sectors are taking the lessons learned from an overreliance on China to heart by ramping up efforts to establish a foothold in ASEAN member countries, or what some in South Korean media have dubbed “post-China” regions.

President Moon Jae-in, currently in Manila for the ASEAN summit — the last stop of his 8-day Southeast Asia tour — spoke plainly on his desire for closer relations. At a business forum in Indonesia on November 9, Moon said, “My goal is to grow the relationship between ASEAN and South Korea to a similar level as with the four major countries surrounding the Korean peninsula.”

Outlining his “3P Values” of people, peace and prosperity, Moon said, “Our government will put its full weight behind a ‘New Southern Policy’ to grow our collaborative relationship with ASEAN in a way that will open up a new era.”

Accompanied by the CEOs of SK E&C, Hyundai Engineering and Construction and POSCO E&C, as well as the head of the Ministry of Land, Infrastructure and Transport, the South Korean and Indonesian representatives put pen to paper on a transportation and infrastructure MOU worth $1.9 billion. 

Moon also said trade between the two countries would be targeted to reach $30 billion by 2022, and afterwards continue until exceeding $50 billion. 

Beyond the size of the deal, the agreement between the two sides is significant as it gains South Korean businesses an entry into a country of over 250 million, an escape valve from Asia’s fourth largest economy being forced to adhere to the whims of its surrounding military and/or economic superpowers in China, Japan and the United States. 

Moon sat down for a face-to-face with China’s leader Xi Jinping at the APEC summit in Vietnam on November 11, the first time the two had spoken since July due to frustrations from Beijing over the installation of U.S. THAAD missile systems on South Korean soil. Tensions eased on October 31 as Chinese leadership backed off from a demand for the anti-ballistic missiles to be withdrawn, a point on which South Korea refused to budge. The meeting with Xi on November 11 and another upcoming talk with Li Keqiang on November 13 in Manila are expected to result in a full dissolution of China’s economic blockades, among them a ban on the import of South Korean culture products.

With a reeling domestic tourism industry — which is heavily reliant on Chinese tourists to keep business humming — and retail conglomerate Lotte resorting to closing its Chinese locations, Moon will ensure that the doors to China reopen, but is also looking increasingly southwards to diversify South Korea’s trade partners.

A handful of companies are already a step ahead of the national government. Retailer E-Mart opened its first store in Ho Chi Minh in 2015, and plans for a second location in Vietnam’s largest city are currently underway. GS Retail will open convenience store GS25 in Ho Chi Minh, and from there will expand into neighboring countries. CJ Group, with its “Great CJ” initiative, is aiming for 100 trillion won in revenues generated from Southeast Asia by 2020, and to do so is opening up its wallet with 70 billion won in investment in Vietnam.

S.B.W. (sbw266@koreabizwire.com)