South Korean petrochemicals, battery, textile stand to lose from trade deals between Taiwan and China, likely to be signed in the coming year, traders said Monday.
Taiwan's Minister of Economic Affairs Shih Yen-hsiang met his Chinese counterpart in Singapore Sunday, as cross-strait trade ties appear to be accelerating, and worrying to Koreans.
“If we look at trade patterns of Taiwan and Korea in China, there are substantial zones of trade conflicts that pit Taiwan against South Korea in China,” said Park Rae-Jeong, a researcher at LG Economic Institute. It is usually a choice between Taiwan and South Korea when Chinese importers purchase batteries, textiles, LCD panels or machines, a recent Korea Traders' Association report said.
“If the ECFA (economic cooperation framework agreement) becomes effective, Taiwan will gain from non-tariff or lower-tariff shipment of their petrochemicals, batteries and machines,” the report said.
China imposes an average 6.17-per-cent tariff on petrochemicals. If waived for imports from Taiwan, the island's manufacturers will be able to take away substantial orders currently given to Japanese and South Korean vendors, it said.
Traders estimate that Japan and Korea account for about 38 percent of China's petrochemical market.
In 2008, China imported US$103 billion worth of products from Taiwan, while it imported US$112 billion worth from South Korea, according to the report.
“ECFA could be an incentive for South Korean companies to be more research-and-development oriented, to further increase a technology gap with Taiwan,” said Oh Seung-Hoon, global research team leader at Daesin Securities.
South Korean companies also may try to beat the competition by embracing it.
“Some South Korean companies will be trying to find a Taiwanese partner that has insider's expertise on the Chinese market, and enter together into China,” the trade association report said.
