[COLUMN] ASEAN coming back as S. Korea's real alternative market

By Kim Sang-chul Posted : August 22, 2017, 09:28 Updated : August 22, 2017, 10:30
 

A Samsung employee assembles Galaxy S8 smartphone at Samsung factory located in Vietnam. [Courtesy of Samsung]



(This article was contributed by Kim Sang-chul, former KOTRA supervisor in Beijing/Shanghai)

For Southeast Asian nations, there is a similar dark period like the 'lost 20 years' which usually refers to Japan. For about 10 years from the mid-1980s to the mid-1990s, Southeast Asia had a golden era, absorbing global corporations, funds, and talent. Most ASEAN members have been gradually out of the limelight from 1997 when they were thrown into the IMF economic crisis.
 
Since then, China has become a 'global factory', taking the baton as a global growth engine. Until 1997, most ASEAN members were our key markets but they had disappeared from our view until recently. Companies, investors and people all flocked to China, pushing the Southeast Asian market into the backstroke.

ASEAN is far behind the EU in terms of market integration, but its market potential is not inferior. The ASEAN market is not unfamiliar to us, and we know well about the shortcomings of each member country. Since 1997, we have been involved in ASEAN + 3 (Korea, Japan, China) talks. However, the market environment and conditions are different from the 1990s, and the aspect of competition has changed. Japan used to be the only competitor, but now we face unavoidable competition with an entirely different China. In the end, it will become the arena for competition by +3, and ASEAN countries are expected to demonstrate a competitive edge by selectively cooperating with +3.

In general, the ASEAN market is called the Overseas Chinese Market. The market power of Chinese residents ranges from 50% to 90% in each country. As a result, there are invisible conflicts between locals and Chinese, and they remain a potential social problem. Depending on the level of economic development, there are six frontrunners (Singapore, Malesia, Thailand, Indonesia, Philippines, Brunei) and four latecomers (CLMV: Cambodia, Laos, Myanmar and Vietnam).

ASEAN is also split into the Malay Peninsula market led by Singapore and Malaysia, and the Indochina market dominated by Thailand and Vietnam. So we need a diversified strategy to target capital, intermediate and consumer goods according to the characteristics or maturity of each market. In order to overcome the conflicts of the market, it is a wise choice to sell general products to Chinese consumers and focus on local indigenous leaders in project marketing.

It is necessary to expand 'supply or value chain' cooperation with Japanese companies that have already secured their business base mainly in Thailand and Malaysia. Rather than confronting China, which is engaged in indiscriminate offensive through the network of the ethnic Chinese, we need should fully utilize value-added selection and the full utilization of vested interests in the local market.

Ultimately, it's important to maintain our attractive position with a differentiated strategy from China and Japan. We should work out a quick strategy to include Myanmar to the Indochina market and to revitalize the Singapore-centered market involving Malaysia, Indonesia, Thailand and the Philippines.

Vietnam, which was our 10th export market in 2010, is now getting closer to the third place this year. Companies are already choosing ASEAN instead of China. Even if it is not a THAAD row, it is time for a new paradigm of economic cooperation with China. US and other developed markets are recovering thanks to the boom of the 4th industrial revolution, but they are in the shadow of protectionism and the silver market is getting bigger there.

ASEAN where consumption led by women and a new middle class is coming back as our real alternative market again in 20 years.



 
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