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Revitalization of Korea’s Exports of Consumption Goods to Southeast Asia economic cooperation, electronic commerce

Author Bo-Young Choi, Sooyoung Lee, Hyong-Kun Lee, Boram Lee, and JungEun Lee Series 18-25 Language Korean Date 2018.12.31

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   The purpose of thisresearch is to derive policy implications for Korea by comparing and analyzingthe current status and competitiveness of Korea, China, and Japan in theSoutheast Asian market as part of efforts to achieve diversification and enhancementof Korea's export items. Accordingly, the report analyzed the import patternsof consumption goods in the three Southeast Asian countries (Indonesia,Thailand, Vietnam), the determinants of consumption goods trade between Korea,China and Japan (KCJ) and the three Southeast Asian countries, the policies forpromoting export of consumption goods in KCJ and import barriers in the threeSoutheast Asian countries.
   In Chapter 2, we lookedinto Korea's export trends of prospective consumption goods to Southeast Asiaby analyzing import patters of prospective consumption goods to Indonesia,Thailand, and Vietnam, as well as Korea’s e-commerce trade—the composition ofwhich is largely made up of consumption goods.
   In Chapter 3, this research empiricallycompared and analyzed determinants of products traded in KCJ, Vietnam,Thailand, and Indonesia. The analysis found that unlike the trade of capitalgoods or intermediary goods, consumption goods trade is influenced by culturalsimilarity: the higher the cultural similarity among countries, the more activethe exchange of consumption goods. This is partly because while demandsfor capital and intermediary goods depend on relatively objective rationale,demands for consumption goods are often based on consumers’ preferences orchoice, which are subjective in nature. In this context,the trade of recreational services, such as broadcasting and education, canplay a complementary role in the trade of consumption goods. The study alsofound that consumption goods are more in affected by the e-commerceinfrastructure level than other products.
   In Chapter 4, this research first reviewed andcompared policies for promoting consumption goods and e-commerce in Korea, China, and Japan. Then we examined import barriers in Indonesia, Thailand, andVietnam.
   Compared to Korea, Chinafocusesmore on supervising and its ever-growing e-commerce market andstrengthening its management system, rather than on specific policy supports. Atthe same time, the government is pursuing a trial-based policy in which certaincities and regions are selected as testbeds for cross-border e-commerce, thanthe number is increased eventually to include the entire country. For Japan, itwas found that they exercise only a few direct support policies and even lesssubsidies, while for e-commerce, Japan provides provisions as a guideline forcross-border e-commerce. In this regard, Korean government’s e-commerce supportpolicy is much more direct and specific compared to China and Japan’s. In thefuture, it is necessary to prepare a comprehensive policy response throughcooperation between government ministries and spread success cases byimplementing adequate policy evaluation, etc.
   Next, the import barriers of Indonesia,Thailand and Vietnam in Southeast Asia are found to be relatively high.According to the TradeNAVI Integrated Trade Information Service provided by theMinistry of Trade, Industry and Energy and the Korea International TradeAssociation, Vietnam (49 cases), Indonesia (33 cases), and Thailand (21) aretaking non-tariff measures on various items such as food and beverage, cosmetics,medicine and medical devices. The measures include certification, quarantine,quantity control, technical barriers, etc.
   In Chapter 5, the following policy suggestionswere drawn based on the report analysis, in order to revitalize the consumptiongoods trade in Southeast Asia contents: First, it is necessary to re-evaluatethe effectiveness of Korea's export-promoting policies and preparecountermeasures accordingly.
   Second, it is necessary tocome up with comprehensive measures to promote exports of consumer goods toSoutheast Asian countries in connection with Korea’s New South Asian policy. Tothis end, the government should consider measures to improve the utilization ofFTAs, eliminate non-tariff barriers, establishing a research organization thatprovides in-depth market information, etc.
   Third, efforts to eliminatenon-tariff barriers, simplify import customs, expand Country RecognitionAgreement (CRA), etc. are imperative, as measures to prepare for theKorea-Indonesia CEPA negotiation.  
   Fourth, continuous effortsare needed to expand and supervise the Mutual Recognition Arrangements (MRA)partner countries, in order to reduce the time and cost of import customs andlogistics bound for Southeast Asian countries. 
   Finally, this paperproposed linking Korea’s consumption goods export stimulus policy to its serviceexport promotion policy. 

 

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