A Study of the Impacts on Electronic Distribution Industry after Korea-China FTA

Abstract

Purpose - This study attempted to discover the impact of the Korea-China FTA(Free Trade Agreement) on electronic products distribution industry. Strategies will be provided to expand both countries' trade after the Korea-China FTA. Research design, data, and methodology - This study analyzed the differences before and after the Korea-China FTA, using an RCA(Revealed Comparative Advantage) index, TC(Technology Sophistication Index) index and TSI(Trade Specialization Index) that considered the FTA tariff situation. Data was collected from the International Trade Statistics Database and Korea, China Customs Service. Results - The results indicate that following the Korea-China FTA, China and Korea's bilateral trade of electronic products is expected to expand, and both countries will experience net welfare gains from the markets' expansion. Korea is competitive in several key products, although it faces competition from China. China's electronic products' competitiveness have indicated an increasing trend. Conclusions - The two countries should closely cooperate and communicate with each other. Ultimately, Korea should focus on high-tech, sophisticated techniques to gain market advantage. On the other hand, with the tariff decrease as well as the labor cost and labor force base, China will greatly be able to benefit from the manufacturing of medium- to low-end products in the future.

Keywords

• Korea-China FTA;
• Competitive Advantage;
• Electronic Products;
• Distribution Industry;
• Export Strategy