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| Is ‘Greater China’Challenge or Chance? |
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This is an opinion piece contributed to The Korea Times on the occasion of the eighth World Chinese Entrepeneurs Convention that ends its three-day run in Seoul today - ED. The eighth World Chinese Entrepreneurs Convention (WCEC) will be held in Seoul from Oct. 10 to 12 under the theme of ``Greater Ties with Chinese Entrepreneurs: Enhancing Global Peace and Prosperity.’’ This year’s WCEC, with the participation of some 2,000 Chinese business leaders from 25 countries worldwide, will provide an opportunity to further integrate ``Greater China.’’ In fact, Greater China, which encompasses China, Taiwan, Hong-Kong and Southeast Asian economies that are virtually dominated by Chinese entrepreneurs, is entering a new phase of integration. Over 1.4 billion Chinese throughout the world are moving toward an official and practical phase of economic integration through the huge Chinese global network. The rise of Greater China shows that seeking further cooperation with Chinese economies has become an inevitable challenge for Korea to deal with. The integration of Greater China has gone through three stages of development processes that were underlined by historic events. In the first stage, China opened up its economy to the outside world, triggering the integration of the Chinese economies. That is, the 35 million Chinese residing abroad flock to China with their capital and became the major driving force behind the successful transformation of the Chinese economy. In return, foreign Chinese entrepreneurs obtained opportunities to capitalize on the rapid economic growth propelled by China’s adoption of free market economy. For instance, according to a report by the Chinese State Council, 60 percent of foreign direct investment (FDI) flowed into China in 2003 consisted of overseas Chinese capital, and 70 percent of foreign invested enterprises in China were set up by overseas Chinese enterprises. The second stage, marked by the strengthened unity of Greater China, began with the conclusion of the Closer Economic Partnership Arrangement (CEPA) between China and Hong Kong, which came into effect in January 2004. The agreement stipulates that goods originating from Hong Kong can be imported to China customs-free and this privilege will be expanded to all freight trade, transportation, construction and tourism by the third phase in January 2006. As a result, the economy of Hong Kong, which has been considered one of the locations for Asian regional headquarters by overseas Chinese industrialists and capitalists, has been integrated into China. The last stage was highlighted by the China-ASEAN free trade agreement (FTA) that took effect last July. Under the China-ASEAN FTA, China and six early member Southeast Asian countries of ASEAN will completely remove bilateral tariffs on goods from both regions by 2010 and other four late starters, including Cambodia, Laos, Myanmar and Vietnam, by 2015, thus creating a free trade zone in this area. Foreign Chinese residents, which account for only 6 percent of its total population in the Southeast Asian region, make up 86 percent of the region’s combined wealth and dominate 70 percent of commerce in the area. Therefore, it is not an exaggeration to say that the high interest of Southeast Asian-based Chinese capital played the lead role in concluding the China-ASEAN FTA. The size of Greater China will be beyond belief if the worldwide network of Chinese capital is finely integrated as a single giant economic entity. As of the end of last year, the Chinese population outside China amounted to about 1.4 billion, accounting for 22 percent of the global population. In terms of purchasing power parity (PPP), the combined gross domestic product (GDP) of China, Taiwan and Hong Kong reaches $7.6 trillion, only after the U.S. with $11.6 trillion and the European Union (EU) with $8.6 trillion. However, when the GDPs of the five ASEAN countries are incorporated, the integrated Chinese economy will emerge as the second largest single economic bloc with the combined PPP-based GDP amounting to approximately $9.7 trillion dollars, accounting for 17 percent of the global GDP. How can Korea turn the immense waves of the rapid emergence of the Chinese economies and their integration into an opportunity? In order to turn it into an opportunity, Korea should no longer approach the Chinese economies as separate individual entities but a single integrated economic entity. Korean companies must seek ways to enter the Chinese market jointly with the capital of foreign Chinese entrepreneurs. Korea’s accumulative investment to China amounted to $12.5 billion last year. There will be even greater room for investment for Korean businesses in China if they join hands with Chinese investors. Through this effort, Korean companies can borrow Chinese investors’ cultural knowledge and communication abilities in successfully doing business in China. Furthermore, considering that most overseas Chinese enterprises have a competitive edge in the service and distribution sectors, joint entrance will serve as effective means to enter the Chinese local market, the current topic regarding Korea-China bilateral trade. Korea should also change its current investment pattern that is mostly focused on China and diversify its investment destinations to other countries such as Hong Kong and South East Asian nations. Such diversification can reduce risks arising from its heavy investment dependence on China. In addition, Korean companies investing in Hong Kong and Southeast Asian countries at a time when CEPA between China and Hong Kong and the China-ASEAN FTA came into effect, they will be able to gain easier access to mainland China. Now is a critical time for Korea, which seeks to emerge as the economic hub of Northeast Asia, to strengthen cooperation from the Chinese enterprises based outside of China, the major economic players in the East Asian region. Despite growing endeavors made by Koreans to beef up cooperation and to attract the overseas Chinese enterprises, there still is room for further improvement. In this respect, Korea should make the best use of this WCEC event to enhance the cooperative relationship with Greater China. Source: www.hankooki.com Oct 11, 05 |
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