Competition Between China and the United States in the Korean Food Market

Korea, a large net-food importing country, is rapidly opening its doors to agricultural trade. In this study, we investigate the nature and extent of competition between two major exporters, China and the United States, to the Korean food market. We first employ the un-centered correlation distance approach to investigate the similarities in the export structures of major exporters to the Korean market. Results show that the United States, traditionally a large food exporter to Korea, is facing serious competition from Chinese exports. The similar export structures of China and America have made the latter vulnerable to competition. Furthermore, the geographic proximity of China to Korean markets confers the former two-fold advantages: similar food products and varieties, and lower transport costs. Secondly, the concept of competitive threat is used to determine which exporter faces threats from which competitor. We show that China poses a threat to the United States in virtually every agricultural product exported to Korea. The complexity of trade patterns and competition is likely to increase given the impending Korea-United States Free Trade Agreement and the ongoing negotiations for a Korea-China Free Trade Agreement.