South Korea Until recently, away Cosmetics could not fill Chinese orders fast enough for its Green Piggy Collagen Jelly Pack, a creamy beige material containing pig collagen, or its Carbonated Bubble Clay Mask, which leaves the user’s face covered with foam.
Then, in November, international politics hit this South Korean creator of skin care products. As China’s ire grew over plans by Washington and Seoul to park a rocket defense system on the South Korean ground, sales of the two beauty aids fell to one-fifth of further Cosmetics’ sales, from one-half.
Now, as the deployment of the system begins this week and China appear to punish South Korea further, companies like Beyond Cosmetics have been preparing for worse. The intensifying diplomatic ruckus is exposing deep crash in South Korea’s economic success story and forcing the nation to confront its dependence on China, its largest trading partner.
Even before the present crisis, Beyond Cosmetics had started to look beyond China, where it was more rushing into problems like tougher government rules and rising homegrown competition.
An export powerhouse that began its upward trajectory decades before Beijing embraced capitalist economics, South Korea has long gained from China’s rise. Chinese factories are major buyers of Korean-made components. A growing Chinese middle class covered Korean devices, cosmetics, television show, and music, often in shopping trips across the Yellow Sea.
All of that may be in danger now. Consumer boycotts have hit Korean chain stores in China. K-pop shows there have been rejected. Just last week, the Chinese National Tourism Administration ordered regional travel agencies to stop sales of package tours to South Korea.
But even before China began lashing out at South Korea, the economic relationship between the industrial giants had started to replace. China is increasingly a competitor as much as a customer for South Korea. Chinese companies have improved product quality and can compete on price, both at home and abroad, in everything from complex elements to cosmetics to smartphones.
That presents main challenges for a country where a bribery scandal has engulfed both the country’s president and the de facto elder of its biggest conglomerate, Samsung, and raised questions about whether an economy driven by exports and close ties between officials and big business have reached their limit. To thrive long term, experts say, South Korea needs to consider repair that will help empower entrepreneurs and spread wealth domestically.
Chinese manufacturers have started to make the parts and elements that South Korean companies have been selling into China, where factory workers gather them into products destined for European or American consumers. This so-called intermediary trade business currently accounts for about three-quarters of all of South Korea’s exports to China.
In 2015 and 2016, South Korea’s exports cut down for the first time in close to 60 years, the Korea International Trade business Association said. Last year, exports to China slid 9.3 percent compared with a year earlier as the Chinese economy slowed down, though those figures were up in the first two months of this year.