China reviews rule that left kimchi sector in a pickle

Volunteers from the Korea Yakult company making kimchi for a charity event in Seoul. For years, cheaper Chinese kimchi imports flowed into South Korea, undercutting local producers, who were not permitted to export to China.
Volunteers from the Korea Yakult company making kimchi for a charity event in Seoul. For years, cheaper Chinese kimchi imports flowed into South Korea, undercutting local producers, who were not permitted to export to China.PHOTO: NEW YORK TIMES

Promise to reconsider classification of Korean kimchi as a pickle set to boost bilateral trade

SEOUL • The fate of South Korea's kimchi industry rests on whether China considers it pickled or not.

When China reclassified the fermented cabbage dish several years ago, Korean exports of kimchi evaporated. As a pickled product, it did not meet China's strict import hygiene standards.

Now, China has pledged to reconsider the designation, a concession that could pave the way for a new boom in exports since the two countries sealed a broad trade deal.

The episode over kimchi, a source of deep culinary and cultural pride in South Korea, reflects the sometimes complicated relationship that China has with its neighbours.

As China looks to deepen its trade ties around the region, such pockets of tension could flare up, creating challenges for its ambitions.

For years, cheaper Chinese kimchi imports flowed into South Korea, undercutting local producers, who were not permitted to export to China. The subject became such a sore point that kimchi was left out of important trade talks with China for years.

China looms large in South Korea's economy. It is South Korea's biggest partner, with bilateral trade totalling US$235 billion (S$321 billion), according to the most recent figures from the Korea International Trade Association.

That is roughly twice the amount with the United States. And neither South Korea nor China is part of the negotiations over the Trans-Pacific Partnership, a US-led trade deal that the Obama administration has said is a way to strengthen its economic links in Asia.

China is pursuing a string of smaller pacts across Asia, using its financial heft and global influences to its advantage. In its first major move, China signed a free-trade agreement with South Korea last month.

Under the agreement, each country will scrap tariffs on more than 90 per cent of goods, including medical equipment, electronics and kimchi, over the next 20 years.

The deal is expected to increase trade between the countries to US$300 billion, according to estimates from the South Korean Ministry of Trade, Industry and Energy.

For South Korea's kimchi industry, it should have been a victory. Kimchi, a pungent cabbage that, traditionally, is buried for months and carries a powerful smell, holds a special place in South Korea. It has been on the table at every meal.

But the producers, in factories across the country, are still reeling from a bureaucratic change in China. By classifying kimchi as pickled goods, the Chinese government basically blocked all imports of the product from South Korea.

Kimchi is fermented and has high levels of bacteria. As such, it did not pass the hygiene standards normally applied to pickled goods, which are sterilised and have low amounts of bacteria.

In a few short years, South Korea's once-growing kimchi trade with China evaporated, from hundreds of thousands of dollars of exports a year to just US$108 in 2013 and US$16,800 last year. Instead, cabbage is flowing in the opposite direction, with China now exporting hundreds of millions of dollars' worth of kimchi a year to South Korea.

Even if the rules change, it may be difficult to reverse the damage.

As cheap Chinese kimchi has flooded the market in South Korea, local producers have struggled to hold on to their business. Some have moved their factories to China to keep costs down. Others have closed their factories. Ms Kim Soon Ja, the chief executive of Hansung Food, said she had been left with little choice but to lower the price of her kimchi products.

NEW YORK TIMES

A version of this article appeared in the print edition of The Straits Times on July 31, 2015, with the headline 'China reviews rule that left kimchi sector in a pickle'. Print Edition | Subscribe