A delegation of Chinese business leaders attends the 2024 Busan Overseas Buyer Trade Conference, hosted on Tuesday by Busan Economic Promotion Agency. Korea Times photo by Luna Sun

A delegation of Chinese business leaders arrived in Busan earlier this week to explore new procurement opportunities with local suppliers, amid fluctuating Sino-Korean trade relations. Their visit followed the meeting between the leaders of the two countries, underscoring the strategic efforts to navigate the challenges posed by current geopolitical tensions and the ever changing trade landscapes.

Although Korean products are losing some competitiveness to increasingly cost-effective and high-quality Chinese goods, their distinctive qualities still appeal to Chinese customers, said the companies, who also urged greater government support to enhance trade opportunities.

The 2024 Busan Overseas Buyer Trade Conference was hosted on Tuesday by Busan Economic Promotion Agency, a government funded non-profit foundation to provide services needed by micro enterprise and small and medium-sized enterprises (SMEs) in Busan.

A total of 37 companies from seven countries, a third from China, had one-on-one business consultations with 128 small and medium sized local businesses in Busan. Japanese buyers accounted for another third of the visitors, while other companies were from the United States and Vietnam among others.

Bai Kefu, from one of the 12 companies of the Chinese delegation, runs a hotel business in Weihai city, Qingdao, and hopes to explore suppliers for items such as Korean snacks and creative kitchenware during this trip.

He said despite his old resources importing coffee and foods from South Korea before the pandemic, it is not easy to resume the work amid the increasingly uncertain environment.

"The export-import landscape between the two countries has been completely reshuffled by the pandemic. I used to import Korean coffee to China, but the old supply chain and the sales channel and supply chains have been cut off during the pandemic, many people just left the game," Bai said.

He added that Korean foods and coffee used to be considered premium in China, and made great gifts. But now as China has cheaper alternatives whose quality are just as good, the prices of Korean products are much higher, including tariffs and transport.

In the meantime, he also pointed out that young Chinese people love Korean gadgets with stylish designs.

"Most importantly, businesspeople should first maintain frequent visits to each other, even without actual deals. There will be more opportunities once mutual understanding and communication deepened," Bai added.

In its second year since being halted by the pandemic, the trade conference aimed to help local companies diversify their export partners through consultations with international buyers.

The sessions cover shipbuilding equipment, electronics, steel, machinery, architecture, automobile parts, hair and beauty products, food and beverages, and general consumer goods. Chinese companies primarily focused on consumer products.

Liu Wenjun, chairman of Qingdao Aovi Industrial Group from Qingdao, has been importing Red Ginseng and other products from South Korea since 2020, and he hoped to explore sports nutrition products, health supplements, as well as cosmetics, which are considerably recognized by Chinese consumers.

Liu said although such trade conferences could open a window for foreign traders to explore the potentials of small and medium sized companies, they are also limited by production costs, which cannot compare with large scale manufacturers.

The prospect of Sino-South trade cannot count on such dribs and drabs efforts, he said.

"Bigger developments would require more targeted support on the government level, which is not enough now."

Liu pointed out, for instance, that governments should facilitate more investments, and strategic collaboration in localized manufacturing, to cut costs and tariffs.

A delegation of Chinese business leaders attends the 2024 Busan Overseas Buyer Trade Conference, hosted on Tuesday by Busan Economic Promotion Agency. The event attracted 37 companies from seven countries. Korea Times photo by Luna Sun

Korea's exports to China plummeted by nearly 20 percent in 2023 from the year prior, to 19.7 percent of total exports, or $124.8 billion, below 20 percent for the first time in 20 years, according to official statistics.

Korean imports from China dropped 8 percent year-on-year to $142.8 billion.

That contributed to $18 billion trade deficit with China, Korea's first trade deficit with China over 31 years.

Korean companies attach great importance to China's massive domestic demand, but in the meantime, Chinese customers are seeking products that are cheap but also of good quality, said Cho Sung-ho, the chief representative of Busan Economic Promotion Agency's Qingdao office.

"If Korean companies want to penetrate the Chinese market, the government needs to provide more support in building information networks," he added.

During the trilateral summit that brought together leaders from Korea, China and Japan on Monday, the three countries said they would continue trade talks on the trilateral FTA.

Victoria Wang, who runs YiJiaRen, a Shanghai headquartered snack food company with approximately 2,300 stores nationwide, also pointed out that the popularity of Korean products in China is undermined by China's ban on Korean cultural content.

"In the past, we often saw people eating large pots of instant noodles in Korean dramas, so Korean instant noodles were a big hit in China," she pointed out, whereas now people are not exposed to Korean entertainment as much.

From the perspective of SMEs in Busan, their smaller size and scale also mean they inherently have a lower capacity to bear risks, Cho said.

"Therefore, they are particularly concerned about the international environment and the relationship with the countries they are dealing with," he pointed out.

"For instance, if they are entering or investing in the Chinese market, they worry about the potential impact of an unfavorable international environment. In extreme situations, they fear they might not be able to recover their money or goods. This kind of concern is certainly present."

Cho added that despite the recent decline in Korean exports to China, it remains the largest export market. Korean firms are targeting high-end consumer goods, advanced technology, products for the elderly, single-person households, emphasizing strict quality control and significant investment in research, which may be more advanced than Chinese standards.

President Yoon Suk Yeol poses with Chinese Premier Li Qiang, right, and Japanese Prime Minister Fumio Kishida during a joint press briefing of the ninth trilateral summit at Cheong Wa Dae (former Korean presidential residence) in Seoul, Monday. Yonhap

Yun Beyoung-han, the president of RE&MI Beauty Group Co., Ltd, a cosmetic tech company based in Busan, said despite the cut-throat competition in the Chinese market that made the market entrance difficult, he is still trying to make inroads.

"In the past years, Sino-Korea trade (has been) susceptible to the turbulent geopolitical environment, but Korean business people still see China as too large of a market to miss," he said.

Some Korean traders also complained about the difficult entry into the Chinese market.

Park Yong Up, the representative at Medicscare, said his small Busan-based cosmetics product company has preferred South American and African markets, while they had not been able to make inroads into the world's second largest economy.

"Chinese buyers came to visit our factory and took samples, but we never heard back from them. They keep trying to drive the price down to a very low level, which I feel shows a lack of sincerity. We don't encounter this issue in other markets."

"My peers are experiencing similar situations. With the improvement in Chinese technology, they can produce many things themselves. As a result, many of us are now focusing more on other markets, like Vietnam and Columbia."

Luna Sun is an economy reporter with the South China Morning Post. She is currently based in Seoul, reporting for both The Korea Times and the South China Morning Post via an exchange program.