The China-South Korea Industrial Park in Yantai, Shandong province, will take a leaf from the practices used in the country’s four pilot free trade zones, including Shanghai and Tianjin, to develop e-commerce, healthcare and high-end maritime equipment manufacturing sectors to fuel growth.
Many of these opportunities come after China signed its largest bilateral free trade agreement in terms of volume with South Korea on June 1, which focuses on 17 areas, including trade in goods and services, healthcare, entertainment, investment and trade rules, as well as e-commerce and government procurement.
Located in East China’s Shandong province and geographically close to South Korea, the China-South Korea Industrial Park has helped the city attract $5.3 billion of South Korean investment in 3,551 projects, mainly focusing on construction machinery, vehicle and other high-end manufacturing, as well as energy-saving and biotechnology sectors.
Giant South Korean companies such as LG Corp, Doosan Heavy Industries and Construction Co, POSCO Group and Hyundai Motor Co have invested in more than 2,000 projects in the park. Each project is said to have received investment to the tune of $10 million.
Yang Li, Yantai’s vice-mayor, said successful experiences such as the negative list system, faster customs clearance procedures and easier market access for foreign companies gained from the four pilot free trade zones will be adequately used in Yantai’s China-South Korea Industrial Park to increase both business and management flexibility.
“The development pattern of the park will shift from individual manufacturing projects to industrial chains to further improve the earnings ability of Chinese and South Korean companies, as well as joint ventures,” said Yang.
Supported by the 1 billion yuan ($161 million) development fund of China-South Korea Industrial Park, more and more South Korean companies are keen to form joint ventures with local companies to expand their footprint, as Chinese companies are proficient in dealing with domestic markets.
Machinery manufacturing, electronic information, smart phones, high-end vessels and liquid crystal display will be treated as priority industries by both sides to build industrial chains over the next five years.
Two-way trade between Yantai and South Korea reached $10.97 billion in 2014, up 20.2 percent year-on-year. Meanwhile, the city received $200 million worth of investment from South Korea, a 31 percent increase from a year earlier.
Under the new FTA, China will remove tariffs on 91 percent of all products from South Korea within 20 years, while South Korea will eliminate tariffs on 92 percent of all goods in the other direction.
Yu Dong, director of Yantai’s commerce bureau, said the China-South Korea FTA will provide a platform for both countries to develop the service sector. Doosan Heavy Industries and Construction Co and Hyundai Motor Co have already established research and development centers in the China-South Korea Industrial Park in Yantai.
Financial institutions including Hana Bank and Industrial Bank of Korea also opened branches in the city. Hana Bank and Korea Exchange Bank launched a joint yuan deposit product with a maturity of six months by the end of last year to diversify their service categories. The deposit rate was more than 3 percent.