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Major Light Industries in Korea

Food and Beverage

This industry includes two sectors, food and beverages. The food sector consists of 8 subsectors: 1) meat and poultry 2) dairy products, 3) seafood processing, 4) fruits and vegetables, 5) grains, 6) oil and fat, 7) baked and confectionary goods and noodles, and 8) food additives. The beverage sector includes both alcoholic and non-alcoholic beverages.

In the 1990s, the Korean food and beverage industry showed an annual growth rate in production of 6 percent. The industry's total value added for 1995 was US$7.6 billion. Just over 8 percent of the manufacturing sector is attributed to this sector. In 1995, the total output value of the industry amounted to US$34.3 billion, a figure representing an annual increase of 9 percent in output value over the same period of the previous year. In 1997, however, the output value in U.S. dollar terms declined due to the Won's depreciation.

Among the subsectors of the food industry, the baked and confectionary goods and noodles hold the largest market share, at approximately 20 percent. Dairy products, alcoholic beverages, grains, and seafood follow in descending order. The output growth rates of the meat and poultry, bakery and confectionary goods and noodles, and grain processing sectors remained relatively high while the beverage sector has shown a very low growth rate in the past few years. The non-alcoholic beverage subsector has suffered a decrease in output in recent years.

Korea's economic crisis, through peoples' belt-tightening and the general mood of austerity, has caused a reduction in purchasing power. This, in turn, has affected the production of the sub-sectors of the industry. The output of instant noodles (ramyon), for example, is on the increase while production of the dairy and meat and poultry sub-sectors is decreasing.

Korea imported US$4 billion worth of processed foods in 1997. A large portion of this total is spent on processed seafood and meat products: US$903 million and US$820 million, respectively. US$433 million is spent on imported processed fruits and vegetables. The import totals for both the oil and fats and alcoholic beverages sub-sectors are US$300 million. The import of processed foods will decrease significantly this year with the devaluation of the Korean Won.

The quality of food consumed has been steadily improving in accordance with the rising income levels. In addition, the rising number of health-conscious consumers has lead to a growing demand for health foods. However, the slowing of the economy that began in the mid-1990s resulted in decreased food demand due to the decrease in real income and increase in unemployment attributable to the current economic crisis. Consumption will center on price rather than quality.

At the end of 1997, processed food exports totaled US$2.5 billion. Major Korean exports include chewing gum, chocolate, ginseng tea, kimchi (fermented cabbage), monosodium glutamic acid (MSG), processed crab meat, and instant noodles (ramyon), among others. A dramatic rise in exports is expected as a result of the ongoing devaluation of the Korean Won. However, the rate of imports will lower.

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Textiles

In 1997, Korea's textile exports were valued at approximately US$18.3 billion, up 3.3 percent from the previous year. This increase stemmed from the growth in synthetic textile yarn and knit goods exports. However, due to Hong Kong's reduced demand for polyester fabrics, exports were down.

In 1997, the nation's general business slump inhibited investment in new facilities by most local textile producers. In particular, synthetic fabric manufacturers with abundant facilities saw a sharp reduction of exports, which suffocated most new investment. Further investment in facilities will be diminished or eliminated. Synthetic textile companies, which have long led the build-up, have already halted expansion. Foreign investment in facilities will also decline.

In 1998, the economic depression is expected to continue. Most companies plan to reduce production. Textile imports will also fall as a result of the reduction in imported apparel and other goods.

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Paper and Paper Products

The paper and paperboard industry consists of separate manufacturing companies which process pulp, recycled paper and paperboard, and other cellulose fiber sources. The sector is divided into three major commodity groupings: primary product manufacturers covering the production of pulp, paper and paperboard, paperboard container producers and box producers.

Korea's paper and paperboard industry is recognized worldwide as a high-quality, high-volume, and low-cost producer that benefits from a number of key operating advantages. Korea's paper and paperboard production increased by 4.29 million metric tons, or 52 percent as a result of the considerable increases in export volume and domestic demand throughout the past five years. According to a 1992 KIET survey, total capacity reached 6 million metric tons. From 1990-1997, the total exports of this industry grouping grew from US$0.45 billion to US$1.64 billion, peaking at a 20.3 percent annual growth rate due in large part to increasing demand from China, Hong Kong and Central Asian countries.

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Information provided by the Korean Embassy

 


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