China's drive to develop and expand its domestic market offers new challenges and opportunities for South Korean exporters, a report said Tuesday.
China adopted a new five-year economic development plan at the recently concluded National People's Congress, which focuses on lowering its annual economic growth to about 7 percent and expanding domestic demand.
This will create new challenges for South Korean businesses as a large portion of South Korean exports to China currently consists of parts or materials for other end-products that China sells in its overseas markets, according to the report by the Institute for International Trade, a think tank of the Korea International Trade Association.
"Our exporters are advised to seek new items that are meant for China's domestic market instead as (the new economic plan) will lead to a great growth of the Chinese market," it said.
The report, however, noted the development of China's domestic market will drive up the country's already rising labor costs, further eroding the profitability of South Korean firms operating there.
"Therefore, such companies must actively consider relocating to China's western regions where labor is still relatively cheaper," it said.