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Bond Grows Between China, South Korea

Thriving economic and cultural ties signal shifts throughout the region -- with implications for U.S. business and political interests.

May 29, 2005|Don Lee | Times Staff Writer

Weihai, China — After living in Seoul; Frankfurt, Germany; Los Angeles; and Beijing, Kim Hyun Soo decided to retire here, a port city in China's Shandong province that juts out toward Korea.

The 69-year-old South Korean knew it would be economical. He pays about $75 a month for a full-time housekeeper, and a haircut costs 60 cents, shampoo included.

What Kim never expected, though, was just how friendly locals would be toward Koreans. From the day he moved into his third-floor apartment two years ago, when a neighbor lent him a set of keys for the front gate, Kim has felt right at home.

"Even though they don't like Japan, they don't have such feelings about Koreans," says Kim, a former government worker. "They wear Korean-made clothes. They watch Korean drama. They understand us."

Kim's experience reflects blossoming goodwill between South Korea and China, stemming from their growing economic, political and cultural ties. The partnership signals profound shifts throughout the region -- with implications for U.S. business and political interests here.

The Chinese call the trend Han liu -- or "Korea current." It refers to the spread of Korean TV shows, music, online games and other pop culture in China. Perhaps most of all, it speaks to the big economic wave. Hyundai became China's top car brand in the first quarter; Samsung cellphones fill the airwaves; LG microwave ovens are in many Chinese kitchens.

In all, South Korean companies invested $6.25 billion in China last year, behind only Hong Kong and Britain and overtaking Japan for the first time, according to China's Commerce Ministry.

The investments came from giants such as Samsung, which plowed $700 million into China last year, as well as hundreds of smaller enterprises. Auto parts entrepreneur Lee Hee Hyung, 48, spent $2 million to build a 160,000-square-foot factory in Weihai's export zone. City officials threw in 10 free acres of land and offered sales tax exemption for three years.

The big draw, of course, was China's low labor costs. Lee's Weihai plant now employs about 180 workers, who earn on average $120 a month. Even at wages 10 times that amount, Lee says he struggles to fill jobs at his two South Korean factories in Kyungsang province. "It's so hard to get workers in Korea," says the chief executive of Guyoung Technology Co.

In 2002, China surpassed the United States as South Korea's largest export market. And last year, China pushed ahead of America to become South Korea's largest bilateral trade partner, with $79 billion of goods flowing between them, according to figures from the U.S. State Department.

The booming commerce comes between two nations that battled each other in a war five decades ago and that only 13 years ago established formal diplomatic relations. During much of the 1990s, many people here and in other parts of China looked down on Korean visitors, regarding them as cutthroat and dishonest in business. Although some of those sentiments persist, the predominant attitude toward Koreans now appears to be more neighborly, especially among younger Chinese.

Liu Deyun, a 23-year-old with streaks of dyed brown hair and silver sneakers, is one of several hundred Chinese studying Korean at Shandong University's campus here. Asked why, he offered a simple answer in Korean: "After I graduate, it'll help me to get a good job."

The strengthening China-South Korea ties are being driven by China's dramatic rise, which has rippled throughout Asia. Even as South Koreans draw closer to their giant neighbor, Japanese investors are considering pulling back from China amid increasing friction between the two nations.

The South Korea-China union has contributed to the isolation of North Korea, China's communist ally, and in some analysts' view chipped away at the influence of the U.S., long the region's most important political and economic force.

"Closer economic ties between the two countries will definitely decrease [South] Korea's necessity to seek military protection from the U.S. and will more and more weaken their cooperation on a political basis," says Shen Dingli, deputy director of the Center for American Studies at Shanghai's Fudan University. "That is what the U.S. doesn't want to see."

From the start, much of South Korea's investments in China have been steered to Shandong province because of its proximity to South Korea. More than $10 billion of South Korean investments have flowed into the province in a little more than a decade. Tae Won Chey, chairman of SK Group, one of South Korea's leading conglomerates, says it's understandable that the two nations are forging closer bonds.

"Sino-Korea relations date back 5,000 years," he says, speaking at a recent economic forum in Shanghai. "Our people can understand and cooperate with each other better than any other people in the world."

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