When will the new direct flight route connecting Jeju and Qingdao, China be established?
Expectations among Jeju residents regarding the establishment of the new direct flight route are growing. Oh Young-hoon, the governor of Jeju, noted at a press conference on the 6th that "Once the route opens, we can directly import construction materials, consumer goods, and feed from Qingdao, which could lower prices, and we can export products like Samdasu." Jeju, which is currently trading with China through Pyeongtaek Port and Busan Port, estimates that the new route could reduce export logistics costs by about 42%. The Jeju-Qingdao direct flight route is awaiting approval from the Ministry of Oceans and Fisheries.
According to the related industry on the 10th, the Jeju Development Corporation is also closely monitoring the establishment of the Jeju-Qingdao direct flight route. This is because it could positively impact Samdasu exports. One of the biggest concerns for the Jeju Development Corporation recently has been expanding the export route for Samdasu. They can no longer rely solely on the domestic market to ensure growth. The domestic bottled water market has reached maturity after more than 30 years since bottled water sales were permitted. With new entrants emerging, competition has intensified, and Samdasu's market share in the domestic bottled water market has dropped below 40%. According to Samil PwC Management Research Institute, as of September last year, there were 63 bottled water manufacturers and over 300 brands.
This is why Baek Kyung-hoon, president of the Jeju Development Corporation, has been reassessing the export strategy for Samdasu since his inauguration. Baek emphasized that whenever there is an opportunity, Samdasu should be developed into "the second Evian." They are also actively engaging in overseas marketing. Last year, they promoted Samdasu in Vietnam. Up until now, sales of Samdasu had been limited to overseas Koreans or domestic tourists traveling abroad, but it has been determined that to overcome the slowdown in growth, it must establish itself in the overseas market as a premium eco-friendly bottled water.
The Jeju Development Corporation has also proactively increased its facilities for exports. A representative example is the eco-friendly factory (L6) scheduled for completion in 2027. Once completed, the production volume of Samdasu is expected to expand to 1.4 million tons annually, an increase of up to 40%. A source in the distribution industry stated, "The revenue generated from Samdasu sales contributes significantly to the Jeju community," adding, "Given the importance of Samdasu's success, focus has proactively been placed on facilities."
However, there are some skeptical views in the distribution industry regarding this. They question whether it is a sound business decision to increase facilities before the export pathways are fully opened. An official from a bottled water manufacturer said, "There has been a rationale that Samdasu suffered from supply shortages every summer peak season, but recently, Samdasu's market share has declined." They pointed out that if export volumes do not materialize as expected, the facilities may end up being underutilized. According to the Jeju Special Self-Governing Provincial Council, Samdasu's market share was recorded at 39.4% based on sales volume as of August last year, which is lower than in 2022 (42.8%) and 2023 (40.3%).
The distribution industry tends to adopt a conservative approach to facility expansion. They typically wait until they are confident that supply shortages are chronic before undertaking a facility expansion. If significant investments are made in facilities but orders do not materialize as expected, they could incur substantial losses.
One notable company is Samyang Foods. As exports of Spicy Chicken Ramen increased and supply lagged behind demand, they established a second factory in Miryang, Gyeongnam. Their maximum annual production capacity is expected to rise to 690 million units. A representative from the distribution industry stated, "Our conviction that the expansion of Spicy Chicken Ramen exports is not just temporary but a trend is what led to the facility expansion, as such expansions are less likely to fail."
The distribution industry believes that if the results of Samdasu's overseas expansion become visible, concerns about facility expansion will diminish. An industry official noted, "While Samdasu has been well-established until now, we cannot ignore the speed at which Nongshim's Baiksan is increasing its market share," indicating that, "If Samdasu achieves results in overseas exports or if its domestic market share rebounds, the perception of facility expansion as an unreasonable decision will quickly disappear."
In this regard, an official from the Jeju Development Corporation stated, "We have been engaged in various activities since last year to expand exports," adding, "We expect to see results."