As relations between China and Japan head toward conflict and tension, Korea has recently held back-to-back Korea-China and Korea-Japan summits to reset its diplomatic ties. Sensing the shifts, the food industry is moving to a two-track strategy—local production and distribution in China, and expanded exports to Japan—seeking growth opportunities in markets warmed by diplomacy.
According to the industry on the 14th, the Korea-China summit created a new channel for cooperation on food safety and quarantine, changing how food companies view the Chinese market. But rather than a "signal to expand exports," it is being seen as an institutional risk-management channel to operate businesses in China stably. China is Korea's second-largest food export market after the United States, but the burden from political and diplomatic variables and non-tariff barriers is high. Simple exports alone inevitably face growth limits.
◇ Samyang, Nongshim, Orion, CJ CheilJedang accelerate local production in China
In this environment, a leading company pursuing a China-focused local production and distribution strategy is Samyang Foods. Samyang Foods' cumulative China sales for the first to third quarters last year were 444.7 billion won, accounting for 25.9% of total sales. Samyang Foods is building its first overseas production base in Jiaxing, Zhejiang province, China. It has increased the investment to 207.2 billion won and expanded the production lines to eight. After completion in January next year, it plans to supply all output to China's domestic market.
Nongshim is operating four subsidiaries in China—in Shanghai, Shenyang, Qingdao, and Yanbian—establishing full-scale local production and distribution networks. Recently, it shifted to a profitability-centered strategy to revamp its China business. In particular, it is focusing on positioning its flagship product Shin Ramyun as a premium brand centered on airports and tourist spots.
CJ CheilJedang has production bases in Beijing, Qingdao, Yaoxing, and Jiangmen and is strengthening its localization strategy built around the Bibigo brand. Orion plans to bolster its strategy of producing its core brands—"Oh! Potato," "Choco Pie Jeong," and "Yegam"—to suit local consumer tastes. Recently, in line with the Chinese government's "three reductions and three health (三减三健)" policy, it has been introducing low-sugar, healthy snacks.
◇ Samyang, Nongshim, Daesang focus on expanding exports to Japan
Japan, by contrast, is considered a market where the model of producing in Korea and exporting is efficient. With geographic proximity and well-developed logistics infrastructure, exports are judged to be more advantageous than local production in terms of cost, speed, and flexibility. Especially after the Korea-Japan summit, alongside a cooperative tone between the two countries and the popularity of K-content, demand for K-food in Japan is rising quickly.
Samyang Foods is expanding the market by exporting its flagship brand "Buldak spicy ramyeon" to Japan. The Buldak series recently surpassed a cumulative 100 million units sold in Japan. In addition to releasing limited editions tailored to Japanese tastes, it is steadily increasing export volumes through major distribution channels such as convenience stores, big-box retailers, and Don Quijote and AEON.
Nongshim is boosting brand awareness by operating "Shin Ramyun" pop-up stores (temporary stores) and experiential stores at major department stores and select shops in Japan. In particular, it is securing sales channels through major distribution networks such as convenience stores, big-box retailers, drugstores, and department stores.
Daesang produces kimchi, sauces and pastes, seasonings, and ready-to-eat meals in Korea and exports them to Japan. Its local subsidiary in Japan, Daesang Japan, focuses on distribution, logistics, and marketing over production. It is concentrating on how quickly and reliably to supply products made at domestic plants to Japanese consumers.
In the industry, while successive summit diplomacy sent a signal of easing diplomatic risks, solutions vary by market. A food industry official said, "Just because summit diplomacy has opened the way does not mean the old approach of simply increasing exports will work," adding, "K-food will grow only if we execute strategies tailored to each country's conditions."
Lee Jong-woo, a professor of business administration at Ajou University, said, "China is a market that can change rapidly with political variables such as THAAD (Terminal High Altitude Area Defense) and the ban on the Korean wave, so local production by corporations whose brand power is well proven can be effective," adding, "Japan has relatively fewer political risks and higher logistics efficiency, so an export strategy is reasonable." He added, "However, to build sustainable sales channels rather than chase short-lived fads, companies need to strengthen their responses to blend into local consumption trends."