This post was originally submitted as a Commodity Chain assignment for Professor Michael Watt’s class, “Introduction to Development,” in Fall 2010.
Amidst wariness of a change in leadership occurring in its bellicose northern neighbors and anxiety over hosting this year’s G-20 summit, South Korea faced a crisis of equal or greater proportions when the already inflating prices for Napa cabbage – the variety used for making kimchi, the nation’s darling staple food – skyrocketed in early October of this year. That this month marked the beginning of the traditional gimjang season where families gather to pickle the upcoming year’s stock of kimchi, heightened the demand for Napa cabbage precisely during the time of its greatest scarcity. An abnormally wet harvest season, adverse to the necessary conditions for growing Napa cabbage, triggered last month’s inflation of Napa cabbage, though South Korea has been experiencing a steady incline in fresh food prices for some time. The literature that documented what some referred to as “a national tragedy” (McDonald) rung appropriately with undertones of urgency since Koreans eat kimchi at every meal, often taking emergency supplies with them even when travelling. Amidst this shortage, a complex trade relationship between China and Korea; mounting pressures due to Korea’s increased role in the global market; and the dynamics between agents of kimchi distribution, all lend a narrative of the tension between Korea’s largely state-led efforts at domestic development and its assertion as a recent arrival on the global market dominated by a circuit of Northern nations.
In general, Koreans tend to prefer Korean-made kimchi as a matter of national pride. A 2005 incident of multiple cases of parasite eggs found in manufactured kimchi, inaccurately sensationalized by the press as a result of low standards of hygiene in Chinese-produced kimchi, only served to exacerbate a disdain towards inferiorly perceived brands of Chinese kimchi (Tsai). Still, in 2005, 60% of Korean restaurants served Chinese-made kimchi and Korea imported up to 85,266 tons of kimchi from China compared to its estimated annual consumption of 1.53 million tons of kimchi (Tsai). Furthermore, South Korea and China have a burgeoning relationship of trade, marked by a 2005 figure of “$100 billion-worth of bilateral trade” (The Economist), with China being South Korea’s biggest export market. And so, it was with a familiar reluctance that the South Korean government announced that it would import 100 tons of cabbage through the Korea-Agro Fisheries Trade Corporation at the end of October (Kim, Tong-hyung). Furthermore, the government also implemented a zero tariff policy on Napa cabbages in mid-October (Kim, Cynthia).
The measures taken by the state to relieve the pressure on Korean families due to high prices of cabbage pay homage to a history of high state involvement in South Korea’s development. Given South Korea’s near religious obsession with kimchi, this intervention alleviates what is considered a matter of both basic human rights (food security) and national economic stability. In fact, the spike in kimchi prices, while aggravated by unfavorable weather conditions during harvest time, also files suit with a general streak of a rising CPI, especially due to inflation in prices of fresh foods. According to an editorial posted on http://www.koreanherald.com, The CPI climbed from 2.6% in August, 3.6% in September, then 4.1% in October. This increase was especially poignant in light of the Lee Administration’s recent “changing course from a ‘business-friendly’ economic policy to a policy crafted in favor of the underprivileged” (www.koreanherald.com). The editorial advocated for the implementation of higher interest rates in order to control the current ‘agflation’ (inflation led by rises in agricultural commodity prices). However, the current political climate characterized by the predominantly ‘Western’ disapproval of currency manipulation and subsequent concern of the potential imminence of a global currency war would curb considerations of greater state management of South Korea’s won (www.koreanherald.com) – an especially sensitive apprehension, considering the impending G-20 Summit that would soon take place in Seoul.
Taking queue from state example, Korean kimchi manufacturers and retailers have also done their part to alleviate the crisis, relying on increased imports of Chinese-farmed Napa cabbage and Chinese-made kimchi. The finicky prejudice against Chinese-made kimchi results in a Chinese kimchi industry marked by “high competition and low profit” as well as the unpredictable lifetime of factories (Tsai). To add more complexity to this relationship, kimchi factories in China are owned by both South Korean kimchi retailers in addition to Chinese ones (Tsai). Then, South Korean retailers and distributors vary from major Korean grocery stores who order the cheaper variety of Chinese kimchi (where value is mostly added in resale,) to South Korean kimchi companies who own and manage factories in China (adding value through branding). These South Korean kimchi companies take advantage of cheaper labor and ingredients available in China. Ironically, in the lead up to the 2005 kimchi-parasite egg scandal, Chinese authorities encouraged South Korean businessmen to hire unskilled peasants, which led to less-than-par hygienic practices in South Korean kimchi company-owned factories in China that resulted in the tainted kimchi (Tsai). One Chinese kimchi factory manager viewed the wrongful ascription of blame to Chinese kimchi manufacturers as a tactic to protect South Korean domestic kimchi production (Tsai). A legitimate speculation considering the careful maintenance of a trade surplus between Korea and China (Schneider) and the existence of organizations like the Korean Peasants League, a progressive lobbying group of farmers, that has taken active positions against an increasing volume of imports. In any event, Chinese kimchi production seems a captive industry (Gereffi) to the caprice of South Korean demand, stoked in times like the current Korean cabbage shortage.
While kimchi may not be a heavily traded global commodity, its relevance in the identity of South Koreans as a point of national pride and honor, and the flux of trade during the ‘kimchi crisis’ in order to manage the inflation of cabbage prices, paint a telling story of Korea’s relationships with the United States and China. In this moment of the nation’s development, South Korea is sandwiched between a negative pressure from the United States in intervening in its currency market and a reliance on imports of cabbage and kimchi from rural areas of China at a time of agfaltion. This points to a fundamental point of tension in Korea’s development where the nation is at once arriving at an influential position on the global stage of international economic relations and concerned with the social welfare of its citizenry pertaining to their individual human and economic rights.
Commodity Chain Diagrams (Before and After)
Gary Gereffi, Global Production Systems and the Third World development, in B. Stallings (ed)., Global Change, Regional Response. Cambridge University Press.
Kim, Cynthia J. “Koreans in kimchi crunch.” The Korea Herald (10/05/2010). Web. 10 November 2010.
Kim, Da-ye. “Korea all-out to secure cabbages amid kimchi crisis.” The Korea Times (10/01/2010). Web. 10 November 2010.
Kim, Tong-hyun. “Uneasiness grows over Chinese cabbage crush.” The Korea Times (10/22/2010). Web. 10 November 2010.
Kim, Yon-se. “BOK dilemma as prices rise, won strenghthens.” The Korea Herald (10/04/2010). Web. 10 November 2010.
McDonald, Mark. “Rising Cost of Kimchi Alarms Koreans.” The New York Times (10/14/2010). Web. 10 November 2010.
“Of Cabbages and Kims: Forget mad dictators. The price of cabbage is what really worries Koreans.” Global Politics: Asia (08/07/2010). The Economist. Web Blog Entry. 10 November 2010.
Schneider, Howard. “For U.S., free-trade agreement could be backdoor to China.” The Washington Post (11/08/2010). Web. 10 November 2010.
The governance of global value chains, Gary Gereffi, John Humphrey, Timothy Sturgeon Review of International Political Economy 12:1 February 2005: 78-104
“The kimchi wars: South Korea and china duel over pickled cabbage” The Economist (11/17/2005). Web. 10 November 2010.
Tsai, Ting-I. “Korea swallows its pride in Chinese kimchi war.” Online Asia Times (11/22/2005). Web. 10 November 2010.
“[Editorial] Who isn’t worried?” The Korea Herald (11/03/2010). Web. 10 November 2010.