JAPAN | South Korea profits from nuke scare – Food exports to Japan spike amid fears of radiation’s spread

Posted on July 30, 2011

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JAPAN | JAPAN TIMES | 30 july 2011

South Korean food exports to Japan are climbing at their fastest pace on record after radioactive contamination and supply disruptions prompted consumers to switch to overseas producers.

Sales of watermelons, tuna and noodles led a 38 percent jump in South Korea’s shipments of food to Japan to $604 million in the second quarter from a year earlier, according to the Korea International Trade Association (KITA).

Surging demand for South Korean products has helped buffer exporters against weakness in U.S. and European markets. Lotte Chilsung Beverage Co.’s drink sales to Japan have more than doubled and its shares have risen 58 percent since the March temblor and tsunami that triggered the Fukushima nuclear crisis.

“The sad truth is that Japan’s disaster is a boon for Korean companies from food producers to carmakers,” said Sean Hwang, head of research at Mirae Asset Securities Co. in Seoul. “The big question is whether they will be able to hang on to the export gains in the long term.”

The March 11 disaster closed factories, caused power shortages and disrupted supply chains. That spurred an increase in imports, resulting in the nation posting trade deficits in April and May. Hwang said power constraints may aid South Korean exporters at least through September.

Demand from Japan helped limit a slowdown in South Korea’s export growth in the second quarter. Shipments rose 1.8 percent from the first three months of the year, when they increased 3.3 percent, a central bank report this week showed. Industrial output climbed 6.4 percent in June from a year earlier, the slowest pace in nine months, a government report showed Friday.

Japan’s imports of food from all countries advanced 17.5 percent in May, the fastest gain since September 2008, and rose 9.4 percent in June, according to the Finance Ministry.

At Lotte Chilsung, sales of soda and fruit juices to Japan have doubled to about $1 million per month since April due to production disruptions in the neighboring country, said spokesman Seong Gi Seung in Seoul. The increase in exports to Japan combined with strong domestic sales helped its share price surge, said Yang Il Woo, an analyst at Samsung Securities Co. in Seoul.

Instant noodle maker NongShim Co.’s exports to Japan more than doubled since March compared with a year ago, said Yoon Sung Hak, a manager at the Seoul-based company. It now expects record sales in Japan of about 100 billion won ($95 million) this year compared with 55 billion won last year. NongShim’s share price has climbed 18 percent since the quake, compared with the 10 percent gain in the Kospi stock index during the same period.

South Korea’s government said it’s confident of securing a 29 percent increase in agricultural, food and fishery shipments to $7.6 billion this year and a similar gain in 2012.

Wider distribution channels and the popularity across Asia of South Korean television dramas and songs that help to promote the nation will assist in achieving those goals, the Ministry for Food, Agriculture, Forestry and Fisheries said in a July 5 statement. “Winter Sonata,” a soap opera, and Girls’ Generation, a pop group, are among the entertainment exports. Japan accounts for about a third of South Korean agricultural, food and fishery exports.

“Demand for Korean food in Japan is growing too fast for farmers to meet in time,” said Shin Eun Jin, president of Seoul-based Nari Trading Co., a trade broker. “Some Japanese producers are coming to Korea to sign contracts directly with Korean farmers,” said Shin, who has exported farm goods and fish to Japan for 12 years.

Exports of watermelons to Japan increased by more than 10 times from a year earlier in May, while shipments of canned tuna rose by almost five times and bottled water gained by 10 times, according to KITA data.

“The Japanese market is hard to enter but pretty attractive as consumers are less sensitive to prices, compared with China and other developing countries,” said Samsung Securities’ Yang.

Tohoku Electric in red

KYODO

Tohoku Electric Power Co. said Friday it remained in the red in the April-June quarter as it continued to suffer from the effects of the March earthquake and tsunami.

The consolidated net loss came to ¥16.69 billion and operating loss to ¥11.80 billion on sales of ¥347.23 billion, down 11.8 percent from the same three-month period a year earlier.

The utility said it can’t forecast earnings for the full business year given continued consequences of the disaster.

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