China and Korea prepare for war...garlic war

The Korean and Chinese governments are heading into conflict, over garlic.
If you are a Korean mobile or petrochemical company, chances are that you will be importing some components from China: perhaps some plastic mouldings for phones or hydrocarbons for the petrochemicals plants. However, recent reports also suggest that you will have to import garlic. Yes garlic.

According to the Yonhap News Agency and Dow Jones, the Korean government is urging its mobile and petrochemical companies to buy Chinese garlic. This stems back to an agreement signed last summer between China and Korea that said the Korean Agricultural and Forestry Ministry will import 10,300 tons of Chinese garlic at $550 per ton.

The ministry claims that it has already imported over 12,000 tons of garlic and wont pay for any more. In retaliation, China has said that it will ban the importation of Korean mobile phones and petrochemical products if the quotas are not bought. So the Korean government has asked the mobile and petrochemical companies to stump up and buy the garlic themselves.

Understandably this has caused something of a stink among these companies. They rightly think that garlic is not in their recipe for success.

So if you are an investor in a Korean mobile or petrochemical company and you smell something funny in this year's figures, you'll know what to look for.