tHE east Asia countries' unhulled rice production each year is:190 billion tons in China, which is approximately 33.6% of all production in the world: 12 million tons in Japan; 6.4 million tons in Korea; 2 million tons in Taiwan, which is only 1% of all production in the East Asian Area. The production cost per kilogram of rice is: NT2.5 in Thailand, NT4.2 in China, NT5.3 in Argentina, NT8.6 in the United States, and NT13.2 in Taiwan. Clearly, the cost is greater in China than in Thailand, but less than in Argentina, the United States and Taiwan. In 2000, China exported 2,950 thousand tons of rice to 51 countries and imported 238 thousand tons. This statistic shows the strong competition of China's normal quality rice. Although the production cost of rice in Thailand is less than in China, its selling price is two to three times as much as China's rice; yet due to their special characteristics, Thailand rice has its own unique market share in china. In comparison, the first grade Taiwan Rice is about the same quality level as Thailand Rice. However, the current price of Thailand Rice in retail market in Beijing in NT39 per kilogram, which is higher than the small package Taiwan rice. As China's economic process is growing, the currency value of the Chinese Yuan and the wages in China will both rise, resulting its competitive advantage in rice gradually declining. Therefore, besides developing rice with its own characteristics, we should expand our scale in rice production to decrease the production cost, and then we might have our own unique market share in China. After free trade, rice tariff will forced to decrease. The highest quality rice from China will only cost NT30 per kilogram in Taiwan, which is extremely competitive. Other than cost advantages, China has high research and development ability in rice production improvement, and major rice production and selling corporations and major rice production and selling corporations are maturing. These corporations are in charged of the rice in all process: from production, quality controlling to selling. That is a critical point we should be aware of.