Vietnam and South Korea Building Constructive Relations

The Korea International Trade Association said in its report on Dec. 19 that the bilateral trade between South Korea and Vietnam has increased 164 times and their mutual investment has increased more than 145 times since the establishment of their diplomatic relations in 1992. At present, Vietnam is the third-biggest trade partner for South Korea, behind China and the United States, and South Korea is the biggest foreign direct investor in Vietnam.

Before 2000, investment in the textile and manufacturing industries accounted for 76.1 percent of South Korea’s investment in Vietnam. At present, the investment is in as many as 57 sectors, including electronic component, computer, automotive, financial, insurance and construction.

When it comes to exports from South Korea to Vietnam, high-tech intermediate goods exports are increasing fast. As for imports from Vietnam, the focus is shifting towards capital goods from consumer goods. Specifically, the ratio of low-tech intermediate goods exports fell from 37.8 percent to 6.9 percent from 1992 to September this year, when that of high-tech rose from 2.1 percent to 51 percent. Capital goods imports from Vietnam rose from 0.1 percent to 25 percent while consumer goods imports fell from 42.2 percent to 28.6 percent.

In October this year, more than 230,000 Vietnamese were staying in South Korea, the biggest group of foreigners except for Chinese (approximately 240,000). As a result of increasing cultural exchange between Vietnam and South Korea, the latter’s brand power in the former is currently higher than that of any other.

In addition, the association pointed out that the ongoing U.S.-China rivalry and global supply chain reshaping may affect the bilateral relations of South Korea and Vietnam and the South Korean government should take proactive measures. “Vietnams’ trade scale is increasing fast along with anti-dumping and countervailing duty investigations targeting it,” it said, adding, “Both the United States and the European Union are increasingly regarding Vietnam as a bypass of products exported from China.”