Three-way Game
The ongoing weak yen is affecting Korea’s exports to China by dropping the prices of products exported from Japan to China.
Senior researcher Jo Kyu-rim at the Hyundai Research Institute released a report on Nov. 8 after analyzing the export unit values of 2,498 items for 2011 to 2014. According to the report, 313 Korean items’ export unit values were higher than those of the Japanese counterparts in 2011, but the number went up to 459 in 2014, while the number of Korean items with lower export unit values decreased from 1,778 to 1,540 during the same period.
This phenomenon is because of the continuation of the weak yen above anything else. The yen-dollar exchange rate changed from 83 yen to 120 yen per U.S. dollar between January 2013 and September this year, while the won-dollar rate moved from 1,065.4 won to 1,184.7 won per U.S. dollar.
Japan’s export unit values decreased in every manufacturing segment. In particular, the trend was noticeable in the petrochemical and metal sectors, where Korea and Japan are engaged in intense price competition amid the oversupply of products having similar levels of quality. In the petrochemical sector, Japan’s export unit value regarding the Chinese market was higher for 322 items in 2011, but the number fell to 282 in 2014.
Under the circumstances, Japan’s exports of manufactured goods to China increased by 1.6 percent between 2012 and 2013 and 1.4 percent between 2013 and 2014 whereas Korea’s exports increased by 4.9 percent between 2012 and 2013 and decreased by 0.3 percent between 2013 and 2014.