Losing Competitiveness
Most of South Korea’s key industries, except for some industries including semiconductor, are highly likely to shrink dramatically in 10 years.
According to a report titled “future vision and development strategy of South Korea’s key industries” released by the Korea Institute for Industrial Economics & Trade (KIET) on August 20, production and exports of the nation’s major industries such as automobile, shipbuilding, textile and communication equipment will decrease starting from 2025. South Korea’s economy has already entered an era of slower growth after 2011 and its key industries are slowing down.
The KIET expected that South Korea would see its major industries’ market share rapidly drop when the industries continuously show the downward trend. It said the nation’s market share of the shipbuilding industry will decline from 36.2 percent in 2015 to 20 percent in 2025, while that of the communication equipment industry will decrease from 24.2 percent to 20.5 percent, automobile from 5.2 percent to 3.8 percent, petrochemical from 5.4 percent to 4.7 percent, home appliances from 3.1 percent to 2.5 percent and textile from 2 percent to 1.2 percent over the same period. However, the market share of the semiconductor industry will increase from 16.5 percent in 2015 to 18.2 percent in 2025, while that of general machinery will rise from 2.8 percent to 2.9 percent and defense industry from 2.4 percent to 2.7 percent.
Cho Chul, a senior researcher at the KIET, said, “Even if the automobile, shipbuilding, petrochemical, textile, home appliances and communication equipment industries have advanced, their global market share objectives in 2025 will fall far short of their market share in 2015. The nation’s industrial growth will be limited by high labor costs, limited domestic market, sluggish exports caused by the continuing global economic downturn and China’s advanced industrial structure.”
Since Chinese industries and companies are advancing and securing the competitiveness, South Korea’s key industries will shrink without innovation.