The Ministry of Trade, Industry & Energy of Korea announced on November 13 that South Korea’s exports to Vietnam totaled US$37.768 billion, up 48.8% from a year ago, for the period of January 1 to October 20, 2017. During the same period, South Korea’s exports to Hong Kong increased by 17.9% year on year to US$29.727 billion and Vietnam beat Hong Kong to become South Korea’s third-largest export destination. South Korea’s annual exports to Vietnam rose from US$21.1 billion to US$27.8 billion and US$32.6 billion in 2014 to 2016 and Vietnam was South Korea’s sixth-, fourth- and fourth-largest export destination in the respective years.
For the period of January 1 to October 20, 2017, South Korea’s exports to the United States increased 3.6% from a year earlier to US$54.822 billion. During the period, the United States and Vietnam accounted for 12% and 8.3% of South Korea’s total exports, respectively. The ratio of South Korea’s exports to Vietnam to its total exports stood at 3.9% in 2014 but rose to 5.3% in 2015 and 8.3% in 2016.
This can be attributed to the fact that South Korean companies are increasing their production in Vietnam. South Korea’s exports to Vietnam continued to increase for 21 months in a row until last month, led by an increase in the export of displays, semiconductors, petroleum products, etc. Specifically, the display exports skyrocketed by 253.1% last month while semiconductor and petroleum product exports jumped 88% and 14.7%, respectively. South Korea’s component and material exports to Vietnam increased from US$12.5 billion to US$17 billion between 2014 and 2015 and then to US$21.3 billion in 2016.
The free trade agreement (FTA) of South Korea and Vietnam, which took effect in December 2015, is another factor contributing to the rapid export growth. “South Korean companies increased their investment in Vietnam to make use of its labor costs lower than those of China, and then material and components exports from South Korea to Vietnam showed a substantial growth as a result,” the ministry explained, adding, “This trend is likely to continue for a while as South Korea is planning to increase its trade with Vietnam by deepening its economic cooperation with the Southeast Asian country.”