China’s Tech Competitiveness
China is cementing its position as an information technology (IT) powerhouse. Experts point out that China is close to overtaking Korea by showing high competitiveness not only in products such as smartphones and home appliances but also in new IT sectors such as drones and electric cars.
The Korea International Trade Association (KITA) announced on January 16 that it found out, in its analysis of China’s major export items, that 16 of the China’s top 20 export items were IT-related products or parts. By contrast, only 10 of the top 20 items exported by Korea cut across the IT sector.
China’s IT exports accounted for 23.5% of its total exports last year. Korea’s IT exports accounted for 25% of its total exports last year, but excluding exports of semiconductors which are Korea’s number-one export item, Korea’s IT export proportion will plunge to 14.7%.
In particular, the export gap between China and Korea is widening in wireless communication handsets represented by smartphones. Korea's handset exports dipped from US$13.175 billion in 2013 to US$6.561billion at the end of November of last year. By contrast, China's handset exports expanded from US$95.642 billion to US$108,849 billion during the same period.
Experts say that this phenomenon took place since China, which served production bases of major IT companies in the world, increased exports by boosting its competitiveness, while major Korean IT manufacturers such as Samsung Electronics and LG Electronics ramped up the proportion of overseas production.
Beyond just a matter of production bases, it is pointed out by some experts that China's IT manufacturing competitiveness itself has increased to the extent that China is closely trailing Korea. "China already dominated emerging markets such as home appliances, low-end mobile phones and computers and is building up its power in major markets worldwide," said Moon Byeong-ki, a senior researcher at the Korea International Trade Association. “China is actively nurturing items such as drones and electric vehicles that Korea cannot due to regulations.”
"Parts exports which spiked as automobile and IT product manufacturing plants moved to China, are now on the decline as local Chinese parts have become more competitive," Moon added. Actually, CEOs of major Korean business groups who visited the CES 2018 in Las Vegas recently expressed a sense of crisis, saying that China's technology overtook Korea’s. "China has already surpassed Korea not only in high-tech areas but in all industries,” said Koo Ja-yeol, chairman of the LS Group. “Fewer industrial regulations fueled China’s economic growth, as well,” said Park Jung-ho, president of SK Telecom.