“Sandwich” Status
Korea’s materials and components industries are contributing greatly to its exports, but are sandwiched between those of Japan and China.
The Institute for International Trade (IIT) of the Korea International Trade Association (KITA) published a report on November 3. According to the report, the materials and components industries’ exports increased 10.1% on an annual average between 2000 and 2012, while the import growth rate stood at 7.2% during the same period, to be a boon to the national trade surplus. At present, the sectors’ exports account for 47.2% of the total, which means their importance is on the rise. Their trade specialization index went up from 0.12 to 0.23 between 2007 and this year.
The materials and components industries can be defined as the entire field covering the manufacturing of raw and processed materials used in textiles, chemicals, plastics, non-metal mineral products, and appliances and machinery such as computers, electronics, AV equipment, and precision machinery.
The sectors’ trade deficits vis-à-vis Japan, in the meantime, increased from US$18.8 billion to US$22.1 billion between 2007 and 2013. Though Korea is sharpening its competitive edge in the sectors, it still has a far way to go to catch up with Japan.
Besides, the percentage of materials and components imports from China has already exceeded that from Japan. Specifically, the figure increased from 23.8% to 26.8% between 2007 and the first seven months of this year. China is distinguishing itself in the IT sector in particular.
The IIT said that China, which used to be the biggest customer of Korea-made materials and components, is now the largest materials and components exporter to Korea.