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South Korea and China in Direct Competition in 37% of Their Export Items: KIET
More Competition Expected in High-tech Areas
South Korea and China in Direct Competition in 37% of Their Export Items: KIET
  • By Jung Suk-yee
  • May 13, 2019, 11:12
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South Korea and China are in direct competition in 37 percent of their export items.

The Korea Institute for Industrial Economics & Trade (KIET) said in its report on May 12 that 37 percent of South Korea’s and China’s export items are currently overlapping with each other as China's export industry structure shifts toward capital- and technology-intensive sectors.

KIET also said China, unlike South Korea, increased its global market shares for the past five years in the consumer electronics, petroleum product, steel, automobile and communications equipment markets.

According to the report, the export similarity index of South Korea and China rose from 0.367 to 0.391 from 2007 to 2016 and returned to 0.367 in 2017, led by an explosive increase in memory chip exports from South Korea. The index that is closer to 1 means more competition and a higher level of similarity between two countries’ export structures.

In spite of the competition with China, South Korea’s total exports increased and its global market share rose from 2.6 percent to 3.2 percent during the 10 years. The institute, however, pointed out that even more competition is around the corner with the Chinese government concentrating its resources on high-tech industries such as non-memory semiconductor and next-generation display.

Of the two countries’ export items, 31.1 percent are currently showing an increase in global market share on China’s part along with a decrease on South Korea’s part. In addition, China is showing a more rapid increase in global market share than South Korea when it comes to 11.4 percent.

During the past five years, South Korea’s global market share rose in a small number of industries such as shipbuilding and electronic component whereas it fell in many other industries such as steel, automobile and communications equipment. Specifically, South Korea’s global steel market share fell from 6.5 percent to 6.4 percent from 2012 to 2017 whereas that of China rose by 2.1 percentage points to 13.5 percent. Likewise, South Korea’s and China’s global communications equipment market shares changed from 7.6 percent to 4.7 percent and from 44.7 percent to 45.3 percent, respectively.

“China has enhanced its competitiveness in various industries since 2010 and South Korea and China are currently competing very closely with each other in most major export industries other than information and communications technology,” the institute explained.