S. Korea Has Absolute Disadvantage in Many Industries
South Korea has 48 items for which it relies on Japanese imports more than 90 percent, according to a report on released by Hyundai Research Institute on July 28
Korea imported 4,227 items from Japan in 2018. Among them, Korea relied on Japanese imports more than 90 percent for 48 items. The value of these high-dependence imports was US$2.78 billion (3.29 trillion won), 5.1 percent of Korea’s US$54.60 billion (64.67 trillion won) worth of imports from Japan and 0.5 percent of the nation’s total imports of US$535.20 billion (633.94 trillion won) last year.
The problem is that the South Korean industry is heavily dependent on Japan because industrial goods, such as intermediary and capital goods, take up a large proportion of Korea’s imports from Japan. Japan accounts for 14.6 percent of South Korea’s total industrial material imports.
Most of South Korea’s industries have a weaker competitiveness than Japan. South Korea has an absolute disadvantage in the chemical, precision machinery and automobile industries, according to the research institute’s analysis of the South Korean-Japanese trade specialization index (TSI).
Notably, the South Korean semiconductor industry, which has been targeted by Japan, is at an absolute disadvantage as a whole despite an absolute advantage in memory chips.