Weak Yen Strategy
The Korea Chamber of Commerce & Industry (KCCI) suggested the PRIDE strategy as a way of responding to Japanese companies that are enhancing their export competitiveness thanks to the weak yen. The acronym stands for Promoting efficiency, Risk management, Internationalization, Driving up added value of products, and Enhancing utilization of FTAs.
The KCCI published a report on March 10 and said, “The total exports from Japan increased 2.4 percent in the latter half of 2013,” adding, “Major Japanese companies are accelerating their efforts for R&D and business reorganization, capitalizing on the weak yen, and their Korean counterparts need to provide against it.”
According to the report, the electronics, shipbuilding, and textile industries of Korea outperformed those of Japan for the past 10 years in terms of export competitiveness analysis based on the relative comparative advantage (RCA). Still, the textile industry’s competitiveness is declining these days. Meanwhile, Japan outdid Korea in the machinery, manufacturing, and automobile sectors. The two countries tied with each other in the steel industry.
RCA is calculated by dividing a country’s ratio of exports by item by its ratio of the global market. An export item is considered to have some competitive edge in the global market when the value is greater than one.
“More efforts have to be made in not just electronics, shipbuilding, and textiles, but also the machinery and car sectors, if Korean enterprises will be able to survive the current weak yen trend,” the report read, continuing, “The PRIDE strategy can be a viable option for such an endeavor.”