Major Korean Industries
According to the Federation of Korean Industries (FKI), most key industries of Korea are likely to continue struggling next year due to China’s rapid growth, the weak yen, and intensifying global competition.
According to Kiwoom Securities research analyst Kim Ji-san, one of the greatest risk factors in the electronics industry is the rapid decline of high-end smartphone demands that is being accelerated by Chinese mass market handset manufacturers such as Xiaomi. This trend is expected to continue next year to affect not only Samsung Electronics but also the entire IT industry of Korea.
In the LED market, Chinese companies are improving their product quality and price competitiveness on the back of government support. “The size of the demands in China is likely to determine the growth of Korean ultra HD TV and electric rice cooker makers,” the analyst predicted, adding, “Samsung Electronics’ Galaxy S6 and LG Electronics’ G4 will create a boom in the market in the first half of next year, but the debut of the new iPhone and increase in marketing expenditures will follow during the rest of the year, while the tablet PC market shows a rapid decline in demand.”
In the meantime, HI Investment & Securities manager Ko Tae-bong also pointed out it is China that holds the key to an increase in global automobile demand. “Hyundai Motor Company and Kia Motors are expected to increase their production by 3.1 percent and 5.3 percent compared to this year, but they still have to address foreign exchange risks and intensifying competition,” he commented.
The three largest Korean shipbuilders are estimated to win orders worth a total of US$33.8 billion to US$38.5 billion in 2015, up 16 percent from this year. However, the outlook is not that bright because their Japanese and Chinese counterparts are increasing their global market share at a fast pace and foreign exchange conditions are defying predictions.
The steel industry is facing a particularly hard time, as the global consumption increase is estimated to be limited to just 2 percent next year. The iron ore price has remained low, too. Meanwhile, the petrochemical sector has both positive and negative factors at the same time. The naphtha price is showing signs of stability, along with that of synthetic resin, though the inventory glut in China has yet to be resolved.