Turning Around
The Korea Trade-Investment Promotion Agency (KOTRA) announced on Feb. 2 that Korea recorded a surplus of US$23 million in its auto parts trade with Japan last year, the first time in history. Five years ago, Korea’s auto parts export to Japan was US$500 million, whereas imports from Japan were three times the amount. In 2013, the deficit declined to US$84 million.
The popularity of Korean auto parts is growing around the world these days, based on their high quality. Last year, exports reached US$26.636 billion, making auto parts one of the top three export items of Korea. The relatively small amount of exports to Japan is attributable to the decreasing bilateral trade volume as of late.
The percentage of Korea’s exports to Japan compared to overall amounted to 36.8 percent in 1973, but has declined since then. The percentage stood at 9.3 percent in 2002 and fell by 2.2 percent, 10.7 percent, and 4.6 percent from 2012 to 2014 each. The rapid depreciation of the yen has added to Korean auto parts manufacturers’ difficulties in Japan, too.
Industry insiders mentioned close cooperation between the Hyundai Motor Group and auto parts suppliers as one of the reasons for its unprecedented surplus. Last year, the group sold more than eight million cars across the world to cement its position as a global leading automaker, and this contributed to the business partners’ annual performance.