industry
Entered 2024.04.28 18:27 Modified 2024.04.28 19:34 Paper A1
Korea is at the crossroads of becoming one of the top five exporting powers
1st quarter export gap 3%, lowest ever
Korea is trying to overtake Japan for the first time this year
Japan is also launching a strong counterattack led by U-turn companies
As Korea’s exports in the first quarter exceeded Japan’s by 97%, competition between the two countries for the world’s fifth largest exporting country is becoming more intense. Containers are stacked at Incheon New Port in Yeonsu-gu, Incheon on the 28th. Reporter Kang Eun-gu It was found that Korea’s exports in the first quarter of this year were more than 97% of Japan’s in dollar terms. This is the result of a steady recovery in semiconductor exports this year, while Korea’s exports of major products such as automobiles and machinery continue to show strong growth. There are expectations that if semiconductor exports accelerate, Korea will achieve its annual export target of $700 billion this year, overtaking Japan for the first time and entering the world’s top five exporters. However, Japan’s counterattack to defend this position is also fierce, so the battle between the two countries for the top 5 exports is expected to continue throughout this year.
On the 28th, Korea Economic Daily analyzed the export and import trends of the Ministry of Trade, Industry and Energy and the trade statistics of the Ministry of Finance of Japan according to the results, Korea’s exports in the first quarter of this year were $163.7 billion (about 227 trillion won), and exports to Japan during the same period was $168.3 billion (it reached about 233 trillion) 97.3%. This figure is based on the average won-dollar exchange rate and yen-dollar exchange rate for each month in the first quarter of both countries. The export gap between Korea and Japan has narrowed to less than 3%, which is an all-time low. In 2022, Korea achieved exports of $683.6 billion, chasing 91.5% of Japan ($746.9 billion), which was the previous smallest gap. However, as semiconductor exports declined last year, Korea’s exports (USD 632.2 billion) fell back to 88.1% of Japan’s (USD 717.3 billion).
This year, there are expectations that Korea’s exports of major products such as semiconductors, automobiles, machinery, petrochemicals, and steel will show a strong trend, surpassing Japan, which focuses on automobiles, for the first time. If Korea surpasses Japan, it will be the fifth largest exporting country in the world. However, Japan is also expected to launch a strong counterattack to defend its top 5 export positions. The plan is to further expand exports from companies such as Panasonic, Renesas Electronics, and Shiseido, which have returned to their home countries from abroad, starting this year.
Production volume from Taiwan’s TSMC Semiconductor Plant 1 in Kumamoto Prefecture, which began operations last February, is also scheduled to be exported to Japan starting this year.
Japan relies on ‘one top car’… Korea chases exports with ‘semiconductors + cars, chemicals and tablets’ ahead
Japan’s gross domestic product (GDP) in 2022 was $4.232 trillion. This figure is 2.5 times more than Korea (USD 1.674 trillion) during the same period. Trade experts found that the reason why Korea’s exports, which account for just 40% of the country’s economy, caught up with Japan’s by less than 3% in the first quarter of this year was due to differences in the main items export. If Japan competes in the export market with a powerful engine but only in the name of automobiles, Korea competes with four engines, including semiconductors and refining (automotive, chemical, and oil refining).
○ Exports to Korea including semiconductors and chahwajeong
According to the Ministry of Trade, Industry and Energy and foreign media on the 28th, Japan’s exports are determined by the automobile industry represented by Toyota. Last year, automobiles accounted for 17.1% of Japan’s total exports. The share of semiconductors and electronic components, the second export item, was only 5.4% In the 1980s and 1990s, when Sony Walkman dominated the world and accounted for 50% of the world semiconductor market -wide, Japan also had a dual engine of automobiles and electronics. However, after ceding leadership in the semiconductor and electronics markets to Korea, Japan’s exports changed to become an ‘automotive powerhouse’.
In Korea, semiconductors account for 15.6% of total exports, but automobiles also account for 11.2%. Including general machinery (8.5%), petroleum products (8.2%), and petrochemicals (7.2%), there are five items with an export share of about 10%. This means that even if one key product performs poorly, it can be compensated with the remaining export products. Last year, when semiconductor exports were slow, automobiles supported Korea’s exports. This year, Korea’s semiconductor exports recovered rapidly, narrowing the export gap between the two countries to less than 3% in the first quarter. Japan’s exports have been stuck in a range of around $700 billion for over 20 years since reaching a record high of $823.2 billion in 2011. While Japan’s economy is suffering from a ‘lost 30 years’, exports have fallen to ’20 years lost’.
Korea’s exports, which were $466.4 billion in 2010, increased 36% to $632.2 billion last year. It entered the top 10 of the world’s exporting countries for the first time in April 2009, and became 6th in 2022. Even last year, when the semiconductor industry was slow, it retained its 8th place. This is compared to Japan, which has remained in 5th place since losing 4th place to the Netherlands in 2019.
Industrialization due to the relocation of large production facilities overseas is also cited as a reason why Japanese exports rarely exceed the $700 billion level. As the value of the Yen reached an all-time high after the Great East Japan Earthquake in 2011, Japanese companies moved large numbers of their production facilities overseas. Statistics show that more than 20% of the production of Japanese companies is produced overseas today. Quantities produced abroad by domestic companies are not counted as exports.
○ Improving export competitiveness is more urgent for Korea
Experts point out that the two countries competing for the world’s fifth largest export volume are at a crossroads where they must fundamentally improve their export competitiveness. This is because the global supply chain is being reorganized due to the competition for hegemony between the US and China, and the landscape of major export products is changing completely.
With the advent of electric vehicles, the car industry is facing structural changes for the first time in 100 years. The pattern of the semiconductor market is also changing with the spread of artificial intelligence (AI) and high bandwidth memory (HBM). Korea’s main export items, such as petrochemicals and general machinery, are being rapidly encroached upon by China.
In general, trade experts point out that Korea is the one that needs to work faster to strengthen its export competitiveness. According to the Organization for Economic Co-operation and Development (OECD), Korea’s exports account for 44% of GDP, more than twice that of Japan, which is 18%. This is why some say that Korea must quickly become one of the world’s top five exporting countries to maintain national competitiveness. An official from the Ministry of Trade, Industry and Energy said, “Challenges are piling up, such as trade friction with the United States, contraction and stagnation in trade with China and Japan, and the development of new export markets such as the European Union. (EU), the Middle East, Central and South America. “
Reporters Jeong Young-hyo/Park Han-shin/Lee Seul-gi hugh@hankyung.com
#Japan #catching #Korea #write #history #time
