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Korea Manufacturing Competitiveness

According to the "Korea Manufacturing Competitiveness" report issued by the Korea Industrial Research Institute, South Korea, which ranked 17th in 1990, continued to rise in rankings, surpassing the United States and Japan for the first-time last year, and leaping to third in the world. According to the analysis, South Korea’s manufacturing industry has played a pillar role in economic growth and stable employment throughout the COVID-19 crisis. After the manufacturing industry’s contribution to economic growth plummeted to -1.6% in the second quarter of last year, it was -0.2% in the third quarter and 0% in the fourth quarter. The service industry was -0.8% in the third quarter of last year and -1.0% in the fourth quarter. Among 28 major countries, South Korea, which has the second-highest share of manufacturing, ranked fourth in terms of growth rate reduction compared to 2019. Before the crisis, South Korea ranked sixth among 28 countries in terms of increase in the unemployment rate. The world economy last year had a growth rate of -3.3%, but South Korea’s was -1.0%, due to the strong performance of South Korean manufacturing.

Driven by its strong manufacturing industry, South Korea now ranks fourth in economic performance among the 28 major economies, and sixth from the bottom in terms of the unemployment rate increase. The contribution of manufacturing to economic growth has surpassed the traditional growth engine of the service industry for two consecutive quarters. As the domestic epidemic continues to fluctuate, it is difficult for domestic demand to drive economic growth. Fortunately, the manufacturing industry has maintained a good momentum, and the large increase in exports has driven the overall South Korean economy from negative to positive. South Korea’s recent surge in exports is mainly due to some of its main industries such as semiconductors, liquid crystal displays, and petrochemicals, which maintain the highest competitiveness in the world. Most of South Korea’s main industries are highly integrated into the international industrial chain, and will need to place great importance on the possibilities and future direction of the global industrial chain restructuring brought about by the technological competition between China and the United States, and respond by diversifying their international market strategy and improving industrial competitiveness.

Overview of South Korea's imports and exports in December 2020

The Ministry of Trade, Industry, and Energy of Korea announced the "Import and Export Trends for the Whole Year of 2020 and December". South Korea’s exports for the whole year of 2020 was approximately US$512.8 billion, a decrease of 5.4% from 2019, and the value of imports was approximately US$467.2 billion. The U.S. dollar decreased by 7.2% from 2019, and the trade surplus was approximately 45.62 billion U.S. dollars, maintaining a surplus for 12 consecutive years.

The Ministry of Trade, Industry, and Energy cited WTO statistics for January to October 2020. Although South Korea’s exports declined by 8.2% in 2020, it still ranks 4th among the world’s top 10 major exporting countries in terms of export growth rate. There were only 4 countries with single-digit growth or decline. Hong Kong’s exports grew by 0.9%, China grew by 0.4%, the Netherlands fell by 7.4%, and South Korea fell by 8.2%. Belgium fell by 10.0%, Germany fell by 10.4%, Italy fell by 11.3%, Japan decreased by 11.7%, the United States decreased by 14.5%, and France decreased by 17.7%.

Among the 20 major export items of South Korea in 2020 (customs clearance statistics from January 1 to December 31), compared with 2019, there was a 57.2% increase in computers, a 54.4% increase in biotechnology and health care and a 15.7 increase in cosmetics. Exports in semiconductors increased by 5.6%, agricultural and aquatic products increased by 4.5%, batteries increased by 1.3%, home appliances increased by 0.7%, and plastic products increased by 0.03%. Items that saw reductions in exports included precision chemical raw materials which decreased by 0.4%, ships decreased by 2.0%, robots decreased by 3.4%, wireless communication equipment decreased by 6.1%, general machinery decreased by 8.8%, monitors decreased by 12.2%, automobiles decreased by 13.1%, textile fibers decreased by 13.2%.? steel decreased by 14.4%, petrochemicals decreased by 16.4%, auto parts decreased by 17.2%, and petroleum products decreased by 40.7%.

As for Korea’s major export regions (customs clearance statistics from January 1 to December 31), compared with 2019, the only major regions that saw increases in exports in 2020 were the United States and Vietnam with 1.1% and 0.8% increases respectively. Exports to the European Union (EU) decreased by 1.2%, to China decreased by 2.7%, to ASEAN countries decreased by 6.3%, to Japan decreased by 11.8%, to CIS decreased by 15.3%, to the Middle East decreased by 16.9%, and to Central and South America decreased by 25.9%.?

As for the import situation in 2020, the import of capital goods and consumer goods increased by 14.5% and 0.6% respectively, while the import of intermediate goods and raw materials decreased by 6.1% and 26.6% respectively. Among the main energy resource items, the import of gas decreased by 21.7% from the previous year, petroleum products decreased by 26.9%, coal decreased by 33.2%, and crude oil decreased by 36.7%.

Among South Korea’s 20 major export items in December 2020, compared with December 2019, shipping growth was 105.9%, biotechnology health care growth was 104.4%, wireless communication equipment growth was 39.8%, semiconductor growth was 30.0%, displays 28.0%, Home appliances 23.4%, robots 20.9%, cosmetics 16.8%, auto parts 15.6%, plastic products 15.3%, computers 14.7%, fine chemical raw materials 14.1%, agricultural and fishery food 11.2%, storage batteries 7.6%, textile fiber 2.9% and general machinery 2.8%. Petrochemical exports showed a decrease of -1.6%, automobiles -4.4%, steel -7.8% and petroleum products -36.5%. In terms of major export regions, compared with the same period last year, exports to Vietnam increased by 35.8%, exports to the European Union (EU) increased by 26.4%, exports to Central and South America increased by 20.1%, and exports to ASEAN countries increased by 19.6%. Exports saw an increase of 16.8% to India, an increase of 11.6% to the United States, an increase of 3.3% to China, and an increase of 1.4% to Japan. In contrast, exports to CIS decreased by 5.5% compared with the same period last year, and exports to the Middle East decreased by 33.1%.

In terms of import items, the imports of capital goods, consumer goods, and intermediate goods in December 2020 increased by 23.3%, 9.1%, and 4.1% respectively from the same month last year, while imports of raw materials decreased by 21.5%. Provisional customs clearance statistics show imports of major energy resources decreased compared with the same month last year. Gas decreased by 28.0%, coal decreased by 31.8%, crude oil decreased by 35.4%, and petroleum products decreased by 56.3%.

According to the Minister of Korea’s Ministry of Trade, Industry and Energy, Sung Yoon, South Korea’s exports in December last year maintained a record growth. Total exports and daily average export value have continued to increase for two consecutive months. The export value in December exceeded US$50 billion for the first time in 25 months, showing an increase rate in the double digits. Minister Cheng pointed out that although South Korea’s exports in 2020 were affected by external environment factors such as the Covid epidemic, the spread of trade protectionism, and the decline in oil prices, every time it faces a crisis, South Korea can rely on the competitiveness of its manufacturing industry, the efforts of export manufacturers, and the active support of its government. The cooperation between the private sector and the government, such as measures to improve export vitality, has helped South Korea successfully overcome difficulties.

South Korea’s exports last year were affected by the decline in global trade and the economic recession of major countries. In the second quarter, exports had severely declined by about 20% and faced a crisis. 91视频官网ever, due to the government’s efforts to promote export recovery, exports in the fourth quarter and the second half of the year resumed growth for the first time in two years. In addition, the export of high value-added products such as system semiconductors, OLEDs, virus detection kits, and environmentally friendly automobiles has set a new historical record. The proportion of exports from small and medium-sized enterprises has increased. Consumer goods such as cosmetics, and agricultural and aquatic foods manufactured by small and medium-sized enterprises are at their highest levels. South Korea’s export outlook is expected to be optimistic. 91视频官网ever, uncertainties such as the spread of the Covid epidemic, US government policies, and trade protectionism still exist. The government will continue to promote all feasible policy responses during the new year.

In the future, relevant government departments will comprehensively guide online marketing, supply trade finance, solve logistics problems, and promote support measures that can boost export vitality. In addition, they will actively expand emerging markets such as RCEP, Korea-Indonesia CEPA, and expand South Korea’s exports. It actively cultivates potential projects, accelerates the increase of the added value of export projects, and builds a Korean online platform to promote the entire digitalization of export marketing, finance, payment, and logistics, and strives to cultivate export enterprises and innovative trade structures.