Rising dependence on China's imports of South Korea materials and components


Release time:

2022-08-30

The South Korea Trade Association International Trade Research Institute released a research report on the 3rd, saying that South Korea's materials and parts industry is suffering from the "double attack" of China and Japan ". As South Korea's current advantageous industries, the materials and parts industry is still generating foreign exchange income for South Korea on the one hand, but at the same time its dependence on China's imports is also increasing.
 
Materials generally refer to textiles, chemicals, rubber, plastics and non-metals, as well as primary metals, while parts usually refer to all parts of general machinery, computers, office equipment, electrical machinery, electronic and precision machines and transportation machinery. The materials and parts industry is also known as the MC industry. In the world economy, the materials and parts industry, especially the high value-added materials and parts industry, has become a new profit highland.
 
In the trade of materials and parts with South Korea, Japan has always been in a surplus position, and the scale of the surplus continues to expand. According to the data mentioned in the report of the Institute of International Trade of the South Korea Trade Association, Japan's surplus with South Korea in the field of materials and parts has increased from US $18.9 billion in 2007 to US $22.1 billion in 2012.
 
At the same time, the scale of South Korea imports of materials and components from China has also increased in recent years. Among the related products imported by South Korea, the proportion of Chinese products has risen from 23.8 in 2007 to 26.8 currently. The proportion has dropped to 21%. China has become the biggest seller of South Korea materials and components, said the report by the Institute of International Trade, a South Korea trade association. However, it should be mentioned that although the number of materials and parts exported to South Korea by China has increased, and the overall proportion is also higher than that of Japan, in this field, Japan has a surplus with South Korea, while China has a deficit with South Korea, which shows that there is a huge gap between Chinese products and Japanese products and South Korea local products in terms of added value.
 
As the materials and precision parts industry, which is located in the upstream of the industrial chain, occupies the profit highland of the whole industrial chain, in some industries, materials and parts can even account for more than half of the profit margin of manufactured goods. Therefore, Japan and South Korea have paid more and more attention to this industry in recent years. Take Japan as an example. Although the global monopoly of consumer electronics giants such as Sony and Toshiba is constantly being challenged, in fact, the core technology mastered by Japanese companies is still difficult to surpass in the short term. For example, in the field of LED display, some Japanese companies even account for more than 70% of the global market due to their patented materials and parts technology. Another example is fiber optic cable manufacturing technology. Japanese companies have mastered the technology of producing high-purity silica so that they can obtain more than 50% of the overall product profit.
 
On the other hand, South Korea experienced the "Han River miracle" in the middle and late last century and achieved economic take-off. It gradually realized that the lack of core technology of enterprises will restrict the development of South Korea economy, and at the same time, South Korea will face a huge trade deficit with Japan. South Korea began to attach importance to the materials and parts industry. From 2000 to 2012, South Korea's exports of materials and components increased by more than 10% annually. In the first nine months of this year, the export value of South Korea materials and parts was 199.5 billion US dollars, and it achieved the highest surplus in history of 72.8 billion US dollars.
 
The development experience of Japan and South Korea in this industry is worth learning from China: on the one hand, the government's encouragement and support provide guarantee for the research and development of new materials and key components for local enterprises. In addition to financial support, we should also focus on the guiding role of policies, so that enterprises have a clear development direction. On the other hand, it is to give full play to the autonomy of enterprises, create a competitive atmosphere by opening up the market and encouraging private capital investment, and urge enterprises to invest resources in independent research and development.