By Yoon Ja-young
The proposed U.S. deployment of the Terminal High Altitude Area Defense (THAAD) system in South Korea is not likely to affect the country's exports to China, Minister of Trade, Industry and Energy Joo Hyung-hwan said Monday.
"The economy and political concerns are likely to be separate issues. There is no sign of THAAD affecting exports," said Joo during a meeting with reporters. He was talking about the growing concern that the deployment of the system on South Korean soil may prompt the Chinese government to take economic retaliation against Seoul.
He noted that exports have slowed since 2012, posting an 18.5 percent fall in January compared with a year ago, the biggest plunge since 2009 August.
Korea saw all of its 13 major export items decrease in volume, including semiconductors, steel and ships, for the first time in history. There is seemingly no immediate rebound as exports have fallen 17.3 percent so far this month.
"This is a global phenomenon caused by the slowdown in China and emerging countries, declining oil prices and oversupply," he said. As global oil prices fell below $30 per barrel, Korea's export of oil products and petrochemical products is decreasing. The Chinese slowdown is hitting emerging markets that rely on the export of resources to China.
However, he added there are internal problems such as a weakening competitive edge of major industries as well as a failure to quickly find alternative industries.
"After the 2000s, exports to China increased notably. Korea should have maintained its market share in the United States, EU and Japan, but it seems to have slowed in those countries as Korea has concentrated on the Chinese market."
He pointed out that China is narrowing the technology gap with Korea as well as shifting its growth strategy to consuming and services from exports and investment. "Korea should have developed high-end service and consumer industries to cope with this."
Joo said that the government will focus on mid-tier companies. "Exports by conglomerates decreased 11 percent and small companies saw a 6 percent drop, but mid-tier companies expanded exports by 3.2 percent as they have a competitive edge. They are component and material firms and consumer goods companies. We plan to focus on them," he said, adding that it will expand its support of new products for export such as cosmetics, infant goods and foods.
Experts maintain that Korea should nurture the consumer goods industry. According to a report by KPMG, consumer goods amounted to 54.5 percent of Korea's exports in 1988, but the ratio fell to 15.6 percent last year. The report thus urges that Korea should pick high growth consumer goods in each sector, developing tailored products for each export destination and engage in marketing activities.
The minister said that the government will focus on deregulation and providing platforms for diverse industries. "Electric car companies, telecommunication firms and insurance businesses, for instance, may meet to discuss new business models. The government will help them work together."
The proposed U.S. deployment of the Terminal High Altitude Area Defense (THAAD) system in South Korea is not likely to affect the country's exports to China, Minister of Trade, Industry and Energy Joo Hyung-hwan said Monday.
"The economy and political concerns are likely to be separate issues. There is no sign of THAAD affecting exports," said Joo during a meeting with reporters. He was talking about the growing concern that the deployment of the system on South Korean soil may prompt the Chinese government to take economic retaliation against Seoul.
He noted that exports have slowed since 2012, posting an 18.5 percent fall in January compared with a year ago, the biggest plunge since 2009 August.
Korea saw all of its 13 major export items decrease in volume, including semiconductors, steel and ships, for the first time in history. There is seemingly no immediate rebound as exports have fallen 17.3 percent so far this month.
"This is a global phenomenon caused by the slowdown in China and emerging countries, declining oil prices and oversupply," he said. As global oil prices fell below $30 per barrel, Korea's export of oil products and petrochemical products is decreasing. The Chinese slowdown is hitting emerging markets that rely on the export of resources to China.
However, he added there are internal problems such as a weakening competitive edge of major industries as well as a failure to quickly find alternative industries.
"After the 2000s, exports to China increased notably. Korea should have maintained its market share in the United States, EU and Japan, but it seems to have slowed in those countries as Korea has concentrated on the Chinese market."
He pointed out that China is narrowing the technology gap with Korea as well as shifting its growth strategy to consuming and services from exports and investment. "Korea should have developed high-end service and consumer industries to cope with this."
Joo said that the government will focus on mid-tier companies. "Exports by conglomerates decreased 11 percent and small companies saw a 6 percent drop, but mid-tier companies expanded exports by 3.2 percent as they have a competitive edge. They are component and material firms and consumer goods companies. We plan to focus on them," he said, adding that it will expand its support of new products for export such as cosmetics, infant goods and foods.
Experts maintain that Korea should nurture the consumer goods industry. According to a report by KPMG, consumer goods amounted to 54.5 percent of Korea's exports in 1988, but the ratio fell to 15.6 percent last year. The report thus urges that Korea should pick high growth consumer goods in each sector, developing tailored products for each export destination and engage in marketing activities.
The minister said that the government will focus on deregulation and providing platforms for diverse industries. "Electric car companies, telecommunication firms and insurance businesses, for instance, may meet to discuss new business models. The government will help them work together."
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