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Korea’s top export sectors could be overtaken by China within 5 years: survey
A Semiconductor Manufacturing International Corporation foundry plant is seen in Beijing in this July 2023 photo. Korea Times file
By Ko Dong-hwan
FKI survey reflects grim outlook by Korean businesses
All of Korea’s 10 key export industries could be overtaken by Chinese companies within five years, according to a survey of domestic companies with the highest sales in those sectors released Monday.
The bleak outlook, revealed in the survey by the Federation of Korean Industries (FKI), reflects how much pressure Korea’s leading businesses now feel from Chinese rivals, with some competitors already surpassing them in global competitiveness.
Among the country’s top 1,000 companies by sales, 200 participated in the survey. When asked which country is currently Korea’s largest competitor in the global market, 62.5 percent of respondents selected China, followed by the U.S. at 22.5 percent and Japan at 9.5 percent. When asked which country will be Korea’s biggest competitor in five years, an even larger portion, 68.5 percent, chose China, while 22 percent selected the U.S. and 5 percent chose Japan.
Wire rods are produced at POSCO’s Pohang plant in North Gyeongsang Province in April. Courtesy of POSCO
The survey also asked respondents to compare the overall market competitiveness of other countries with Korea, which was fixed at a value of 100. Respondents said China currently scores 102.2 and is expected to rise to 112.3 by 2030.
One notable finding is that Chinese firms are expected to be nearly on par with U.S. firms by 2030. Respondents rated the U.S. at 107.2 at present and projected it to grow to 112.9, nearly matching China’s expected level.
The survey also compared Korea’s competitiveness with China across key industries. Respondents said Korean firms in all sectors expect Chinese firms to surpass them by 2030.
At present, Korean companies hold an edge over Chinese firms in semiconductors, electronics and electromechanics, shipbuilding, petrochemicals and oil products, and bio health, with Chinese competitiveness rated at 99.3, 99.0, 96.7, 96.5 and 89.2, respectively.
However, respondents predicted these figures will climb to 107.1, 113.0, 106.7, 106.2 and 100.4 by 2030, surpassing Korea in all five industries.
In the steelmaking, machinery, secondary battery, display and automobile and auto parts industries, respondents said Chinese firms have already overtaken Korean firms in market competitiveness. They added that Chinese firms’ market competitiveness in each of those industries will grow even stronger by 2030.
As for the U.S., the respondents said Korean firms currently dominate American firms in the steelmaking, shipbuilding and secondary battery sectors, rating American firms 98.8, 90.8 and 89.5 in those respective sectors. But the respondents said that by 2030, U.S. firms in steelmaking will overtake Korean firms, rating them 100.8.
The respondents said that overall, China is outpacing Korea in price competitiveness, productivity and government support. They added that the U.S. has greater competitiveness over Korea in brand power, key personnel and core technologies.
Regarding obstacles to further growth, respondents cited worsening product quality at 21.9 percent, rising global risks at 20.4 percent, a shrinking domestic market due to declining population at 19.6 percent and a shortage of skilled workers in key technologies such as artificial intelligence at 18.5 percent as the main reasons.