By Jhoo Dong-chan
Korea's small- and medium-sized enterprises (SMEs) are enjoying surging export performance with Vietnam. Highlighting the Southeast Asian country's economic development, the nation's top think tanks say Vietnam is expected to become Korea's second-largest export partner soon.
According to the study released by the Korea Small Business Institute (KOSBI), Korean SMEs' exports to Vietnam reached $12.6 billion last year, up 33.4 percent from a year earlier.
The Southeast Asian country was Korean SMEs' fourth-largest export partner in 2016, but became the second-largest with 11.7 percent of their total export volume last year following China with 22.5 percent.
“Vietnam's population is more than 90 million, and is steadily enjoying a 6 percent economic growth every year,” the study said.
“The country's population will reach more than 100 million by the end of 2020. It will play a leading economic role in the Indochinese peninsula soon.”
Thanks to the SMEs' surging export volume, Korea's exports to Vietnam reached $47.8 billion, or 8.3 percent of the nation's total export volume, last year.
The figure indicates the country was Korea's third-largest export partner after China and the United States last year. The nation's top think tank claims Vietnam will soon take over the U.S. in export volume.
According to the Korea International Trade Association (KITA), the nation's exports to Vietnam will reach $96.6 billion by 2020 to become Korea's second-largest export country.
The KITA also noted Korea enjoyed a $31.5 billion trade surplus with Vietnam last year, nearly doubling the trade surplus with the U.S. worth $17.8 billion.
“An increasing number of Vietnamese people are favoring Korean brands thanks to the Korean wave and major Korean firms' entry to the country. Korean firms, especially SMEs, should establish a foothold in major cities or special economic zones in Vietnam to expand their exports,” said a KOSBI researcher.
“The government should also provide various support linked with its official development assistance program to Vietnam.”
The study said, however, Vietnam often experienced labor disputes while its wage level is rapidly growing these days, calling for SMEs to take a cautious approach when seeking a cheap labor cost abroad.