Export Competition between Korea and Japan is Getting Fiercer in the U.S. Import Market

The export competition between Korea and Japan is becoming fiercer in the US import market. The Institute for International Trade (President, Kim Geuk-soo, http://iit.kita.net) of Korea International Trade Association published a report titled “A comparison of export competition between Korea and Japan as well as Korea and China in the US Import Market.” According to the report, the export similarity index (ESI) between Korea and Japan increased from 0.438 in 2013 to 0.517 in 2014.

*Export Similarity Index shows the degree of competition between two countries by measuring similarities in structure of export items in certain market of both countries. The ESI figure closer to 1 indicates fiercer competition.

By item, it appears that Korea’s major export products have high export similarity index as competition in cars and auto parts posted the highest (0.782) followed by machinery (0.548) and electric and electronics products (0.519). In particular, the competitions in cars and auto parts were intensified as the index went up 0.08 point from 0.702 in 2010 to 0.782 in 2014 and semiconductor (0.499 -> 0.561) and machinery (0.440 -> 0.548) sectors became more competitive during the same period.

On the other hand, Japanese products’ market share increased in highly competitive sectors while Korean products’ market share dropped in gearbox, industrial robots, and semiconductor devices.

Last year, export similarity index between Korea and China in the US market stood at 0.346, displaying steady rise since 2010. By item, the competitions were severe in mobile phones and components (0.845), shipbuilding (0.558) and electrical and electronic products (0.505). Meanwhile, Chinese products’ market share augmented in plastic plates and lighting equipment parts sectors whereas Korean products’ market share fell in those areas. In particular, Korea’s market share in telephone sets for cellular networks decreased to 10 percent range while China’s market share has reached 80 percent.

While Japanese products’ price competitiveness is expected to be stronger due to weak yen, China is rapidly catching up with its neighboring countries with its improved quality competitiveness. Therefore, it is projected that the competition between Korea and Japan and Korea and China will be fiercer in the US market in the future.

Shim Hye-jeong, a researcher at the IIT mentioned “As the export competition is getting more severe in the US import market, it is necessary for Korean trade industry to exert efforts to enhance the export competitiveness such as to strengthen the core technology, to build brand image and to increase the use of the FTA.”

 
 
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