SEOUL, KOREA - A study said Korea's competitiveness is being eroded by its regional rivals, China and Japan. Hyundai Economic Research Institute said this on January 26 in a research report "Korea Losing Ground in Tripartite Division of Labor."

 

According to the report, competition among the three East Asian nations is getting fiercer, as can be seen in global market share figures. In 2000, the shares of China, Japan, and Korea in the world export market were 3.1, 11.2, and 5.2 percent, respectively. After 12 years, the figures shifted to 9.2, 9.8, and 6.3 percent. During the same period, the combined share in the world export market has increased to 27.0 percent from 17.6 percent.

 

Using the World Input-Output Database, the Hyundai Economic Research Institute report compared value added in the three countries for 14 manufacturing industries between 2000 and 2011. The upshot was, according to the report, Korea's reliance on China is rising rapidly, with the former's relative profitability worsening.

 

As for industrial competitiveness, Korea was most vulnerable. As of 2011, the manufacturing area in which Korea enjoys comparative advantage with the highest degree of value added contribution within the region was oil and chemical only. For China, the most competitive industrial sector was textiles and apparel. For the remaining six manufacturing areas, including rubber and plastics, non-metal, metal, machinery, electric and optoelectric, and transportation equipment, Japan was the country with the highest competitiveness.

 

The report said, "Korean industry must come up with special measures to counter the trend toward worsening manufacturing competitiveness. One such measure could be a tripartite free trade agreement to strengthen regional cooperation."