"South Korean Products Hold 8.5% Market Share in China, Declining Annually Since 2015"

[Asia Economy Reporter Changhwan Lee] It has been revealed that the market share of Korean products in the Chinese market is continuously declining.

The Federation of Korean Industries (FKI) announced on the 18th that, based on an analysis of the United Nations Comtrade trade statistics database, Korea's share of the total Chinese import market decreased steadily from 10.4% in 2015 to 8.5% last year.

Korea's market share in the Chinese domestic import market also declined from a peak of 7.9% in 2016 to 5.4% in 2018.

Sales and operating profit margins relative to investment by Korean companies in China also showed a downward trend. Examining the sales-to-investment ratio of Korean companies in China, it peaked at 7.3 times in 2013 and fell to 4.5 times in 2017.

The operating profit margin also decreased from 4.9% in 2013 to 3.8% in 2017. In the electrical and electronics and automobile sectors, market share sharply declined until last year due to a steep drop in semiconductor prices and sluggish sales of smartphones and passenger cars.

Data provided by the Federation of Korean Industries

The FKI forecasts that the market share of Korean companies in China will decline further. This is because, following the conclusion of the Phase One trade agreement between the U.S. and China, China has agreed to expand its purchases of American products and services.

China's imports of American manufactured goods are expected to nearly double from $78.8 billion in 2017 to $156.5 billion in 2021, with the import share rising from 9.1% in 2017 to 18.0% in 2021, an increase of 8.9 percentage points.

The U.S. market share in China's import market is projected to increase not only in manufactured goods but also in agricultural products, energy, and service sectors, making it even more challenging for Korean companies to penetrate the Chinese market.

Um Chiseong, Director of International Cooperation at the FKI, said, "China entered the era of a per capita GDP of $10,000 at the end of last year, and the Chinese government is also expanding the opening of its domestic market. Our companies must overcome the current difficulties and turn them into opportunities."

Director Um added, "Our companies need to benchmark those performing well in the Chinese market and reestablish mid- to long-term strategies. It is also necessary to consider diversifying the global supply chain in light of the COVID-19 pandemic."