[Great Transformation of Korea, Korea-Japan Future Cooperation] Changes in Numbers: 60 Years of Korea-Japan Industrial Partnership

60 Years of Korea-Japan Relations: Partners for Future Cooperation
Korea-Japan Trade Expands 352-Fold Over 60 Years, Reaching $77.2 Billion
From Vertical Division of Labor to Horizontal Cooperation: Intermediate Goods Now 77.5%
30% of Korean Exporters to Japan Have Japan as Their Main Client
Japanese Investment in Korea Doubles in One Year to $1.8 Billion
Over 95% of Companies in Both Countries Say "We Will Maintain or Expand Cooperation"
High Satisfaction With Cooperation: 76.7% of Korean Companies Say "Satisfied"

Since the normalization of diplomatic relations with the signing of the Korea-Japan Basic Treaty in 1965, industrial cooperation between the two countries has undergone both quantitative and qualitative transformation over the past 60 years.

According to the "60th Anniversary of Korea-Japan Diplomatic Normalization Corporate Cooperation Report" released by the Korea International Trade Association on June 20, the trade volume between the two countries expanded 352-fold, from $200 million in 1965 to $77.2 billion in 2024.

In the 1960s, Korea mainly exported raw materials and light industrial products to Japan and imported high value-added products, resulting in a vertical division of labor. However, recently, bilateral trade has become more active, centering on IT and heavy chemical products, leading to a shift toward a horizontal cooperative relationship. In particular, the proportion of intermediate goods exports increased significantly from 31.6% in 1988 to 77.5% in 2024, while the share of consumer goods decreased from 49.5% to 12.1% over the same period.

The share of trade itself has declined compared to the past. Korea's trade share with Japan, which was 39.8% in 1973, dropped to 5.9% in 2024, and Japan's trade share with Korea has remained around 6%. Nevertheless, both countries remain among each other's top trading partners.

The pattern of inter-company cooperation has also become more pronounced. As of 2024, there are approximately 12,700 Korean companies exporting to Japan, with about 30% classified as major exporters to Japan, with more than 70% of their exports going to the Japanese market. Japan, for its part, recognizes Korea as a major demand market. Japanese investment in Korea reached $1.8 billion in 2024, more than doubling from the previous year.

According to a survey of companies in both countries, 94.5% of Korean companies and 95.9% of Japanese companies responded that they intend to maintain or expand cooperation in the future. Notably, the satisfaction rate for cooperation among Korean companies dealing with Japanese materials and components firms reached 76.7%.

There were also clear calls for policy support. Companies in both countries cited "stabilizing the supply chain for materials, components, and equipment" as the top priority. Korean companies requested "seller-buyer matching" from the government, while Japanese companies called for "tax support."

The report analyzed that, based on the structure of cooperation centered on intermediate goods over the past 60 years, future cooperation is promising in four advanced sectors: mobility, next-generation semiconductors, bio, and critical minerals and energy. Specifically, it proposed: ▲ forming a MaaS (Mobility as a Service) technology consortium ▲ jointly operating a system semiconductor design R&D platform ▲ mutual certification of clinical data and safety evaluations ▲ joint resource development and building supply chains in third countries.

Support at the government level is also important. Consistent economic diplomacy and institutional support from both governments are required to establish a trust-based, long-term partnership. The report explained that it is necessary to provide tailored business opportunities to expand inter-company exchanges, support public research, and establish joint policy financing.

Kim Nayul, a researcher at the Institute for International Trade and Commerce, emphasized, "For Korea-Japan corporate cooperation to expand beyond simple product transactions to joint technology development and global market entry, institutional support and consistent diplomatic policies at the government level are essential."