Although China is the world’s number one exporter with global shipments valued 4.1 times higher than those for fifth-place South Korea, that doesn’t mean that South Korea is devoid of competitive advantages doing business with its bigger international trade rival.
Sure, China maintains many profitable relationships encompassing a wide range of goods that it ships to its Korean customers due to an abundance of resources and greater population. Less well-known is the fact that South Korea still enjoys significant trade product strengths that result in counterbalancing positive cashflows from China, albeit from a smaller set of products.
China Top 10
Chinese Product Advantages Versus South Korea
Below are the top 10 goods for which China enjoyed a higher dollar value from its exports to South Korea after subtracting what it spent on Korean imports for those same types of products. Technically, a country’s exports minus imports is known as “net exports” which can be a positive amount (indicating a surplus) or a negative number (indicating a deficit).
- Phone system devices: US$10.7 billion surplus win for South Korea
- Flat-rolled other alloy steel products: $1.8 billion
- Alloy steel bars, rods: $1.6 billion
- Insulated wire/cable: $969.4 million
- Miscellaneous iron and steel structures: $884.8 million
- Monument/building stones, art: $851.4 million
- Flat-rolled stainless steel items: $812.4 million
- Women’s clothing (knit or crochet): $793.7 million
- Cases, handbags, wallets: $744.9 million
- Electrical converters/power units: $713.8 million
Among these, flat-rolled stainless steel items (up 423.1%) and knit or crochet women’s clothing (up 139%) increased their net revenues for China from export sales to South Korea by the highest percentages from 2012 to 2014.
South Korea Top 10
Korean Product Advantages Versus China
Essential components for consumer electronic goods, integrated circuits and microassemblies represent the number one export for which South Korea shows the strongest sales advantage compared to similar product exports from China to South Korea. In second place are sophisticated tools reflecting the latest technological trends as well as Korea’s reputation for high quality workmanship.
- Integrated circuits/microassemblies: US$45.1 billion surplus win for China
- Liquid crystal/laser/optical tools: $15.1 billion
- Precious/semi-precious stones (unstrung): $10.4 billion
- Cyclic hydrocarbons: $7.6 billion
- Processed petroleum oils: $5 billion
- Acyclic hydrocarbons: $3.1 billion
- Automobile parts/accessories: $2.8 billion
- Computer parts, accessories: $2.5 billion
- Ethylene polymers: $2.2 billion
- Machinery for making semi-conductors: $2.1 billion
By far the fastest-growing Korean product win versus China is unstrung precious and semi-precious stones, posting a $10.4 billion surplus compared to just a $3.7 million surplus during 2012. This shows heightened demand from the growing Chinese middle class.
South Korea’s edge over Chinese computer parts and accessories improved in value by 111.9% from 2012 to 2014.
The Winner Is
Final Scorecard for Trade War: China Versus South Korea
Led by the iron and steel metals category, South Korea earned an overall $89.8 billion surplus in its international trade with China during 2014.
From a more granular perspective, the Harmonized Tariff Schedule has 97 product categories at the two-digit summary level. China held positive balances in 66 of those 97 categories (68%) for a $25.8 billion subtotal, led by the following:
- Iron, steel: $4 billion surplus win for China
- Knit or crochet clothing, accessories: $2.4 billion
- Clothing (not knit or crochet): $2.3 billion
- Furniture, lighting , signs: $1.7 billion
- Articles of iron or steel: $1.6 billion
- Fish: $1.3 billion
- Footwear: $1.2 billion
- Stone, plaster, cement: $899.7 million
- Ceramic products: $825.3 million
- Leather, animal gut articles: $807.9 million
These 10 product categories account for 70.7% of the total value of Chinese product-specific surpluses trading with South Korea.
South Korea dominated the remaining 31 product categories subtotaling $115.5 billion in surplus, led by the following:
- Electronic equipment: $39.7 billion surplus win for South Korea
- Optical, technical, medical apparatus: $18.2 billion
- Organic chemicals: $11.4 billion
- Plastics, plastic articles: $10.7 billion
- Gems, precious metals: $10.4 billion
- Machinery: $8.4 billion
- Mineral fuels including oil: $7.4 billion
- Vehicles : $4.3 billion
- Copper: $1.2 billion
- Rubber, rubber articles: $787.3 million
The above categories represent 97.3 % of the total value of Korean product-specific trade surpluses gained at China’s expense.
See also South Korea’s Top 10 Exports, Highest Value South Korean Export Products, Chinese Major Product Supply Advantages and China’s Top Import Partners
Research Sources:
The World Factbook, Country Profiles, Central Intelligence Agency. Accessed on January 8, 2016
International Trade Centre, Trade Map. Accessed on January 8, 2016
Investopedia, Net Exports Definition. Accessed on January 8, 2016
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