Analysis of Competitiveness of the Material Parts Industry in Korea, China and Japan

Abstract

Purpose: This paper focuses on comparing and analyzing the changes in the competitiveness of Korea, China, and Japan in the global market. To this end, the changes in Korea’s competitiveness with China and Japan and structural characteristics are analyzed to observe the current status of the competitiveness of the Korean material parts industry. Research design, data, and methodology: The analysis target is 11 items in the material parts industry, and the trade Specialization Index was introduced as the analysis method. And the statistics introduced in the analysis are using the material parts database of the KOAMI and the UN Comtrade. Results: It was found that the competitiveness of the Korean material parts industry with China has declined significantly. Over the past 14 years, it has been observed that Korea’s dependence on China has risen significantly across all items, while China’s dependence on Korea has declined significantly. Meanwhile, it was observed that the overall competitiveness of the Korean material parts industry with Japan is improving. Over the past 14 years, Korea’s dependence on Japan has improved significantly in all items, while Japan’s dependence on Korea has increased significantly. Implications: First, the trade balance between the two countries is expected to change significantly due to the improved competitiveness of the Chinese material parts industry in Korea. This proves that China’s trade deficit with Korea has been sharply narrowing. Second, the trade imbalance between the two countries is expected to improve significantly due to the improved competitiveness of the Korean material parts industry with Japan. Nevertheless, as Korea’s dependence on Japan is relatively higher than that of Japan in Korea, it is expected that it will take a long time to resolve the trade deficit.