South Korea’s economic decoupling from Japan has accelerated after Tokyo’s export restrictions last year prompted Korean businesses to achieve tech self-sufficiency and diversify supply sources.
The share of Japanese imports in Korea fell to 9.0 percent in the fourth quarter of 2019 from 9.8 percent in the first quarter, according to a report by the Korea Chamber of Commerce and Industry (KCCI) released on Sunday.
The percentage of Japanese imports in the industrial components and parts sector actually rose to 16.0 percent from 15.7 percent during the same period, despite being the primary target of Tokyo’s trade curbs.
In July 2019, Japan restricted Korea-bound exports of three materials critical for the production of semiconductors and displays, Korea’s key export items. Tokyo later removed Korea from its list of trusted trade partners with preferential export controls, which led Korea to strike Japan off its own whitelist in a tit-for-tat move.
Japan’s actions were widely seen as retaliation for a Seoul court ruling that ordered Japanese firms to compensate Korean victims for their forced labor during the Japanese colonial rule from 1910 to 1945.
Japanese imports in Korea last year totaled $47.6 billion, accounting for 9.5 percent of the country’s total imports. It was the first time the figure had dropped to a single digit since data compiling started in 1965, KCCI said.
“Korean businesses were able to avoid the blow of Japan’s trade restrictions by replacing Japanese parts and materials with homegrown substitutes and diversifying their trade portfolio,” KCCI said in the report. The export curbs instead had the effect of prompting other industries to reduce their reliance on Japan, it added.
Roughly 84 percent of Korean companies said they suffered no damage from the curbs, according to a survey by KCCI and Korea Trade-Investment Promotion Agency. Out of the 302 Korean companies doing business with Japan, as much as 91 percent said the restrictions had “no major impact” on their corporate competitiveness.
About 85 percent of the companies praised the Korean government’s response against the Japanese curbs, such as R&D assistance and stabilization of supply chains.
By Lim Hyung-joon and Kim Hyo-jin
[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]