Korean Manufacturers Face Mounting Pressure as Chinese Technology Surpasses Their Own
SEOUL - A new report from the Korea chamber of Commerce and Industry (KCCI) reveals a growing sense of urgency among Korean manufacturers as they grapple with rapidly advancing Chinese technology and increasingly competitive pricing. The study, released today, indicates a significant shift in the technological landscape, with 57% of responding companies believing China will catch up to or surpass Korean technology within the next 15 years.
The findings paint a stark picture of eroding competitive advantages for Korean businesses. Historically recognized for speed and quality, Korean manufacturers are now facing challenges on both fronts. A ample 84.6% of companies surveyed reported their products are more expensive than Chinese equivalents, with over half (53%) stating Chinese products are more than 30% cheaper. Furthermore, 42.4% of respondents found Chinese production speeds to be faster than their own,compared to 35.4% who believed Korea maintained the lead.
The KCCI report highlights the anticipated impact of this trend, with 69.2% of companies predicting a decrease in their global market share and sales within the next three years. This pessimism underscores a growing concern that the “mistakes of the continent are a thing of the past,” as the KCCI stated, referencing a historical perception of lower quality Chinese goods.
The report identifies several factors contributing to this shift, including insufficient government support, a restrictive regulatory habitat, and a counterproductive incentive structure that penalizes company growth through decreasing deduction rates.Lee Jong-myeong, head of the Industrial Innovation Division of the Sangsan, emphasized the need for a strategic response.”We must acknowledge that Korea’s manufacturing competitiveness is relatively weak, select areas where we can have a comparative advantage, and provide intensive support,” he said. “In order to avoid losing more of the global pie, we need a bold shift to growth-oriented policies so that our companies can invest more and develop technological capabilities.”
