One Year After Japan's Export Restrictions, South Korea's Semiconductor and Display Materials, Parts, and Equipment Competitiveness 'Rises'

'Changes in Competitiveness of Materials, Parts, and Equipment' Survey
Semiconductor and Display Industries 92.7→98.7

[Asia Economy Reporter Dongwoo Lee] It has been found that the competitiveness of domestic major companies importing materials, parts, and equipment (SoBuJang) from Japan has improved compared to one year before the export regulations. However, since it still remains at around 90% of Japan's level, efforts to localize SoBuJang and strengthen competitiveness are necessary.

On the 30th, the Federation of Korean Industries (FKI) commissioned Mono Research, a market research specialist company, to conduct a survey on 'Changes in materials, parts, and equipment competitiveness one year after Japan's export regulations' targeting 149 Korean companies among the top 1,000 non-financial companies by sales in 2019 that have import transactions with Japan. The results showed that assuming Japan's SoBuJang competitiveness was 100 in July last year, Korea's SoBuJang competitiveness rose from 89.6 in the same period last year to 91.6 this month.

By major industry, the electronic components, computers, video, audio, and communication equipment manufacturing sector, which includes semiconductors and displays, increased the most from 92.7 to 98.7. This is interpreted as reflecting efforts to strengthen competitiveness following Japan's export regulations on three major items?hydrofluoric acid, photoresist, and fluorine polyimide?one year ago. Next, competitiveness rose in ▲primary metal manufacturing from 88.1 to 92.5 ▲food manufacturing from 91.9 to 96.3 ▲other machinery and equipment manufacturing from 97.0 to 101.0 ▲chemical substances and chemical products manufacturing from 96.1 to 97.8.

Regarding actual difficulties experienced in importing SoBuJang after Japan's export regulations, 45.6% responded that there were 'no actual difficulties,' which was higher than the 23.5% who said there were 'difficulties.'

This result reflects that Japan's measures often did not lead to actual export restrictions. In fact, 68.5% of the surveyed companies continued to import SoBuJang from Japan as before without switching to domestic or third-country suppliers after the export regulations. However, the remaining 31.5% of companies sought changes in supply sources such as localization of SoBuJang after the export regulations and reported replacing an average of 3.35% with suppliers outside Japan.

Regarding corporate responses, more than half of the companies trading with Japan did not take separate measures against the export regulations and Korea's removal from the white list. The response 'no separate response' was the highest at 57.1%, followed by 'securing alternative import sources outside Japan (18.8%)' and 'securing domestic suppliers (17.4%).' Other responses included 'self-production of parts and materials (4.0%)' and 'changing product portfolios such as production items (2.7%).'

Regarding the need to improve Korea-Japan relations, 66.4% (16.1% very necessary + 50.3% somewhat necessary) responded that improvement is needed, which was overwhelmingly higher than the 3.4% who said improvement is unnecessary.

For the most appropriate measures to improve Korea-Japan relations, companies responded most highly to ▲'diplomatic compromise between the Korean and Japanese governments (66.4%)', followed by ▲'utilization of international arbitration means such as the WTO (11.4%)' and ▲'U.S. mediation between Korea and Japan (7.4%).' The perception of the need for diplomatic compromise between the two governments increased by about 25.9% compared to the 40.5% who responded that diplomatic compromise was necessary in a survey conducted by FKI in July last year, indicating that companies have higher expectations for restoring relations through diplomatic efforts by both countries.

Kim Bong-man, head of the International Cooperation Office at FKI, said, "During the one year of Japan's export regulations, the competitiveness of our SoBuJang has somewhat improved through government and corporate efforts, but it is difficult to raise SoBuJang competitiveness to Japan's level in a short period." He added, "We hope for continuous efforts from both the public and private sectors to strengthen SoBuJang competitiveness, and also for active efforts by both governments to resolve the export regulations."

This content was produced with the assistance of AI translation services.