The Bank of Korea: "Secondary Battery Competitiveness at the World's Top Level... Improvement Needed in Bio and Display"

Report on the Global Competitiveness and Risk Factors of Major Domestic New Growth Industries

[Asia Economy Reporter Seo So-jeong] Among domestic new growth industries, the global competitiveness of semiconductors and electric vehicles has increased, while the competitiveness of secondary batteries is at a top-tier level. Biohealth and display sectors were evaluated as having room for improvement.

On the 30th, the Bank of Korea released a report titled "Evaluation of Global Competitiveness and Risk Factors of Major Domestic New Growth Industries," stating that domestic companies in new growth fields have advantages over overseas companies in terms of market share and growth potential, but profitability and innovation have room for improvement.

According to the report, domestic new growth industries are leading Korea's exports and investments based on high competitiveness. The contribution rate of new growth industries to the domestic total export value-added amount rose from around 20% in 2015 to about 24% since 2020.

From the corporate perspective, domestic new growth companies showed higher growth and profitability compared to other companies, and their research and development (R&D) investments also increased rapidly. In particular, during 2020, when the COVID-19 crisis occurred, the operating profit of KOSPI companies in new growth sectors (excluding Samsung Electronics and SK Hynix) increased by about 34% compared to the previous year. For other companies, it was only 1%.

However, while domestic companies showed high growth potential through active investment and market entry, profitability and innovation were analyzed to be somewhat lower than those of overseas companies. Based on financial statements of over 320 listed companies domestically and internationally, a comparison of profitability and innovation showed that the operating profit margin (average from 2016 to 2020) and the ratio of R&D expenditure to sales (as of 2020) of domestic companies were below the global corporate average.

By industry, the semiconductor industry maintained its status as a global frontier mainly in the memory sector, but the display industry’s global market share gradually declined due to intensified competition with China. The electric vehicle sector saw a significant increase in domestic companies’ export market share, and secondary batteries demonstrated competitiveness at a global top-tier level. The biohealth sector improved its international credibility amid the COVID-19 crisis and expanded the proportion of high value-added products thanks to technological investments; however, the global market share of domestic companies remained minimal.

In particular, unstable raw material supply due to the Ukraine situation and the global value chain (GVC) restructuring movement have emerged as major risks.

The report expressed concern, stating, "The recent increase in supply chain vulnerabilities and raw material supply instability could negatively affect new growth industries that heavily depend on essential raw materials from abroad," and "If overseas production increases due to the U.S.-centered supply chain restructuring, the growth-enhancing effect of new industries may weaken." It also noted that as the technological gap with overseas latecomer companies such as China narrows, the global market leadership of domestic new growth industries may weaken.

The report added, "For the sustainable growth of domestic new growth industries, qualitative growth measures through technological innovation and human capital accumulation must also be explored," and "Efforts to minimize side effects such as the decline of existing industries, growth without employment, and worsening imbalances between sectors are also necessary."

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