Chinese Cars Surpass Japan... First Time Ranking 3rd in Auto Imports

Korea International Trade Association H1 Trade Statistics
China Ranks Third in Import Value After Germany and the US
China Has Had Trade Deficit Since 2017 with Imports Exceeding Exports

BYD, a Chinese electric vehicle and battery company that participated in last year's Shanghai Auto Show, exhibition hall

[Asia Economy Reporter Choi Dae-yeol] Chinese-made cars have begun to be imported into South Korea more than Japanese-made cars. This is due to a persistent backlash against Japanese brands, which has led to a decrease in import volumes, alongside an increase in sales of Chinese makers, mainly commercial vehicles.

According to statistics from the Korea International Trade Association on the 18th, the import value of automobiles from China from January to June this year was $275 million, an increase of about 80% compared to the same period last year. By country, China ranks third in import volume, following Germany and the United States.

This is the first time China has ranked third among South Korea's automobile import countries. Until 2019, before the COVID-19 pandemic, China was outside the top 10 among South Korea's automobile import countries, but it rose to ninth place last year and has continued a steep upward trend this year.

Complete vehicle production line of China Shanghai Automotive

While automobile imports from China have steadily increased, exports have sharply shrunk over the past five to six years. Until about ten years ago, automobile trade with China was a 'foreign currency earning' sector with a surplus of tens of billions of dollars annually, but the situation has completely changed. The trade surplus reached $2.31 billion in 2011, but since then exports have decreased and imports have increased, resulting in a deficit since 2017.

In particular, after the deployment of the Terminal High Altitude Area Defense (THAAD) system in 2016, anti-Korean brand sentiment in China grew, causing a significant drop in export volumes, while imports have continued to increase by double digits annually. Last year's trade deficit was $278 million, and in the first half of this year alone it reached $234 million, with expectations of setting a new record by the end of the year.

Brands based in Europe such as BMW, Volvo, and Polestar have increased the volume of finished cars produced in factories in China and exported to South Korea. Recently, imports of Chinese brands, especially electric vehicles, have also increased considerably. China has long focused on the development and production of electric vehicles, rapidly increasing export volumes of various electric vehicles, including passenger cars and commercial vehicles.

In 2020, Elon Musk, CEO of Tesla, is taking a commemorative photo after the Model 3 customer delivery event at the Tesla Shanghai factory.

In the case of commercial vehicles, price competitiveness is important, so demand for inexpensive Chinese buses and trucks is increasing. According to data from the Kaizyu Data Research Institute, among newly registered commercial vehicle brands (buses, trucks, special vehicles) in the first half of this year, Dongfeng Sokon (2nd), Higer Bus (8th), Changan Automobile (9th), CHTC (11th), China National Heavy Duty Truck Group (12th), and King Long (13th) all made the list.

Until the first half of last year, sales per brand were only in the tens or less than ten units, but this year sales have increased to triple digits across the board. There have also been steady reports since the beginning of the year that BYD, emerging as the world's largest eco-friendly car maker, is preparing a passenger car sales network in the Korean market.

On the opposite side of China's rise, Japan's stagnation is noticeable. Japan, the world's third-largest automobile producer after China and the United States, had held the third place among South Korea's automobile import countries for over 20 years since 1999, except for two or three occasions before Toyota and Honda entered the Korean market. Despite indirect and direct trade barriers such as tariffs and the special nature of Korea-Japan relations, Japanese cars had firmly established themselves in the domestic market based on excellent product quality.

The trade dispute that erupted in 2019 caused mutual resentment between consumers in both countries, dealing a blow to the market. Nissan, one of Japan's three major makers, completely withdrew from South Korea. As of the first half of this year, the import value of Japanese cars was $263 million, a 45% decrease from last year. Japan fell to fifth place among import countries, following Germany, the United States, China, and the United Kingdom. An industry insider predicted, "Electric vehicles, whose demand is rapidly increasing recently, are receiving more attention for product quality from South Korean and Chinese companies than from Japanese ones, so there is little room for Japanese car imports to increase in the future."

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