7 out of 10 Domestic Manufacturers Affected by China's Low-Cost Push Aggression

KCCI Survey of 2,228 Manufacturing Companies
27.6% "Sales Impacted by Low-Cost Chinese Exports"
42.1% "Concerned About Future Damage"
Battery Companies Face 'Double Burden'

Due to China's low-price dumping offensive, 7 out of 10 Korean companies were found to have been affected in sales or orders, or to have a potential risk of damage in the future. Concerns are also rising that the low-price dumping offensive may prolong as the inventory of finished products in China is increasing again.

According to the Korea Chamber of Commerce and Industry on the 6th, a survey of 2,228 manufacturing companies nationwide showed that 27.6% of respondents said that low-priced exports from Chinese products have actually affected their sales and orders. Meanwhile, 42.1% of companies expressed concerns that although there has been no impact so far, there is a possibility of damage in the future.

The damage caused by China's low-price offensive was more severe in overseas export markets than in the domestic market. Among export companies, 37.6% responded that their performance was affected, significantly higher than the 24.7% of domestic companies who gave the same response. Also, the proportion of domestic companies (32.5%) who said they expect little or no damage in the future was higher than that of export companies (22.6%).

In particular, battery companies struggling with reduced demand for electric vehicles were facing double difficulties due to China's low-price offensive. By industry, the proportion of companies responding that their business performance has already been affected was highest in secondary batteries (61.5%), followed by textiles and apparel (46.4%), cosmetics (40.6%), steel and metals (35.2%), and electrical equipment (32.3%), all exceeding the overall industry average (27.6%).

On the other hand, industries such as automobiles (22.3%), medical precision (21.4%), pharmaceuticals and bio (18.2%), non-metallic minerals (16.5%), and food and beverages (10.7%) were found to be relatively less affected by the low-price offensive.

The damages experienced by domestic companies due to China's low-price offensive (multiple responses allowed) were mostly price declines (52.4%) and reduced transactions in the domestic market (46.2%). Other damages included decreased sales in overseas export markets (23.2%), reduced exports to the Chinese market (13.7%), and business downsizing or suspension due to poor performance (10.1%).

To respond to China's additional low-price and volume offensives, Korean companies cited strategies (multiple responses allowed) such as quality improvement through the development of high value-added products (46.9%), market base expansion through product diversification (32.4%), pioneering and targeting new export markets (25.1%), and cost reduction including labor costs (21.0%).

According to China's National Bureau of Statistics, the inventory rate of finished products in China sharply increased from 6.94% in October 2020 to 20.11% in April 2022 due to consumption and real estate market downturns during the COVID-19 period. Subsequently, as Chinese companies exported excess inventory overseas at low prices, the inventory rate dropped to 1.68% in November 2023, but it rose again to 4.67% as of June due to China's persistent economic slowdown.

Although Korean companies are preparing for the low-price offensive with technological capabilities and quality, survey results also showed that China's technological catch-up is accelerating, and it may catch up in technology within a few years.

Over the past five years, only 26.2% of companies responded that they have maintained technological and quality competitiveness superiority over Chinese competitors. Meanwhile, 47.3% said they still have an advantage but the technology gap has narrowed, and 22.5% said Chinese competitors have caught up to a similar level.

Among companies that responded they currently have technological superiority or are at a similar level compared to Chinese companies, 73.3% expected Chinese companies to surpass them in technology within five years (39.5% within 4-5 years, 28.7% within 2-3 years, and 5.1% within 1 year).

Regarding support policies needed to respond to the prolonged Chinese low-price offensive, the most cited was domestic industry protection measures (37.4%). Other responses included expanding research and development (R&D) support (25.1%), support for pioneering new markets (15.9%), expanding trade finance support (12.5%), and support for utilizing free trade agreements (FTA) (6.3%).

Kang Seok-gu, head of the Korea Chamber of Commerce and Industry's survey division, said, "The number of anti-dumping petitions filed by our companies against imported goods is usually 5 to 8 cases annually, but this year, 6 cases were filed in the first half alone," adding, "As global trade disputes continue to expand, the government's response stance must also change."

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