Korea needs to redesign its trade structure to address export slump

[Photo by Yonhap]

The Korea Chamber of Commerce and Industry (KCCI) released a report on Wednesday, emphasizing the need for South Korea to reorganize its trade structure and strengthen its technological competitiveness to overcome sluggish exports caused by global market dynamics.

The report titled “Changes in the Global Trade Structure and Responses” presented key strategies for the country to address its export slump. These included shifting away from a heavy reliance on China, seizing opportunities in the evolving market landscape, enhancing economic diplomacy to restructure the current trade structure and providing policy support to strengthen technological competitiveness.

The report stressed the importance of proactively seizing market opportunities within the global trend of supply chain diversification away from China. The Economist recently proposed the concept of Altasia as an alternative to the Chinese supply chain. The term is a combination of alternative and Asia and includes 14 major Asian countries, including South Korea.

“Among the countries identified as part of Altasia, only a very few countries, including Korea, possess a combination of excellent technological capabilities, human capital, stable societal infrastructure, and suitable market environments for serving as test beds,” said Lee Boo-hyung, a director at the Hyundai Research Institute.

He further emphasized the need for the Korean government to enhance economic diplomacy, rebuild its strategy for trade with China and make reasonable adjustments to domestic regulations that hinder corporate investments, to position Korea as an attractive alternative within global supply chains.

The report also called for the restructuring of trade composition through the enhancement of economic diplomacy. It suggested expanding the focus from certain countries to high-growth regions such as the Indian-Pacific countries and the Middle East and African markets. Furthermore, it emphasized the importance of diversifying export products, which are currently concentrated in sectors such as semiconductors.