South Korea, Japan export market competition reaches new high

Competition between South Korea and Japan in the global export market reached an all-time high last week as more than half of all products sold by the two countries competed directly with each other, a report by a local international traders organization showed Monday.According to the Korea International Trade Association (KITA), the export similarity index (ESI) between the two neighboring countries stood at 0.501, the first time ever that the indicator surpassed the 0.5 mark.A higher ESI number translates into the two countries competing in more markets, with a reading of 0.5 meaning the rivals are competing with at least half the products they ship abroad. KITA said last year’s numbers follow the trend that has been maintained since 2009, when the index stood at 0.455. In the following three years, South Korean companies have been competing more and more with products made by Japanese firms.In particular, competition in automobile parts stood at 0.560 last year, a record high for this sector, South Korea’s News Agency (Yonhap) reported.“The numbers clearly show that South Korean auto parts have become more competitive vis-a-vis Japanese rivals,” the association said.South Korea has been developing car parts as a key growth industry that can augment sales of automobiles abroad.He said that while Japan’s weak currency has not seriously affected South Korean products this year, there is a need to keep tabs on foreign exchange rates. A weaker Japanese year can hurt the price competitiveness of South Korean-made products. The latest report, moreover, showed competition in semiconductor equipment, autos, industrial machinery, steel, computer chips and plastic products was high.ESI numbers for semiconductor equipment, autos and industrial machinery stood at 0.766, 0.707 and 0.690 respectively.These products make up South Korea’s core exports to the global market.KITA latest data showed the ESI for South Korea and China, its largest export market, standing at 0.377.