KITA News and Reports
  • Impact on US-China Trade Conflicts on Korean Companies “Limited”
    2018-05-03

     

    Impact on US-China Trade Conflicts on Korean Companies Limited

    - KITA’s survey, only 6.4% predicts their businesses will be damaged when the US place

    sanctions on Chinese products -

     

    Many have expected that the intensifying trade conflicts between the United States and China would bring significant damages on the Korean exporters to China. However, an analysis says that the real impact would be likely to be limited.    

     

    The Korea International Trade Association (Chairman, Kim Young-joo) conducted a survey titled ‘The impact of trade conflicts between the United States and China on Korean companies’ of 656 companies operating in China on April 30. According to the survey, only 42 companies (6.4%) responded that ‘the real damage is expected if the United States carries out restrictions on 1,333 items of China in accordance with the section 301 of trade act.’   

     

    It is appeared that there are 281 companies (42.8%) that export to the United States via China. Of those companies, 53 companies answered that ‘their businesses are directly or indirectly linked to sanctions on Chinese items under section 301 of the trade act. In particular, 78.6 percent of the 42 respondents, who answered that ‘they were worried about the damages caused by the US sanctions,’ expected ‘decrease in exports to China’, 35.7 percent expected ‘decline in exports of local corporations in China to the United States’, and 7.1 percent predicted ‘generation of costs to transfer production factories in China’ (duplicate responses included). 11 companies of the respondents said that there would be no damage despite US sanctions.

     

    Regarding the question about the expected damages on exports to China, the answers were ’decreased by 10% or less (48.4%)’, ‘decrease by 10~20%(33.3%)’ and ‘decrease by 20~30% (18.2%).

     

    Regarding the responses to the realization of the sanctions under the US section 301, 42.9 percent of respondents answered that ‘they will maintain the status quo without any special countermeasures’, 35.7 percent said ‘they will expand direct exports to the United States’ and 33.3 percent said ‘they will reduce their exports to China’.

     

    Park Jin-woo, manager at trade policy support group at the Korea International Trade Association, said, “Only about 5 percent of Korea's intermediate exports’ final destination is the United States and the impact of the trade conflicts between the two countries on the overall Korean exports would be limited, but the damages to individual companies could be significant and direct.” He stressed “During one month before the Unites States realize the sanctions on Chinese products, the Korean government, the related organizations and the trade industry need to monitor the progress of the negotiations between the two countries and jointly seek response strategies.

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