April 20, 2024

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[THE INVESTOR] Technology disparities between Korea and China in major industries including tech devices and automobiles are only five years apart, a report suggested Monday, raising concerns over the weakening competitiveness of Korean companies in overseas markets.

When comparing the level of product quality and technology of home appliances manufactured by Korean companies with that of Chinese competitors, the former group held 100 points for now with the latter standing about 10 points behind.

But in five years, Chinese companies are likely to reach the level of Korean companies in most market segments including steel and petrochemical, the Korea Institute for Industrial Economics and Trade said in the report.

In a survey of industry experts, the technology level of Chinese firms for mobile devices was also expected to grow from 92 points to 95 points in 2022, while the quality of automobile products was forecast to increase from 80 to 90 points, the state-funded research institute said.

Korean companies in most industries, except for display panels, are already falling behind their Chinese rivals in terms of price competitiveness. But the gap will also be narrowed down in the next five years, the report said.

Chinese companies are chasing fast after Korean firms largely because of the government-led industrial growth strategy, it added.

Through its five-year plan announced last year, the Chinese government aims to support local companies not only to expand their production capacity but also to improve the quality of products.

In most of the industries, the market presence of Chinese companies in foreign markets outgrew that of Korean companies. For instance, Korean carmakers took 5.2 percent of the automobiles market in 2014, coming behind Chinese firms that held a combined 5.6 percent.

To keep a lead in the market, the Korean government should ease related regulations and revise related system, the institute said in the report.

“Korean companies should also explore new industries and develop new products to differentiate themselves with Chinese rivals.”

By Cho Chung-un (christory@heraldcorp.com)