President Kim Jae-hong of Korea Trade-Investment Promotion Agency (KOTRA) (Photo: KOTRA)

President Kim Jae-hong of Korea Trade-Investment Promotion Agency (KOTRA) said there’s good and bad news when it comes to exports: The bad news is that the Korean export industry has shown a negative growth, but the good news is that the industry is undergoing a structural shift departing from an over-dependence on conglomerates and China. 

“A crisis is an opportunity, and despite minus growth, the Korean export industry has a possibility of restructuring when it is seen from the field: it’s departing from a focus on conglomerates and dependence on China,” KOTRA President Kim said in a recent interview. “I feel great responsibility as the chief of the Korean trade promotion agency for failing to meet the target of raising Korea’s two-way trade to $1 trillion for the second straight year.” 

Kim is painting a rosy picture in 2017 for the outlook of the Korean trade industry. He said, “The Korean economy shows signs of improvement coupled with the recovery of the global economy, so it (Korean trade industry) will likely post a plus growth next year.”  KOTRA is at the forefront of exports, with 126 trade offices in 86 countries. 

Kim, two years in office since taking the helm of the trade promotion agency, has made business trips equivalent to 224 days on 38 occasions: staying abroad one day out of every three. He traveled 600,000 km by air to 61 cities in 43 countries, equivalent to circulating the earth 15 times. His is known as “a military field commander.” 

Korea continued to suffer sagging exports in 2016. The nation saw exports in the first 11 months of the year decline 7 percent to $450.6 billion. It is the first time since 1958 that Korea posted minus export growth for a second straight year. Externally, the setback is attributable partly to the sagging global economy, changes in China’s growth strategies and low international crude oil prices. Internally, such structural problems as the weakening competiveness of the nation’s mainstay products and insufficient diversification of export items are also cited. 

“The export structure, cited as one of the chronic problems so far, shows signs of change. Now is a good opportunity for the Korean export industry to change its structure fundamentally,” Kim said. 

First, the Korean export industry is departing from a focus on conglomerates. SMEs’ portion of exports rose from 32.1 percent in 2012 to 35.8 percent in 2015 and 37.5 percent in the Jan.-Oct. period of 2016. The 5 percentage point rise may be attributed to the fact that the nation’s export base has been expanded, he said. 

A decline in Korea’s dependence on China for exports is considered to be desirable from the viewpoint of diversification. The nation’s portion of exports to China dropped from 26 percent in 2015 to 25 percent in the January-October period of 2016. 

A decline in the portion of 13 mainstay exports to China is an immediate worry, but it is assessed to be conducive in improving export structure, he said. China’s increased production in steel and chemical substances has dealt a blow to Korean related export companies, but export items have been diversified to consumer goods, agricultural & food items, household products, medical equipment and fashion & textiles, which have shown signs of sharp rise.

Korea needs to build a balanced export portfolio to prepare for inevitable global economic fluctuations. 

Of late, President Kim has made frequent trips to Vietnam, the sole country to which Korea has seen rising exports in 2016. The Southeast Asian country has emerged as Korea’s third largest export market following the United States and China. Korea needs to redouble efforts to make a foray into Vietnam whose economy has an annual economic growth of 6 percent by diversifying exports and distribution channels of the Vietnamese domestic market. Kim cites Myanmar, Cuba and Iran as Korea’s new export markets. 

KOTRA Aims to Recover Int’l Trade to over $1 Trillion in 2017  

KOTRA will spearhead a goal to help the nation see international trade recover to more than $1 trillion and attract $22 billion in foreign direct investment in 2017.

KOTRA said the agency will redouble efforts to secure lost momentum to boost exports with the goal of turning around the country’s international trade to more than $1 trillion next year. 

To this end, KOTRA plans to expand support to promising SME exporters and overhaul the support system in 2017. The agency will increase to 5,050 the number of SME beneficiaries from a program in which KOTRA’s overseas offices host them at their branches abroad. The number of beneficiaries from a program that aims to nurture “world champions” will rise to 200, while 6,300 SMEs will be given support for their participation in overseas exhibitions.

KOTRA will provide expert counseling services on solving exporting barriers and grievances to SMEs on a combined 33,000 occasions. Mobile teams will visit a total of 2,600 SMEs next year.

The number of centers that support the utilization of FTAs will rise from six in 2016 to nine in 2017, while the number of intellectual property desks from protecting the IP rights of Korean companies will increase to 12 in six countries.