The Evolving Structure of Korea-China Supply Chains in High-Tech Industries and Korea's Response

Eun Kyo Cho () and Woojung Shim ()
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Eun Kyo Cho: Korea Institute for Industrial Economics and Trade, Postal: Sejong National Research Complex, Korea Institute for Industrial Economics and Trade, 370 Sicheong Dae-ro C-dong 8-12F 30147, Republic of Korea, http://www.kiet.re.kr
Woojung Shim: Korea Institute for Industrial Economics and Trade, Postal: Sejong National Research Complex, Korea Institute for Industrial Economics and Trade, 370 Sicheong Dae-ro C-dong 8-12F 30147, Republic of Korea, http://www.kiet.re.kr

No 24/5, Research Papers from Korea Institute for Industrial Economics and Trade

Abstract: As trade tensions between the US and China ratchet up and spur a wholesale transformation of global supply chains, structural changes to the trade relationship between South Korea and China have become inevitable. This is likely to be most pronounced in high-tech industries, such as semiconductors, batteries, and pharmaceuticals, where there is already a well-established cross-border division of labor. In this paper, we analyze the structure of Korea-China supply chains with respect to the three high-tech in­dustries listed above. We find that Korean semiconductor, battery, and pharmaceutical companies all rely heavily on China for materials. Korean firms source key intermediates and parts and use China as a base for entering other countries, and together these factors constitute the primary driving force underpinning Korea’s high dependency on Chinese suppliers. In this paper, we argue that Korean industries need to internalize and diversify their supply chains to reduce their de­pendency on Chinese materials while also seeking out new models of cooperation to capitalize on Chinese infrastructure, technology, and markets as well as Chinese companies’ growing interest in using Korea as a production base.

Keywords: semiconductors; batteries; supply chains; Korea-China supply chains; high-tech supply chains; high-tech industry; pharmaceuticals; supply chain diversification; IRA; battery policy; industrial policy; semiconductor policy; Korea; KIET (search for similar items in EconPapers)
JEL-codes: F13 F15 F21 F23 F51 F52 (search for similar items in EconPapers)
Pages: 11 pages
Date: 2024-03-29
New Economics Papers: this item is included in nep-cna, nep-int and nep-inv
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