South Korea's Non-IT Exports Hold Steady Against Germany and Japan Amid China's Manufacturing Surge

As China's manufacturing sector continues to grow, South Korea's non-IT exports are performing relatively well compared to traditional manufacturing powerhouses like Germany and Japan, according to an analysis by the Bank of Korea. The strengthening of export competitiveness, particularly in high-value items, suggests that South Korea is partially replacing products from Germany and Japan alongside China.

In a report titled "Assessment of Competitive Conditions Among Major Countries in Non-IT Exports," released on May 30, the Bank of Korea noted that while South Korea's non-IT exports have shown stagnation since 2023, they still account for more than half of the country's total exports.

However, recent trends indicate that non-IT exports are lagging behind IT exports due to intensified competition with China and the impact of U.S. tariff policies.

Despite the expansion of China's market share, the Bank of Korea assessed that South Korea's competitiveness remains relatively stable. By 2024, China's share of the global market for non-IT chemical products increased from 11.0% in 2019 to 14.6%, while Germany's share fell from 12.4% to 11.1%, and Japan's dropped from 6.9% to 5.6%. South Korea's share saw a slight increase from 3.9% to 4.0% during the same period.

In terms of specific sectors, China's market share rose across all categories, including chemicals, steel products, machinery, and transportation equipment, while Germany and Japan generally experienced declines. South Korea's share in steel and machinery products decreased slightly, but there were gains in transportation equipment and other categories.

Notably, in markets where China's share increased, South Korean products also often saw a rise. From 2019 to 2024, 60.8% of the items that experienced an increase in China's share also saw a corresponding rise in South Korea's share, compared to just 20.4% for Japan and 23.6% for Germany.

Lee Taek-min, a senior official at the Bank of Korea's International Economic Team, stated, "In categories where South Korea's share has expanded, there has been a tendency for Germany and Japan's shares to decline, indicating that our products are partially replacing those from Germany and Japan alongside Chinese products."
 
The competitiveness of high-tech items also appears to be relatively strong. An analysis based on the Product Complexity Index (PCI) showed that from 2020 to 2024, South Korea's export growth rate for high-tech items averaged 6.8%, surpassing the rates for low-tech (3.3%), lower-middle-tech (3.0%), and upper-middle-tech (2.1%) items.

This growth rate exceeds the global average of 6.0% and outpaces Germany's 5.2% and Japan's 2.3%. However, it remains lower than China's high-tech growth rate of 11.8%.

Despite the impact of U.S. tariff policies, South Korea's non-IT exports to the U.S. have been relatively resilient. Between the second quarter of 2025 and the first quarter of 2026, South Korea's exports of non-IT tariffed items to the U.S. decreased by 12.8% compared to the same period the previous year, but the decline in market share was limited to 0.4 percentage points.

The Bank of Korea noted that the imposition of high tariffs on Chinese products by the U.S. has restricted their entry into the American market, allowing South Korean products to benefit from a spillover effect. In fact, there have been numerous instances where South Korea's share increased in categories where China's share declined.

Lee added, "In the future, non-IT exports are expected to focus more on technological and quality competition in high-value items rather than price competition for generic products, which may limit quantitative growth. Our products seem to have also benefited somewhat from the U.S. tariffs on China."