South Korea's trade ministry has proposed a national strategy project to increase the country's advanced material and equipment production capability within the global value chain.
South Korea's exports rely heavily on the global value chain, or GVC, where a product's manufacture involves specialized activities in several countries. Only three countries are more reliant on the global value chain, but the GVC has been changing with the fourth industrial revolution and the changing global trade environment.
The Trade Ministry says that global value chains are becoming regionalized, with U.S. President Trump trying to keep the GVC of U.S. products within North America, China is keeping its GVC within China, Japan within ASEAN, and Germany within the EU.
China's increasing self-sufficiency of components amid the trade dispute with the U.S. has become a crisis and also an opportunity for South Korea.
The ministry's proposal focuses on forming a new GVC that can increase the exports of materials and equipment to China as they will continue to import such items from abroad.
It also said the government should promote M&As and innovation to adapt to the changing global value chain.
This proposal was taken into account when the government announced measures to eliminate the country's external dependent industrial structure as part of its efforts to cope with Japan's recently-imposed export curbs.
Meanwhile, a support team created by the government has started helping businesses that are affected by Japan's export curbs.
This team will focus on using extra funding, tax relief and deregulation to ease the burden on South Korean firms.
Hong Yoo, Arirang News.