Korea’s trade deficit with Japan totals $516 billion

Untitled-72.jpgKorea gained political independence from Japanese rule exactly 71 years ago. As far as the economy is concerned, however, the former seems to be still dominated by the latter. Since the two nations signed a trade pact to resume cross-border transactions in 1965, Korea has never recorded a trade surplus with Japan and the deficit has totaled $516 billion over the past five decades.
The annual deficit peaked at $36.1 billion in 2010 and is still massive at $10.5 billion for the first six months of this year. “Korea is now one of the most profitable exporters across the world but that is not the case with Japan and some oil-producing countries such as Saudi
Arabia,” said a Seoul analyst. “We cannot dramatically reduce imports from Japan because many of them are crucial components for our exports. The thing is that Japan does not consume Korean products for some reason.”
Korean enterprises, even flagship ones, have struggled to find their feet in the world’s third-largest economy. Hyundai Motor, Korea’s No. 1 automaker and global contender, advanced to Japan in 2000 with a great fanfare; but only managed to sell around 15,000 vehicles in 10 years, which prompted it to leave.
After then, the Korean carmaker shifted its focus to the United States and China. This is comparable to Japanese vehicles’ popularity in Korea ― 41,518 cars were sold here last year alone, although they lag behind German rivals such as BMW or Mercedes Benz.
Amore Pacific, Korea’s top cosmetics producer, entered Japan in 2006 with its premium brand but failed to make its presence felt. It eventually packed up there in late 2014. Samsung Electronics, the world’s primary smartphone maker, accounts for just 6 percent of the market in Japan where Apple and Japanese brands take the lion’s share.
Against this backdrop, Samsung came up with an eccentric marketing strategy last year of taking out its company name from its Galaxy S6 smartphones only in Japan.
Japanese people also prefer homegrown TV brands to those of Samsung and LG, the world’s two leading TV manufacturers that are far more popular than Japanese players in the global market. From the perspective of Samsung, there is a silver lining amid dark clouds ― its newly-launched Galaxy 7S Edge smartphone sold well in Japan this year, generating fresh hope for the upcoming jumbo Galaxy Note 7.
Korean liquor companies once flourished in Japan but saw their fortunes fall ― Japan-bound shipments of the Korean alcoholic beverage soju almost halved from 4.65 million boxes in 2011 to 2.42 million boxes last year.
Exports of makgeolli, the country’s traditional rice wine, sold briskly in Japan in the late 2000s and early 2010s thanks to the Korean wave but substantially shrank after that.
An outstanding exception would be Naver, Korea’s foremost Web portal, which chalked up a huge success with its Japanese subsidiary called Line. Thanks to its popular Line messaging applications, the firm went through initial public offerings in New York and Tokyo simultaneously last month and was valued at around $10 billion. News outlets said that Line’s tailor-made services for Japanese consumers are attributable to its success. But more than that, they seemingly don’t know that Line is a firm with Korean roots, according to observers.

< Source: KITA>



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