The survival rate for Korean exporters 5 years after their first entry into the Chinese market proves to be lower than European countries, the U.S., or Japan. Only 25 out of 100 survive.
According to a researcher of international trade at the Korea Trade Association who surveyed 87,000 Korean exporting companies from 2009-2014, the survival rate after a year was 54.6 percent; after 3 years, 34.7 percent; and after 5 years, 25.6 percent. Overall, only 26 out of 100 companies survived after 5 years.
The figures suggest that the viability of Korean export companies has slightly improved, as the figures are higher than those reported during the export boom of 2003-2008.
By item, exporters of used cars, plastics, clothes, and non-manufacturing products prove frequent stoppers, whereas exporters of pyrotechnics, machinery, and manufactured goods prove relatively more resilient.
By country, while China represents the largest export market, it is also the most challenging market for Korean exporters. The number of new exporters to China has recently declined, but the number of quitters has risen, indicating the worsening export conditions in China.
The viability of China as an export market for Korean exporters for the duration of a 5 year period marked 19.9 percent. The U.S. is ranked first, followed by Japan, the E.U., and ASEAN. China is trailing these countries.
Meanwhile, exporters point out the possibility of market expansion is the most critical factor to determine whether or not they continue exporting their production. The empirical analysis also testifies to that, showing a large number of exporting countries are more important than the wide range of goods they export.
Research fellow of the Institute of International Trade Chang Sang-sik said, “Those who discontinued exporting in 2014 reported that their exports from the previous year were worth US$2 billion. This means that if they continue to export, their exports will significantly contribute to the performance of the national export industry and their future export industries. As far as Chinese markets are concerned, rather than one-time support and matching, substantive types such as linking exporters up with local Chinese distributors, enhancing cooperation among Korean exporters, or localization support are necessary.