Semiconductors Alone Are Not Enough: K-Beauty and K-Food Must Lead the Way to $1 Trillion in Exports

Hyundai Research Institute Report: "1 Trillion Dollars in Exports Depends on K"

"South Korea’s exports are highly dependent on certain industries"

An analysis has indicated that in order to usher in the era of $1 trillion in exports, South Korea must move away from its semiconductor-centric structure and foster consumer goods industries such as K-Beauty and K-Food as new engines of growth.

In its report "1 Trillion Dollars in Exports Depends on K," released on the 24th, the Hyundai Research Institute diagnosed that, given South Korea's high dependence on certain industries for exports, the country must broaden its export base by focusing more on consumer goods and emerging industries.

According to the report, South Korea’s annual exports reached $709.3 billion last year, surpassing the $700 billion mark for the first time. However, the analysis also noted the structural limitations, pointing out that much of this growth was driven by the semiconductor boom.

In fact, while semiconductor exports increased by 22.2% year-on-year, the export growth rate for items excluding semiconductors was only 1.1%. This means that overall export growth was concentrated in a few categories. The institute analyzed global demand and market competitiveness for 20 major export items from 2022 to 2024 and classified them by type. Semiconductors, ships, and pharmaceuticals were cited as representative items that experienced both an expansion in market demand and improved competitiveness.

Latin America is emerging as a new market for K-Beauty. According to the Korea International Trade Association’s International Trade and Commerce Research Institute report titled "Analysis of the South American Beauty Import Market and Strategies for Local Expansion," beauty imports in South America reached $4.13 billion last year, steadily increasing at an average annual rate of 4.7% since 2021. The photo shows foreign customers selecting cosmetics at an Olive Young store in Seoul on the 24th. Photo by Yonhap News Agency

On the other hand, cosmetics and agri-fishery products were evaluated as cases where exports increased through enhanced competitiveness and differentiation strategies, despite challenging global market conditions. The institute classified these as "struggling type" items.

In particular, the competitiveness contribution of cosmetics and agri-fishery products rose by 22.2 percentage points and 14.0 percentage points, respectively, compared to 2023. The global popularity of K-Beauty led to increased overseas consumption, and the spread of K-pop and K-drama heightened interest in Korean food culture, which also contributed to the growth in agri-fishery exports.

Meanwhile, secondary batteries and fashion apparel were identified as items with declining exports due to weakened competitiveness, despite rising market demand. Petroleum products and displays showed sluggish performance, with both weakening demand and competitiveness occurring simultaneously.

The institute emphasized that, to achieve $1 trillion in exports, it is more important to establish a foundation for qualitative growth rather than simply expanding volume. In particular, it proposed the need to strengthen financial support and regulatory response assistance for consumer goods sectors with high growth potential. Additionally, it recommended a transition toward a high value-added, export-oriented structure through nurturing premium brands and enhancing technological competitiveness.

This content was produced with the assistance of AI translation services.