China: Competitor and Partner in Non-IT Exports? Korea Gains as Substitute for Germany and Japan

Since 2020, China Expands Market Share

Korea Outperforms Traditional Powerhouses Germany and Japan

Market Share Increases, Led by High-Tech Items


Despite U.S. Tariff Impact, Korea's Non-IT Export Share to U.S. Falls Less Than Comp

Since 2020, China has rapidly expanded its share in the global non-IT export market. Nevertheless, compared to traditional manufacturing powerhouses such as Germany and Japan, Korea has shown relatively strong performance. Notably, Korea’s growth has been driven by increases in technologically advanced products, often in tandem with China’s rise. Looking forward, experts anticipate that non-IT exports will increasingly compete based on technological and quality advantages in high value-added categories, thereby limiting overall quantitative growth.

On May 29, the Bank of Korea published its May Economic Outlook, which included a report titled “Assessment of Competition in Non-IT Exports among Major Countries” by Taekmin Lee. Taekmin Lee, Head of the International Trade Team at the Bank of Korea’s Economic Research Bureau, explained, “While IT exports have recently benefited from the global expansion of artificial intelligence (AI) infrastructure investment, non-IT exports have continued to underperform due to intensifying competition with China and U.S. tariff policies.” He further noted, “Although Korea’s non-IT exports have stagnated since 2023, they still constitute a significant portion of our total exports, so we examined whether their competitiveness can be maintained.”

Containers are piled up at Pyeongtaek Port in Gyeonggi Province. Photo by Yonhap News

China Rises, but Korea Achieves ‘Tandem Growth’—Market Share Edges Up as Germany and Japan Take a Hit

Since 2020, China has increased its market share in the global market by improving technological capabilities and expanding production capacity, resulting in declines for traditional manufacturing leaders such as Japan and Germany. However, Korea’s market share has remained stable. In 2024, China’s share of the global non-IT heavy and chemical industry product market was 14.6%, up 3.6 percentage points from 11.0% in 2019. During the same period, Korea’s share edged up from 3.9% to 4.0%. In contrast, Germany’s share dropped from 12.4% to 11.1%, and Japan’s from 6.9% to 5.6%, each falling by 1.3 percentage points.

By sector, China’s market share increased across all categories—chemical products, steel products, machinery, and transportation equipment—while Germany and Japan lost ground. Korea saw a modest decrease in market share for steel products and machinery, but an increase in transportation equipment and other sectors.

A key finding is that there was a tendency for Korean products to rise in tandem with Chinese products in categories where China’s market share increased. According to Lee, “When plotting the global market share relationship between China and Korea for 2,311 detailed heavy and chemical industry items (based on Korea Customs Service classifications) from 2019 to 2024, the majority fell into the first quadrant (both China and Korea’s market shares rising).” In terms of export value, 60.8% of items where China’s share increased also saw an increase in Korea’s share, compared to just 20.4% for Japan and 23.6% for Germany. He added, “In categories where Korea’s market share expanded, Germany and Japan’s shares tended to decline, suggesting that our products, alongside those from China, are partially replacing existing German and Japanese products.”

Non-IT Exports to Shift Toward Technology and Quality Competition in High Value-Added Products

Korea has shown especially strong results in technologically advanced product categories. Lee explained, “When we analyzed detailed items by dividing them into quartiles based on the Product Complexity Index, we found that between 2020 and 2024, Korea’s exports of high-complexity products grew at an average annual rate of 6.8%.” He added, “This rate is higher than those for low-complexity (3.3%), lower-middle (3.0%), and upper-middle (2.1%) products, indicating an upgrading of Korea’s non-IT export portfolio.” Korea’s growth rate in high-complexity products also outpaced the global average (6.0%). While lower than China’s (11.8%), it surpassed Germany (5.2%) and Japan (2.3%), both of which have traditionally led in this market segment.

Comparing 2024 to 2019, China’s market share increased across all technology levels—high, upper-middle, lower-middle, and low. Germany and Japan, however, lost market share at every level. For Korea, market share declined in low-tech products but rose modestly for high, upper-middle, and lower-middle tech categories. Lee predicted, “In the future, non-IT export growth will be limited in quantitative terms, as competition will focus less on price for generic products and more on technology and quality in high value-added goods.”

Impact of U.S. Tariffs Limited for Korea; ‘High Tariffs on China’ Provide Indirect Benefit

Meanwhile, Korea’s non-IT exports to the U.S. have performed relatively well following U.S. tariff hikes. From the second quarter of 2025 through the first quarter of 2026, Korea’s non-IT exports subject to tariffs dropped by 12.8% year-on-year. However, Korea’s market share in the U.S. shrank by just 0.4 percentage points, a smaller decline than China (-1.9 percentage points), Japan (-2.1), or Germany (-2.2). Lee noted, “Even as ASEAN (Association of Southeast Asian Nations, +1.1 percentage points) and Mexico (+1.0) increased their shares as alternative supply bases for China, the decline in Korea’s share was limited.”

This is attributed to the relatively high tariffs imposed on Chinese products, which allowed Korean goods to partially replace Chinese products in the U.S. market. Lee stated, “In many detailed categories where China’s U.S. market share declined, Korea’s share increased. While this effect was less pronounced than for ASEAN or Mexico, Korea nevertheless benefited to some extent from the restrictions on Chinese products entering the U.S. market.”

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