Overseas sales accounted for nearly a fifth of all products sold by Korean companies and the numbers are expected to continue rising in the future as countries ramp up protectionist policies, market data showed Sunday.
Data from the Bank of Korea and Export-Import Bank of Korea showed the foreign sales ratio for local firms standing at 18.8 percent in 2016, following efforts by companies over the years to build production facilities abroad.
(Yonhap)
Companies have actively built factories and various operations in foreign countries to circumvent growing protectionist trends.
Official figures showed the ratio of sales generated abroad was 13.9 percent of the total in 2009, with this number reaching 18.5 percent in 2014 and rising to 18.7 percent the following year.
"A rise in foreign sales is the natural development of companies moving some aspects of their operations abroad to avoid paying high tariffs, and in certain cases to take full advantage of low labor and production costs," an observer said. He said companies have been going to places like China and Vietnam for years, and that this trend actually accelerated in 2017 and 2018, although official data have yet to be released.
Samsung Electroics Co., Hyundai Motor Co. and LG Electronics have all made plans to enlarge and build production facilities in the United States, as Washington has warned of high import duties on foreign-made goods.
Such developments, meanwhile, are very worrisome for Asia's fourth largest economy as they may restrict investments made by companies in Korea. More money going abroad can leave companies with little means to allocate resources into local production facilities.
The BOK said that with the country's capacity utilization ratio remaining sluggish, protectionism trends and more corporate investment abroad, it has downgraded this years facility investment forecast to 1.2 percent growth, down from the 2.9 percent prediction released three months earlier.
Besides moving facilities abroad, which could affect local investment and production, rising domestic interest rates and large scale industrial restructuring could adversely affect how much goods are made in the country compared to those made abroad, it said. (Yonhap)