From the Sino-Korean trade, Which Mechanical and Electrical Products Exist Domestic Substitution Opportunities?

Since 2000, exports of electronic and chemical machinery products backed by capital technology have grown sharply, gradually dominating The South Korean export market. Electrical and mechanical products, chemical products and optical medical equipment are the main products exported to China by South Korea. Exports in 2018 were $88.04 billion, $22.33 billion and $13.62 billion, respectively, accounting for 76.5 percent of South Korea's total exports to China.

South Korea's exports of mechanical and electrical products to China have declined, but the industrial chain of foreign investment methods has been further strengthened. In the first half of 2019, South Korea's exports of mechanical and electrical products, chemical products and plastic rubber to China fell by 20.6%, 5.2% and 10.8%, respectively, to US$34.18 billion, US$10.08 billion and US$5.22 billion.

1) On the one hand, China's industrial structure adjustment continues, the domestic industry's independent research and development capacity has been enhanced;

2) On the other hand, since the implementation of the China-ROK FTA, the two sides have cut tariffs four times, and the convenience of foreign investment has been strengthened, which has to a certain extent enhanced the synergy between industrial manufacturing.

3) In 2019, japan and South Korea trade problems in the impact of the larger industries in semiconductors, the manufacture of mobile phone screen OLED panel fluoropyrimide, for semiconductor manufacturing photoresist and high-purity hydrogen fluoride and other three chemical raw materials, Japan and South Korea's trade problems have also accelerated South Korea's product substitution of China-related raw materials (some South Korean manufacturers began to purchase hydrogen fluoride for semiconductors and proved to be available).

From the perspective of Sino-Korean trade structure and industrial chain synergy, the impact of the industrial chain under the spread of the epidemic has also put pressure on the urgency of domestic work resumption. In the short term, normal industrial chain start-ups have been affected, and bilateral trade may have declined. However, the spread of the Japan-South Epidemic has led to limited bilateral trade with China, or to give China access to semiconductor core technology and new materials related industries in the field of domestic substitution space.