2024-08-06 03:07:43
Analysis of data from the National Bureau of Statistics of China by the Korea Chamber of Commerce and Industry
China’s inventory ratio increased from 1.68% at the end of last year to 4.67%
The technology gap is also rapidly narrowing… “We will catch up within 5 years”
Petrochemical company A has been suffering from management difficulties due to cutthroat competition with Chinese competitors for the past three years. Company A complained, “Since the price of Chinese products is only 70% of ours, we have no choice but to lower our prices to the minimum margin level,” and “It seems difficult to hold out for long as crude oil prices fluctuate between deficit and surplus.”
Company B, which produces core battery components, needs to export its products to the U.S., but is having a hard time due to the onslaught of low-cost Chinese products. Company B said, “We are minimizing the use of Chinese raw materials due to issues such as tariffs and quality, but as a result, we are losing price competitiveness,” and “Competitors are encroaching on the market by pushing ahead with cheap Chinese raw materials.”
There are concerns that China’s inventory is increasing again this year, and that the low-price push offensive is intensifying. It appears that our companies are suffering damage in various fields, including not only petrochemicals and batteries, but also textiles, clothing, cosmetics, and steel.
According to the analysis of data from the National Bureau of Statistics of China by the Korea Chamber of Commerce and Industry on the 6th, the finished product inventory ratio in China has been on a continuous upward trend since the beginning of this year. It peaked at 20.11% in April 2022, the worst recession ever, during the COVID-19 period, and fell to 1.68% in November last year, before rising to 4.67% as of June this year. The inventory ratio is a calculation of how much inventory is compared to the amount of products shipped. A higher inventory ratio means that inventory accumulation is faster than product sales. This is analyzed as the result of China’s inability to overcome an economic slowdown.
This has also led to results that have affected our corporate performance. According to a survey conducted by the Korea Chamber of Commerce and Industry on 2,228 manufacturing companies nationwide, 27.6% of the responding companies said they are affected by China’s low-price offensive. 42.1% said they are not currently affected but may be affected in the future. The remaining 30.3% predicted that there will be little or no impact.
The percentage of respondents who responded that the damage was great in each industry was the highest in batteries at 61.5%. Textiles and clothing were 46.4%, cosmetics 40.6%, and iron and steel 35.2%. The main damage (multiple responses) was ‘decrease in sales price’ (52.4%) and ‘decrease in domestic market transactions’ (46.2%).
China is now threatening our companies with rapid growth in technology as well as price. 73.3% of the responding companies answered that they will be overtaken by China in technology within 5 years. The largest number, 39.5%, answered ‘within 4~5 years’, followed by 28.7% within 2~3 years, and 5.1% within 1 year.
Kang Seok-gu, head of the investigation department of the Korea Chamber of Commerce and Industry, said, “The number of anti-dumping lawsuits filed by our companies on imported goods is usually 5 to 8 per year, but this year, 6 cases were filed in the first half of the year (January to June) alone.” He added, “Global trade disputes are expanding, so the government needs to come up with countermeasures.”
Reporter Park Hyeon-ik [email protected]
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2024-08-06 03:07:43