Ministry of Trade, Industry and Energy

Export and Import Trends for July of 2014

In 2014, prompted by the recovery of the advanced economies, Korea recorded an export growth and the largest ever import growth. * Export growth rate (%): ('14.3) 3.7 → (4) 8.9 → (5) -1.4 → (6) 2.5 → (7) 5.7 * Import growth rate (%): ('14.3) 3.6 → (4) 5.0 → (5) 0.3 → (6) 4.1 → (7) 5.8 Exports to the US (petrochemicals and mobile devices) and EU (automotive and mobile devices) grew thanks to the recovery of the advanced economies, and exports to Japan in particular (oil products and steel) saw a turnaround towards growth over the three months. Imports of raw materials, capital goods and commodities grew, with raw materials leading the import growth. Among raw materials (61% of Korea’s imports), imports of crude oil (unit price hikes) and oil products (naphtha and bunker fuel oil C) grew. Among capital goods (28% of Korea‘s imports), imports of equipment for semiconductor manufacturing, car parts and parts for mobile devices grew. Among commodities (11% of Korea‘s imports), automotive imports conspicuously grew. Korea’s exports continued to grow in July thanks to robust exports to the advanced economies, although the fact that exports to China have declined for three consecutive years is worrying. As a matter of urgency, government bodies will be working together to respond to the slowdown in exports to China. It is expected that Korea’s exports will continue to grow thanks to the recovery of the advanced economies. date2014-08-04

Development of a Fully Fledged Robotics Industry through Convergence with Other Industries

The 1st Vice Minister for Industry in the Ministry of Trade, Industry and Energy said, “In order to develop the Korean robotics industry into a key industry, we need to secure core technology and increase the demand for robots within the business and service models of other industries. The government will provide intensive support.” Before announcing the 2nd master plan, the Ministry of Trade, Industry and Energy, released the following results of the 2013 robotics industry survey (July 2014, Korea Institute for Robot Industry Advancement). ▴Domestic robotics market (production): KRW 2.1 trillion in 2012 → KRW 2.2 trillion in 2013 (up 4.1%) ▴Robotics exports: KRW 595.3 billion in 2012 → KRW 737.6 billion in 2013 (up 23.9%) ▴Number of robotics businesses: 368 in 2012 → 402 in 2013 (up 9.2%) ▴Number of jobs in the robotics industry: 10,515 in 2012 → 11,478 in 2013 (up 9.2%) date2014-07-28

Sales Trends of Major Distributor for June 2014

The sales of supermarkets declined by 5.9% year-on-year and by 6.7% month-on-month in June 2014. The overall sales decline is attributed to the weaker seasonal sales due to temperatures being lower than in the previous year, as well as there being less operating days on holidays (-1 day). Quarterly sales also declined for the ninth consecutive quarter since the 2nd quarter of 2012, but the pace of the sales decline has been slowed. * Year-on-year sales growth/decline by quarter: (1Q 2012)0.1, (2Q 2012)-5.1, (3Q 2012)-3.8, (4Q 2012)-4.5, (1Q 2013)-8.4, (2Q 2013)-3.4, (3Q 2013)-4.3, (4Q 2013)-3.8, (1Q 2014) -3.3, (2Q 2014) -2.9 As the sales growth in May 2014 due to the seasonal demand in the so-called Month of Family has been normalized, overall sales has declined month-on-month in June 2014.   [Sales Growth Rate by Category] Non-Foods ○ Home Appliances and Culture - Year-on-Year (Monthly) : 0.5 - Year-on-Year (Quarterly) : 5.7 - Month-on-Month : -7.1 ○ Apparel - Year-on-Year (Monthly) : -14.7 - Year-on-Year (Quarterly) : -9.2 - Month-on-Month : -20.6 ○ Household Supplies - Year-on-Year (Monthly) : -7.8 - Year-on-Year (Quarterly) : -4.9 - Month-on-Month : -1.8 ○ Sports - Year-on-Year (Monthly) : -10.9 - Year-on-Year (Quarterly) : -4.6 - Month-on-Month : -11.2 ○ General Merchandise - Year-on-Year (Monthly) : -13.3 - Year-on-Year (Quarterly) : -8.8 - Month-on-Month : -10.1 ○ Subtotal - Year-on-Year (Monthly) : -7.6 - Year-on-Year (Quarterly) : -3.4 - Month-on-Month : -7.8     ○ Foods - Year-on-Year (Monthly) : -4.5 - Year-on-Year (Quarterly) : -2.5 - Month-on-Month : -4.3 ○ Total - Year-on-Year (Monthly) : -5.9 - Year-on-Year (Quarterly) : -2.9 - Month-on-Month : -6.7       Sales of department stores also declined by 4.6% year-on-year, and by 14.1% month-onmonth. There was a particularly strong decline in the apparel category due to the worsened consumer confidence compared to the same period of the previous year, and the sales declined in most categories. Year-on-year quarterly sales also declined, for the first time since the 3rd quarter of 2012. * Year-on-Year Quarterly Sales Growth/Decline : (1Q 2012)-0.2, (2Q 2012)-1.4, (3Q 2012)-2.9, (4Q 2012)2.6, (1Q 2013)0.0, (2Q 2013)1.0, (3Q 2013)2.4, (4Q 2013)1.0, (1Q 2014) 1.1, (2Q 2014) -1.6 As the sales growth in May 2014 due to the seasonal demand in the so-called Month of Family has been normalized, the overall sales has declined month-on-month in June 2014.     [Sales Growth Rates by Product of Department Stores] Non-foods ○ General Merchandise - Year-on-Year (Monthly) : -5.8 - Year-on-Year (Quarterly) : -3.7 - Month-on-Month : -21.5 ○ Women’s Formal Dress - Year-on-Year (Monthly) : -3.6 - Year-on-Year (Quarterly) : -2.3 - Month-on-Month : -10.0 ○ Women’s Casual - Year-on-Year (Monthly) : -6.7 - Year-on-Year (Quarterly) : -4.7 - Month-on-Month : -17.4 ○ Men’s Apparel - Year-on-Year (Monthly) : -12.4 - Year-on-Year (Quarterly) : -5.7 - Month-on-Month : -10.7 ○Kids & Sports - Year-on-Year (Monthly) : -4.9 - Year-on-Year (Quarterly) : -0.6 - Month-on-Month : -23.9 ○Household Supplies - Year-on-Year (Monthly) : -1.3 - Year-on-Year (Quarterly) : 2.3 - Month-on-Month : -1.9 ○Foreign Premium Brands - Year-on-Year (Monthly) : -1.6 - Year-on-Year (Quarterly) : 2.2 - Month-on-Month : -4.7 ○Subtotal - Year-on-Year (Monthly) : -5.1 - Year-on-Year (Quarterly) : -1.9 - Month-on-Month : -14.9 ○Foods - Year-on-Year (Monthly) : -0.2 - Year-on-Year (Quarterly) : 1.3 - Month-on-Month : -9.1 ○Total - Year-on-Year (Monthly) : -4.6 - Year-on-Year (Quarterly) : -1.6 - Month-on-Month : -14.1 Sales of convenience stores grew by 6.3% year-on-year, and declined by 0.5% month-on-month. While sales grew compared to the previous year thanks to the increase of stores and the incr date2014-07-25

FDI Trend for the 1st Half of 2014

The amount declared was USD 10.33 billion, with year-on-year growth of 29.2% (from USD 8 billion in the previous year). The amount received was USD 7.2 billion, with year-on-year growth of 55.9% (from USD 4.62 billion in the previous year). The materials and parts sector accounted for 87.0% (USD 3.01 billion) of FDI going to manufacturing, with year-on-year growth of 84.7%. It is expected that FDI will contribute to improvement in the value chain.* ● This is the process whereby value adds are created during business activities. Investments in materials and parts manufacturers in Korea, and in domestic large enterprises that generate demand, are contributing to the creation of a self-contained industrial ecosystem in Korea. FDI from China and the EU grew by 200.2% and 31.1%, respectively, to USD 2.39 billion and USD 3.26 billion, while FDI from the US and Japan declined by 0.4% and 15.2%, respectively, to USD 2.51 billion and USD 1.15 billion. Most notably, as the food industry and the cultural content industry have evolved new investment models in China, it is expected that advances into China by Korean businesses will increase through local cooperation. The M&A and greenfield investment approaches to FDI saw growth of 41.5% and 20.4% respectively, to USD 4.73 billion and USD 5.61 billion. date2014-07-23

Framework for Korea-China FTA Service and Investment Negotiations Built at the 12th Korea-China FTA

The 12th Korea-China FTA negotiation took place at EXCO, Daegu, over a five-day period from July 14, 2014 (Mon) through July 18, 2014 (Fri). Chief FTA Negotiator Woo Taehee of the Ministry of Trade, Industry and Energy, led the Korean delegation team, which consisted of members of related government agencies. The Chinese delegation team, which consisted of members of related government agencies, was led by Shouwen Wang, Assistant Minister of the Ministry of Commerce. During this negotiation, the two countries discussed all areas of the FTA, including goods, services and investments, Rules and areas of cooperation. In relation to goods, the two parties exchanged views on and focused on narrowing the gap on the terms of early tariff exemption on China’s manufacturing sector and on agricultural and fisheries goods, a sensitive issue for Korea. The two countries reached an agreement on the approach to market opening, which has been the biggest issue in the services and investment area. In relation to the services sector, Korea has long supported the idea of a negative approach (listing the areas not opened), while China has supported positive approach(listing the areas to be opened). In relation to investment, Korea had supported reflecting the investment liberalization factors, while China had supported including only investment protection factors. This negotiation achieved fruitful results in terms of Rules and Economic cooperation. The two countries reached a full agreement on the chapter regarding competition and e-commerce, and made the substantial achievement on the environment chapter. There were meaningful improvements in customs procedures, economic cooperation and government procurement. The two countries agreed that the 13th negotiations would be held in China in September 2014, at a date and venue to be determined. Head Kim Young-moo (044-203-5780), Director Cho Soojung (02-734-1863), East Asia FTA Bureau date2014-07-21

MOTIE Will Create Six New Energy Businesses and Over 10,000 Jobs by 2017

The six new energy businesses are as follows: ● Demand Response business: Implement energy saving systems for businesses in their buildings and plants, collecting unused power for profitable sale in the energy market.  ● Integrated energy management service business: Build ESS, EMS and LED systems combining finance, insurance and energy management technology, and provide maintenance services.  ● Independent micro-grid business: On islands with a high unit price for power generation, replace diesel generators with a hybrid micro-grid combining new and renewable energy with ESS. ● PV rental business: Rent PV systems such as water purifiers to households, generating profit through energy savings. ● Electric vehicle servicing and charging business: Install systems and provide charging for electric car service providers including electric taxi service providers. ● Business using waste heat from thermal power plants: Make use of the massive waste heat from thermal power plants on adjacent farms. date2014-07-18

Korea Records USD 33.7 Billion in Contracts

Korea Records USD 33.7 Billion in Contracts for Overseas Plants in the 1st Half of 2014 The Ministry of Trade, Industry and Energy (Minister Yoon Sang-jick) announced that Korea had recorded a historic-high contract amount for overseas plants in the 1st half of 2014, amounting to USD 33.7 billion. It is even more meaningful that this achievement was reached considering the numerous challenges, such as political uncertainty in Middle Eastern markets including Iraq and the decline in contracts date2014-07-15

Korea’s Car Sales for 2014 1H and Outlook for 2014 2H

The Ministry of Trade, Industry and Energy (Minister Yoon Sang-jick) announced provisionally that the car industry had produced 2,342,578 units, sold 807,063 units in the domestic markets and exported 1,596,198 units in the 1st half of 2014, showing year-on-year growth of 2.6%, 7.3% and 0.4%, respectively. < Overview of the Car Industry Results (Unit: 1 unit, %, USD 0.1 billion) > ○ June 2014 - Production : 380,456 - Domestic Sales : 139,864 - Korean Cars : 122,061 - Imported Cars : date2014-07-11

Korea’s ICT Exports Reach Historic High in the 1st Half of 2014

* Adjusted Outlook for 2014 Global ICT Growth Rate (Gartner, %): : Outlook for September 2013: 3.6 → Outlook for May 2014: 3.2%, reflecting the slowdown in the growth rates of emerging economies and the smart devices sector ○ 2012. 2H - Overall ICT Export Growth Rate : 3.4% Key Items - Export Growth/Decline : 1.5% - Percentage of Export : 70.4% - Rate of Contribution to Export Growth : 32%   ○ 2013. 1H - Overall ICT Export Growth Rate : 10.9% Key Items - Export Growth/Decline : 9.8% - Percentage of Export : 69.2% - Rate of Contribution to Export Growth : 63%   ○ 2013. 2H - Overall ICT Export Growth Rate : 7.6% Key Items - Export Growth/Decline : 8.4% - Percentage of Export : 70.9% - Rate of Contribution to Export Growth : 78%   ○ 2014. 1H - Overall ICT Export Growth Rate : 3.2% Key Items - Export Growth/Decline : 6.2% - Percentage of Export : 71.2% - Rate of Contribution to Export Growth : 133%       date2014-07-10

Labor Productivity of All Industries in the 1st Quarter of 2014 Grew by 1.1% Year-on-Year

Ministry of Trade, Industry and Energy (Minister: Yoon Sang-jick) and Korea Productivity Center (Chairman Jin Hong) jointly analyzed the labor productivity index of all industries for the quarter. According to the analysis result, the labor productivity index of all industries for the 1st quarter of 2014 was 99.0 (2020: 100), a year-on-year increase of 1.1% and showing moderate growth for the third consecutive quarter. Prompted by the base effect, capital investment in the 1st quarter of 2014 grew by 7.3% (1st quarter of 2013: -12.7%), and both industrial production and labor input of all industries grew compared to the same period in the previous year, thanks to the moderate growth of consumption and export. In terms of industrial production, production of all industries grew by 1.6% year-on-year, thanks to the growth in production of major sectors including manufacturing (0.6%), services (1.8%) and construction (6.5%). As for labor input, the number of employees grew by 1.3% compared to the same period in the previous year, while the labor hours declined by 0.7% with labor input growth of all industries as 0.6%. Looking at labor productivity by industry, the service sector showed productivity growth of 3.0% compared to the same period in the previous year, thanks to production growth and labor input decline, while the manufacturing sector and the construction sector recorded productivity growth rates of -1.6% and -3.1%, respectively, as there was more labor input than production growth. Real value added of all industries grew by 4.2% year-on-year, as the gradual growth has continued since the 1st quarter of 2013 (2.2%). The value added labor productivity by industry of the manufacturing sector and the service sector grew by 3.3% and 3.2%, respectively, compared to the same period in the previous year, driving the growth of value added labor productivity of all industries (construction sector: -6.9%). date2014-07-04