By Nathan Weber
Is South Korea becoming the new China?
Not in overall economic power, certainly, but perhaps in major appliances, where the tiny nation—less than 1 percent the size of its gargantuan neighbor in square miles—already dominates exports of laundry equipment to the United States, and is second after Mexico in exports of household refrigerators and freezers.
Data released by the International Trade Commission, a unit of the U.S. Commerce Department, show South Korea exported to the United States more than $589 million worth of laundry appliances, or almost quadruple China’s exports of the same commodity, in 2007.
And it kept up that lead in the first quarter of the current year, with more than $128 million of the item exported here so far, or more than three and a half times the $36.4 million shipped from China.
The picture is similar with respect to refrigerators and home freezers. Last year, South Korea shipped nearly a half million dollars worth of those appliances here, compared with China’s $369 million.
South Korea did not always have this commanding lead. At the start of this decade, the small but vibrant Asian nation was well down on the list of laundry equipment exporters, shipping $10 million worth (compared with the then-market leader Canada’s $139 million).
Likewise with refrigerators and freezers: At the start of this decade, Korea’s shipments were well below exports from Mexico, China, Sweden and Canada. Today, Korea holds second place.
Korea’s exporting dominance does not extend to all major appliances. In cooking equipment, such as ranges and ovens, it slipped from first place in exports in 2000 to fourth place today, after China, Mexico and Canada. And for a variety of other major appliances, such as waste disposal units and dish washing machines, it remains low on the list of key U.S. trading partners.
Still, its robust exporting sector—at $325.5 billion in 2006—has been one motor of its burgeoning economy; the other is domestic demand. And when one of these motors loses steam, the other rushes in to compensate. As the U.S. Central Intelligence Agency observes in its World Factbook on Korea, “A downturn in consumer spending [during the Asian crisis] was offset by rapid export growth.”
According to Statistics Canada, having weathered the economic malaise battering Asia in 1997-98, the Republic of Korea is now the world’s 11th largest economy.
As this is written, the major economies of the world appear to be facing an economic downturn, a chain reaction to the mortgage and credit woes in the United States. But South Korea may again be likely to weather the storm. “The upward momentum of the second half of 2007 is projected to continue in the first half of 2008,” the Asian Development Bank noted in a recent newsletter. And although the country’s economic boom may cool later in the year, the bank said that the broad-based nature of the upswing, coupled with other factors, suggests “that it should survive the likely global slowdown.”