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China Briefings

Reports on China issued by Samsung Economic Research Institute

Competitiveness and Outlook for Auto Industry and Shipbuilding & Offshore Industries

Competitiveness and Outlook for Auto Industry and Shipbuilding & Offshore Industries

BOK Deuk-Kyu, BAE Young-Il

Feb. 1, 2012

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Ⅰ. Auto Industry

China has become the world’s No.1 auto market in 2009. Yet the number of car ownership per 1,000 people was a mere 35.2 units in 2008, a tenth of Korea’s 345.5 units. As a result, global auto makers are eager to break into the Chinese auto market. China’s auto industry has a competitive edge in terms of cost competitiveness and domestic auto market share. Surveys showed that the competitiveness of China’s auto industry is lower than Korea’s yet China is strong in EV competitiveness.

The Chinese government is working on a number of initiatives to improve the competitiveness of the nation's automobile industry, among others, the promotion of independent brands and the development of environmentally-friendly vehicles. To maintain its lead, Korea's automobile industry must prepare for China's rush into overseas markets, while attempting to gain a bigger role in the fast-growing Chinese market.

Ⅱ. Shipbuilding and Offshore Industries

China has emerged as the world’s No.1 shipbuilder based on unrivaled size. Although China still lags behind Korea in terms of technology, its leading shipbuilders are rapidly catching up while state-owned corporations drive the growth of the offshore industry. The rise of China’s industries is also supported with detailed government policies and abundant human resources.

China’s growth momentum and advantages are big threats to Korea’s shipbuilding industry. Korea’s shipbuilding industry should secure a dominant position in high growth and high value-added areas while Chinese shipbuilders are struggling due to the slump in the global commercial ship market and rising labor costs. To that end, Korea needs to defend its market with already accumulated capabilities while strengthening its own advantages and seek new competitiveness.

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