Abstract

Purpose - This research undertakes to understand the competitivenessof the steel distribution industry of both Korea andChina to strengthen Korea-Sino economic cooperation, examinesimpediments to trade between the two countries to analyzecauses which affect trade, and examines improvements in theseareas to identify means of trade expansion. Through this surveyof a defined period, we can identify the structural factors oftrade dependence in the relationship between Korea and China. Research design, data, and methodology - The data werecollected from the Korea Traders Association, the KoreaCustoms Office, and UN Comtrade, from which whole table indexesare calculated. The research methodology uses trade-relatedindexes to focus on analyzing comparative advantagesbased on time-series analysis statistics data (2000–2012) by usingthe analysis index of trade intensity index (TII), the revealedcomparative advantage index (RCA), and the trade specializationindex (TSI). Results - The export ratio for Korea to China was slightlyhigher in 2000 at 2.867, and the export ratio for Korea to Chinawas sustained in 2005. However, it diminished gradually, reaching1.263 in 2012. During the period 2000–2012, the indexeswere maintained without any significant change. However, theystill remain close to –1. In particular, in 2012 it is the closest it has ever been to –1. Therefore, China has a comparative advantagein export specialization. On the other hand, Korea hasa comparative advantage in import specialization. For the researchperiod, all indexes were much lower than 1, whichmeans that Korea has consistently had a comparative disadvantageagainst China for the past 10 years when comparedto other industries, even though it experienced improvement in2000. Conclusions - The summary of conclusions based on empiricalanalysis research are as follows: First, per the trade intensityindex of industries between the two countries, we concludethat the export ratio index in 2000 is 2.867, which meansthe export ratio of Korea to China is slightly higher. Furthermore, the ratios of 2.259 and 1.263 held in 2005 and2012, respectively, meaning that the export ratio of Korea toChina was maintained in 2005, but was diminishing gradually asthe index in 2012 was 1.263. Second, per the trade specializationindex of the steel distribution industry between Koreaand China, the value was –0.379 in 2000, -0.368 in 2005 and-0.568 in 2012. Looking at the whole period of 2000–2012, theindexes remained without any significant change. However, theyare still moving closer to –1. In particular, in 2012 it is the closestit has ever been to –1. Third, regarding the revealed comparativeadvantage index of the steel distribution industry betweenKorea and China, the RCA indexes in 2005 and 2012are 0.246 and 0.306, respectively, which are still far from 1,even though the index has improved compared to the 2000’svalue of 0.0001. Therefore, the Korean steel distribution industryis at a significant comparative disadvantage to that of theChinese steel distribution industry.