The share of Chinese-made vehicles in South Korea’s imported car market has surged more than tenfold in just three years, overtaking Germany to claim the number one spot for the first time. Notably, all imported electric buses were sourced from China, and seven out of every ten imported electric vehicles were also manufactured there.
According to a report titled ‘South Korea’s Key Manufacturing Production and Supply Chain Map’ released by the Bank of Korea on the 27th, Chinese-made imports accounted for 37.2% of the market by value last year. Considering the figure stood at a mere 3.5% during the 2022 survey, this represents an explosive increase of more than ten times in just three years. Over the same period, the share of German-made vehicles slipped slightly from 38.5% to 37.0%, pushing it into second place. The share of American-made vehicles also plummeted from 28.9% to 11.1%.
The tally includes not only homegrown Chinese EV brands like BYD and Geely but also global brands such as Tesla vehicles produced at Chinese factories, all classified as ‘Chinese-made.’ The Bank of Korea explained, “All vehicles produced in China and imported into South Korea are reflected in the statistics as Chinese-made imports.”
The surge of Chinese-made automobiles has been driven by electric vehicles. Among the vehicle types imported by South Korea last year, EVs represented the largest category at $3.177 billion, with approximately 70% of that total originating from China. Specifically, 100% of imported electric buses and 80% of imported electric trucks were found to be Chinese-made. “As China has grown into the world’s largest EV producer, its presence in South Korea’s imported car market is expanding,” analyzed Jeong Seong-yeop, head of the Bank of Korea’s Regional Research Support Team. However, German-made vehicles still maintained the highest share in gasoline and diesel segments.
The growth in Chinese auto imports has accelerated further this year. According to the Korea International Trade Association, imports of Chinese-made EVs reached $2.001 billion in the first half of this year, a 145% surge compared to the same period last year. This accounts for 72% of the total EV import value of $2.773 billion.
The expanding influence of Chinese manufacturing extends beyond automobiles. Despite the U.S.-China trade war spearheaded by U.S. President Donald Trump, China’s manufacturing sector has continued its growth trajectory over the past three years. China held the top spot with a 53% share of the overall display market, including OLED and LED, and showed an overwhelming presence in smartphone and component exports, with shares of 64.6% and 68.2%, respectively. In crude steel production by country, China ranked first at 51.9%. In the shipbuilding sector—once a flagship export industry for South Korea—China’s orderbook share rose to 51.8%, up from 50.0% three years ago. Conversely, South Korea’s shipbuilding order share fell from 34.7% to 21.5% over the same period.
The Bank of Korea diagnosed the situation, stating, “China’s manufacturing industry is rapidly expanding its influence in the global market based on technological prowess, large-scale production capacity, and price competitiveness.” It added, “Competition in overseas markets is intensifying, particularly as the technology gap narrows in South Korea’s key industries such as electric vehicles, batteries, steel, and petrochemicals.”
Meanwhile, the position of South Korean-made EVs in the U.S. market has rapidly contracted. Due to strengthened U.S. trade protectionism, expanded local production, and EV subsidy policies, South Korea’s share of EV exports to the U.S. plummeted from 33.6% in 2022 to 5.2% last year. In contrast, exports of South Korean EVs to Europe remained relatively solid as carbon-neutral policies were maintained.
The semiconductor supply chain is also being rapidly reshaped around AI. Following the proliferation of generative AI, investment in data centers and AI computing infrastructure has surged, shifting demand from traditional CPUs and general-purpose DRAM to GPUs and High Bandwidth Memory (HBM). Consequently, the global AI semiconductor supply chain linking Nvidia, Taiwan’s TSMC, Samsung Electronics (005930.KS), and SK Hynix (000660.KS) has solidified.
This shift has also redrawn South Korea’s semiconductor export landscape. The share of chip exports to Taiwan more than doubled from 9.0% in 2022 to 19.9% last year, making it the second-largest export market after China. While China remains the top destination, export value decreased from $75.8 billion (~111.1 trillion won) to $74.5 billion (~109.2 trillion won), with its share dropping from 53.1% to 40.3%.
Changes in the import structure of materials, components, and equipment driven by semiconductor production expansion were also notable. As imports from the Netherlands’ ASML—the exclusive supplier of extreme ultraviolet (EUV) lithography equipment essential for advanced chip manufacturing—increased, the Netherlands’ share of South Korea’s semiconductor manufacturing equipment imports rose from 22.8% in 2022 to 26.0% last year, surpassing the U.S. and Japan to become the top source country.