The weak Japanese yen is clearly hurting South Korean exports to the island nation, a poll conducted by the country's international trade organization showed Sunday.
According to the survey on companies that ship goods to Japan, 95 percent claimed the unfavorable exchange rate is directly affecting their business operations, resulting in lower profits and a reduced market share, the Korea International Trade Association said.
Of the 301 companies that responded to the poll, 48.8 percent said they suffered from losses incurred by foreign currency transactions, with 23.9 percent saying export volume has been hurt as locally made products are more expensive in the Japanese market.
A further 21.9 percent said they were having problems sealing deals or arranging talks to secure export orders.
In 2013, South Korea's exports to Japan contracted 10.6 percent on-year, marking the first time since 2008 that outbound shipments fell by double digits. Exports of mobile communication equipment and semiconductors fell 24 percent and 15 percent, respectively.
The latest findings showed that of the top 15 product groups imported by Japan, the market share of South Korean goods in 10 of those groups decreased in recent months.
The number is higher than eight tallied for Chinese and Taiwanese goods, and nine for products made in the U.S. and Association of Southeast Asian Nations.
Such developments, KITA said, caused market shares of locally made goods that stood at 4.6 percent in 2012 to dip to 4.3 percent in the first 11 months of last year.
In contrast, China's market share in Japan actually rose from 21.3 percent to 21.7 percent, while numbers for Taiwan reached 2.9 percent in the January-November period from 2.7 for the whole of the previous year.
KITA said that if the yen depreciates by 10 percent to the won in the coming months, exports of petrochemical goods, steel and agricultural products will likely be hurt the most, followed by shipments of electronic devices and general machinery.
The latest poll, moreover, showed that roughly 40 percent of respondents believed the weak yen will continue at least until the end of the year, with quite a few predicting this trend will last until 2015. Only 20 percent believed the current situation will last only till the first half of 2014.
On how companies are coping with the weak yen, 41.9 percent said they are resorting to cutting costs and expenses, with 40.9 percent seeking to diversify into new markets.
About 14 percent said they have no strategy whatsoever with 8.3 percent saying they will stop exports altogether.
To counter such problems, KITA said it plans to provide consulting services to companies affected the most and to assist companies in applying for foreign exchange risk insurance that can reduce exposure to sharp exchange rate fluctuations. (Yonhap News)