South Korea has been overtaken by or is trailing China in six key industries, making it imperative for local companies to find new ways to stay competitive globally, a report by the lobbying group of large conglomerates showed Monday.

The report by the Federation of Korean Industries (FKI) showed China outpacing South Korea in the smartphones, cars, shipbuilding and marine plants, petrochemicals, and the steel and refinery sectors.

South Korean companies still maintain an edge in semiconductors and displays, but the lead has been eroded in recent years, it said.

The smartphone sector is the latest of the high-profile industries to be dominated by Chinese rivals. The FKI findings showed that as of the second quarter of this year, the number of Chinese smartphones sold accounted for 31.3 percent of the global total, 1.2 percentage point higher than the 30.1 percent market share for South Korean devices.

The total takes into account sales numbers of Samsung Electronics Co. and LG Electronics Inc. and the total sold by nine leading Chinese smartphone companies such as Huawei Technologies Co., Lenovo and Xiaomi Tech.

Samsung remained the largest smartphone maker in the world with 25.2 percent market share, while Huawei placed third with 6.8 percent share, but Chinese manufacturers have made considerable strides, particularly in their domestic market, according to the report.

"Apple remains strong among high-end smartphones, while China's price competitiveness and technological gains have reduced the gap with South Korean products that have caused Samsung and LG to lose some market share," it said.

In the automobile sector, South Korea's global market share was overtaken by China in 2009 and has remained behind ever since.

In 2013, South Korea made some 8.63 million cars, or 9.8 percent of the global total, versus 12.5 percent, or 10.97 million units, made in China.

"South Korean carmakers such as Hyundai Motor Co., and Kia Motors Corp. have made strides in pushing up sales in the last few years, yet Chinese carmakers, benefiting from the vast internal market, have been able to pull ahead," the FKI said.

In the petrochemical industry that is generally measured by ethylene production output, South Korea surrendered its lead to China in 2004. As of 2013, South Korean companies held 5.4 percent market share to 12.2 percent for Chinese rivals.

In the past decade, South Korea's petrochemical industry grew 3.6 percent on average annually, while that of China soared by 12.5 percent.

"South Korea, thanks to steady investment in facilities, remains the fourth largest (in petrochemical industry) in the world, yet the scope of expansion carried out by China in the mid 2000s has made it the No. 2 nation," the report said.

In the shipbuilding and marine plant sectors, China leads in all three measurements of size such as new orders, completions of ships and orderbook tally.

"Local yards remain global leaders in the specialized, value-added LNG tankers and drill ships, so they need to inject more into research and development," the federation said.

The latest findings showed China overtook South Korea in the steelmaking industry in 2003 and has since extended the lead to control roughly half of the global market. South Korea's market share dipped from 4.8 percent to 4.1 percent.

In petroleum refining, China's market share stood at 13.3 percent as of last year, while South Korea held just 2.8 percent.

Chinese companies, supported in part by state investment, are expected to challenge South Korean companies in semiconductors and displays.

Beijing announced it will pour 20.75 trillion won (US$18.55 billion) into semiconductors. Growth of Chinese companies in this field in the 2008-2013 period reached 29 percent per year, compared to 5.6 percent for South Korean counterparts.

China has also raised import tariffs on LCDs from the current 4 percent to 6 percent to protect local industries.

"Chinese manufacturers have made gains in building up price competitiveness and technological knowhow, allowing them to overtake South Korean companies," said Yoo Hwan-ik, a senior economist at FKI.

He said that to overcome such challenges, South Korean companies must do their best to make full use of the free trade agreement that has been reached recently to make inroads into China's vast domestic market.

South Korean companies also need to do more to break into new overseas markets such as entertainment and healthcare, he said. (Yonhap)