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Trade Minister Sung Yun-mo speaks during a dialogue regarding “post-coronavirus industry strategy” at the Korea Chamber of Commerce and Industry in Seoul on May 11. (provided by the Ministry of Trade, Industry and Energy)

Domestic stockpiles of major strategic industry items have roughly doubled since Japan’s imposition of export controls last year, a study shows. The South Korean government plans to continue efforts to ensure stable supplies of materials, components, and equipment while establishing a real-time supply network monitoring system in preparation for the “post-coronavirus era.”

On May 11, the Ministry of Trade, Industry and Energy (MOTIE) held a second “post-coronavirus industry strategy” dialogue, presided over by Trade Minister Sung Yun-mo at the Korea Chamber of Commerce and Industry in Seoul’s Jung (Central) District. The dialogue was attended by the directors of the Korea Evaluation Institute of Industrial Technology and Korea Institute for Advancement of Technology, along with representatives of related enterprises.

MOTIE concluded that clear progress has been made in policy efforts since the second half of 2019 to ensure stable supplies of 100 major items. After Japan imposed its export controls, MOTIE selected 100 strategic items and established plans to ensure domestic supplies of 20 of them within a year and 80 of them within five years.

A recent MOTIE examination of domestic stockpiles of major items among the 80 selected showed them to have increased from 1.3 months’ worth as of July 2019 to 2.6 months’ worth as of the first quarter of 2020. In several cases, stockpiles rose sharply from weekly to monthly levels, including electronic control units (from one week to 1.5 months), substrate materials (from two weeks to two months), and core battery materials (from two weeks to three months).

In the case of the first group of 20 items, 10 production facility or expansion projects were counted, with a total scale of 734 billion won (US$598.9 million). SKC’s mask blank factory was built in the latter half of 2019, while Hyosung doubled the scale of its carbon fiber production facilities this year. Other companies are building or expanding factories for sensor components and non-metallic materials.

In his opening remarks, Sung said, “Thanks to concerted efforts amid supply uncertainties with the Japanese export control measures and other factors, we have achieved strong results in stabilizing material, component, and equipment supplies.”

“We’ve gained a great asset in the experience and confidence that comes from seeing how it actually has worked out,” he added.

The government also announced its aim of achieving a full-scale reorganization of the global value chain (GVC) through cooperation between the government and private sector in anticipation of the post-coronavirus era. Its plan involves expanding the list of supply network management targets from 100 items to 338 items worldwide, while working to build a resilient supply system through diversification.

In the short term, it plans to have companies share supply and production plans with their secondary and tertiary partner companies; in the intermediate to long term, it plans to have them set up real-time monitoring systems for the entire value chain process from development to raw and subsidiary material purchasing and final product sales.

Yang Byeong-nae, the chief of MOTIE’s division for materials, parts, and equipment, said, “There’s a growing consensus now even among companies that we need to diversify and domestically produce major items, even if that means coping with high costs.”

“We plan to develop concrete measures going forward so that the coronavirus situation can be turned into an opportunity for boosting our competitiveness in terms of materials, parts, and equipment,” he added.’

By Lee Jae-yeon, staff reporter

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