The domestic industrial ecosystem is collapsing under the onslaught of cheap Chinese goods. While the U.S. has taken defensive measures with "tariff walls," South Korea remains defenseless. Graphic by Han-Mi Ilbo

Low-priced Chinese goods are penetrating far beyond specific sectors, infiltrating global industries as a whole. After capturing over 90% of the solar inverter market, they are now indiscriminately encroaching upon the legacy semiconductor chip, electric vehicle (EV), and wind power industries.

Using "low prices" as a weapon, Chinese products are rapidly expanding market share, absorbing technical personnel, and seizing industrial leadership.

While the U.S. has adopted extreme measures—even imposing tariffs on small postal shipments—to counter the influx of low-cost goods, South Korea continues to rely on cheap Chinese imports, effectively dismantling its own domestic technology and manufacturing base. Caught in a structural crisis of industrial dependency and technology theft, the domestic ecosystem is steadily losing its footing.

“The Collapse of the Domestic Ecosystem and Industrial Dependency”

China is sweeping the global market with a low-price offensive. By capturing over 90% of the South Korean solar inverter market, it has effectively paralyzed the competitiveness of domestic manufacturers. Just five years ago, a mid-sized Korean company, Company A, maintained a 20% market share; today, it is in the process of withdrawing from the market.

Some companies have resorted to "re-labeling"—importing finished goods from China and simply applying their own labels for distribution. While this may lower installation costs in the short term, it means sacrificing long-term technology accumulation and production foundations.

This trend is not limited to solar energy. In the semiconductor sector, China has encroached on the legacy chip market through aggressive low-price tactics. It is estimated that China now accounts for over 30% of global production capacity for legacy chips (28nm or larger), with a market share of around 40% in automotive microcontrollers (MCUs) and power semiconductors.

While they have yet to catch up with South Korea and Taiwan in advanced processes, they have become an unavoidable force in the global supply chain by tightening their grip on the general-purpose chip market. An industry insider warned, "If China gains control over legacy chips, it could deal a direct blow to our competitiveness in advanced semiconductors as well."

The onslaught of Chinese electric vehicles is also intense. As of 2024, Chinese EVs have surpassed a 20% market share in Europe and account for nearly 50% in Southeast Asia. Due to the volume-based offensive led by low-cost models from BYD, Xiaomi, and Geely, South Korean EVs hold less than a 5% market share in Southeast Asia.

While supply dependent on low prices produces short-term results, it disrupts market order by bypassing safety verification and neutralizing environmental regulations.

The wind power market is also more than 60% dominated by China. After entering with low-cost equipment, they have come to dominate the entire industrial structure by monopolizing maintenance, repair, and parts supply.

The U.S. is responding forcefully to this situation.

What is particularly noteworthy is that this is not merely a defense but a strategic choice to reorganize the supply chain structure itself. The U.S. has taken extreme measures, such as imposing tariffs on postal packages, and provided massive subsidies through the Inflation Reduction Act (IRA) and the CHIPS Act. This goes beyond "blocking cheap Chinese goods"; it is an effort to revive domestic manufacturing and restructure the global value chain around the U.S.

The so-called "reshoring" policy is more than just industrial protection.

The process of bringing back factories and personnel that had moved overseas is akin to a national project to reclaim technology, capital, and employment. High tariffs are also an expression of the will to exclude China from the supply chain, even at the cost of short-term inflation. In other words, the U.S. has prioritized industrial sovereignty over cost and efficiency.

In contrast, South Korea’s response is, in a word, helpless. The government avoids anti-dumping measures under the pretext of WTO rules and consumer prices, while the National Assembly, buried in political strife, effectively ignores legislation for industrial protection.

While the U.S. is prioritizing national strategy through high tariffs and reshoring, the South Korean government and legislature are, in effect, kneeling before cheap imports.

While China pushes its national strategy under the disciplined control of the Communist Party, South Korean politicians are trapped in partisan calculations, failing to even hold proper discussions on industrial sovereignty.

Add to this the problem of industrial espionage.

Recent incidents in the semiconductor and battery sectors, where employees moved to Chinese firms immediately after retirement and leaked thousands of technical documents, are merely the tip of the iceberg. As core talent leaves, research achievements accumulated over decades are being leaked in short periods. We are witnessing the worst-case scenario where industrial dependency and technology theft are occurring simultaneously.

Experts also point to internal factors.

A supply structure centered on large conglomerates, subsidy policies focused on short-term performance, and insufficient protection for small and medium-sized enterprises are weakening the domestic ecosystem. These are structural limitations that cannot be explained by external Chinese aggression alone. Ultimately, South Korea is facing dual pressure: the low-cost Chinese offensive and internal institutional loopholes.

Therefore, South Korea must now choose.

It must move beyond simply avoiding cheap Chinese goods and establish institutional mechanisms to protect its own technology and industrial base. A comprehensive strategy is needed, including anti-dumping regulations, strengthening technology protection laws, policies to foster alternative products, and shifting consumer awareness. Above all, South Korea must reflect on the message the U.S. has conveyed through reshoring: "Industrial sovereignty cannot be compromised, even if costs rise."

South Korea is currently at a crossroads between the U.S. and China.

If we dismiss the cheap Chinese onslaught as merely a market phenomenon, South Korea is choosing to abandon its industrial sovereignty and path toward dependency on China. Conversely, we must follow the path of reviving domestic industries and restructuring supply chains, just as the U.S. is doing, even if it means bearing higher costs and short-term burdens.

The choice is clear. The answer is already decided. South Korea must distance itself from China and make technological self-reliance and the restoration of its industrial ecosystem its national strategy.

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