Vulnerability of Global Supply Chain: focusing on Korea’s Major Imports from China

Abstract

Risks in the supply chain originating from China are expanding due to the intensifying trade conflict between the US and China and the blockade of major Chinese cities. In order to minimize the impact of the supply chain disruption on the Korean economy, it is necessary to reduce the import dependence from China and diversify the supply chain. This study analyze the vulnerabilities of the global supply chain for Korea's major import items, which are more than 50% dependent on imports from China. Major findings are: first, there is a weak correlation between the three indicators of supply chain vulnerability. Second, items with high priority for supply chain stabilization due to high dependence on imports from China, difficulties in diversifying suppliers, and weakness of localization capabilities are mainly raw materials and consumer goods. Third, as a supplier to replace China, Vietnam has a great influence on imports of consumer goods and capital goods, while Japan has a great influence on imports of raw materials. The optimal strategy for diversifying supply chain, such as monitoring of the potential risk factors, strategic international cooperation, and strengthening localization capacity, may vary by country, type of goods, and time frame.