In early June 2026, the Korean won against the U.S. dollar once hit the 1,560 mark, and the Japanese yen exceeded 160. During the same period, the RMB bucked the trend and appreciated by nearly 3% against the U.S. dollar.
Theoretically, the price competitiveness of South Korean and Japanese export products in the global market has increased significantly – South Korea’s exports in May surged 53.2% year-on-year. It seems that China’s foreign trade will be “robbed of business.”
However, data from the General Administration of Customs also showed that China’s exports still increased by 11.8% year-on-year in the first five months of this year, and monthly imports and exports exceeded 4 trillion yuan for three consecutive months.
The “assist” effect of currency depreciation is far more complex than the superficial numbers.
Where do the dividends from the devaluation of South Korea and Japan go?
South Korea’s cumulative export growth from January to May reached 43.2% year-on-year, but the growth was almost entirely supported by semiconductors: semiconductor exports surged 202% year-on-year in the first 20 days of May, accounting for 41.7% of total exports during the same period.
Automobile exports fell 10.1% year-on-year, home appliances fell 20%, and steel fell 11.6%.
The situation in Japan is similar – exports in April increased by 14.8% year-on-year, and semiconductor shipments surged by 41.6%. However, automobile exports fell by 12.7% in the first quarter, and the combined net profits of the seven major auto companies in fiscal 2026 plummeted by 48%.
The most direct benefits of the depreciation of the Korean won and the Japanese yen fall into categories with absolute technological monopoly such as AI memory chips and semiconductor materials.
Korean companies account for more than 70% of the total HBM and DRAM markets. With exchange rate advantages, overseas customers have almost no bargaining power. The pricing power for long-term orders in 2026 is completely in the hands of the seller.
In traditional advantageous areas such as automobiles and home appliances, depreciation has been swallowed up by imported inflation. In April, 85 Japanese companies went bankrupt due to rising raw material prices.
Are Chinese foreign trade companies really being snapped up?
Order diversion is structural, not industry-wide.
In the field of high-end semiconductor storage, the US dollar quotations of Korean products are 5% – 8% lower than those of similar Chinese products. Some European and American AI companies have shifted their non-rigid storage orders to Korean suppliers. The increase in the overseas market share of China’s domestic memory chips will slow down by about 7 percentage points in 2026.
However, in subcategories such as electronic special gases, China’s tungsten hexafluoride production capacity has been rapidly released. In April 2026, exports soared 198% year-on-year, and the average export price was only 52% of the quotations quoted by Japanese and Korean manufacturers, directly replacing Japan and South Korea’s share in the international market.
The pressure on traditional small and medium-sized foreign trade companies is real: the average net profit margin has been compressed from 5% – 8% in 2024 to 2% – 4%, and some low value-added categories without exchange rate hedging have suffered single-quarter losses.
In 2025, 3,077 A-share listed companies suffered exchange losses, totaling 41.9 billion yuan.
BYD incurred exchange losses of approximately 2.1 billion yuan in the first quarter, directly dragging down net profit by approximately 4 billion yuan.
However, the average profit margin of the high-end manufacturing industry still remains in the 15% – 25% range. New energy vehicles, optical modules and other categories rely on technical barriers to increase prices by 5% – 10% to pass on costs, and the impact is controllable.
The three cards in the hands of enterprises: pricing, risk control, and differentiation.
Leading companies have developed mature combination strategies.
In terms of pricing, high value-added categories directly increase prices by 5% – 10% – BYD, Xinyi Sheng, etc. have locked in prices by signing long-term orders with overseas customers, and customers basically accept them; low value-added categories have added exchange rate sharing clauses in the contracts, agreeing that both parties will share costs in proportion when the fluctuation exceeds ±3%.
In terms of exchange rate risk control, companies generally adopt the combination of “dynamic foreign exchange settlement + forward hedging”. Data from the XTransfer platform shows that a large number of small and medium-sized foreign trade companies have set up exchange rate subscription warnings and settled foreign exchange upon receipt, thereby controlling exchange loss fluctuations within 1% of revenue.
The more fundamental difference lies in the efficiency of the supply chain: Zhejiang’s garment industry belt can achieve a “minimum order of 50 pieces” for small orders and quick turnaround, but the production lines of local small and medium-sized enterprises in South Korea and Japan simply cannot compete with this kind of flexibility.
What is a truly irreplaceable moat?
China is the only country in the world that has all industrial categories.
In the first five months of 2026, exports of high-tech mechanical and electrical products increased by 18.4% year-on-year, accounting for more than 60% of total exports.
More importantly, the domestic coal chemical industry system makes the cost of chemical raw materials 30% – 40% lower than that of Japan and South Korea. When geopolitical conflicts in the Middle East pushed up global raw material prices, Chinese factories were able to stabilize supply, and even orders that had previously been relocated to Southeast Asia returned to China.
The Ministry of Commerce has implemented a combination of policies: in March 2026, the United Export Credit Insurance Company will expand the coverage of credit insurance, and the Export-Import Bank will arrange special foreign trade credit; the “one-pole joint inspection and release” customs clearance model in the free trade pilot zone has increased port efficiency by more than 60%.
Coupled with the zero tariff on 86% of products from China, Japan and South Korea under the RCEP framework, trade barriers have been significantly reduced.
Taken together, the currency depreciation of South Korea and Japan is just a short-term price fluctuation. The fundamental advantage of China’s foreign trade lies in the efficiency of the entire industrial chain, technological innovation capabilities and stable delivery and performance – this is a competitiveness that cannot be replicated by a single exchange rate tool.
Instead of falling into low-price competition, the competition dimension should be brought back from price to comprehensive value through scene customization, brand overseas and refined management of exchange rates.
The key to holding on to share is not “cheaper than you”, but “more worth buying than you”.
