[Monitor] Intermediate trade buoyed by overseas smartphone production

South Korean businesses’ profits made from intermediate trade surged significantly last year. The total net profit reached $9.46 billion, up 18.9 percent from the previous year.

Net profits from intermediate trade have been increasing since several years ago, as businesses started investing heavily overseas, and had reached a record high of $14.6 billion in 2014.

Popular goods for intermediate trade are smartphones, computers, television and other high value-added electronics.

By 2012, overseas production of smartphones, in particular, took up about 80 percent of the total, compared to 16 percent in 2010.

Overseas production can help raise price competitiveness through reduced labor costs and increase global market share, while reducing sensitivity to exchange rates.

The trend, however, has also invited criticism for its negative impact on the domestic job market and in attracting investment.