South Korean President To Meet Vietnam Leaders To Improve Trade Relationships

South Korean President Yoon Suk Yeol is scheduled to meet with Vietnamese leaders on Friday, at a critical juncture in their relationship as bilateral trade falls and Hanoi plans tax hikes for top Korean manufacturers.

Over the last few decades, the two countries have developed almost symbiotic industrial ties, with South Korea being the largest foreign investor in Vietnam, where multiple Korean companies, including LG Electronics and conglomerate SK Group, have manufacturing hubs.

Samsung Electronics has invested approximately $20 billion in its manufacturing facilities in Vietnam, where it produces half of its smartphone output, and it accounts for nearly a fifth of Vietnam's total exports.

Many of the components used in assembly by those manufacturers in Vietnam come from South Korea itself, demonstrated by the consistently big trade surplus that Seoul has with Hanoi.

Last year, that exceeded $34 billion, the largest for South Korea among its trading partners, according to its customs data.

But the slowing global economy is putting this close relationship to the test, as falling orders for electronic goods force South Korean firms to reduce their Vietnam workforce, multiple industry and business sources say.

Bilateral trade has fallen by a quarter so far this year compared to the first five months of 2022, driven down largely by a nearly 30% drop in Vietnamese imports of South Korean products - notably intermediate electronic goods assembled in Vietnam before being re-exported as smartphones or televisions.