Hong Kong police draw guns on protesters on Sunday [Source: Hong Kong Associated Press]

Instability in Hong Kong as anti-extradition bill protests stretches into their 12th week is another setback to Korean exports whose losses have widened to double digits amid ever-increasing trade woes, study showed.

Hong Kong is not just the fourth biggest export market for Korea but also a gateway for shipments to mainland China, the Korea International Trade Association (KITA) said in a report released Tuesday.

“Most of Korea’s shipments to Hong Kong are rechanneled to China so escalating protests would further dampen exports to China especially in semiconductors,” the report said.

Korea sold $46 billion worth of goods to Hong Kong last year, making it the country’s fourth-largest export destination after China, the United States and Vietnam. Semiconductors were the dominant export item, accounting for 73 percent of all Hong Kong-bound shipments, with memory chips making up 63.3 percent. Computers followed with 3.4 percent, cosmetics 2.9 percent, petroleum products 2.7 percent, and petrochemical products 2.4 percent.

For Korea, Hong Kong is an important trading route to mainland China. Nearly 82.6 percent, or $29.3 billion of Korea’s total $35.5 billion worth of shipments to Hong Kong were exported to China last year.

Korea has so far taken advantage of Hong Kong’s status as a global financial hub, benefiting from its low taxes, zero tariffs and stable legal framework.

If the protests drag on further, Korea might consider shifting its exports to Shanghai or Shenzhen. But this could entail increased risks and costs from tariffs and other regulatory barriers, the report said.

By Lim Hyung-joon and Kim Hyo-jin

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]