Imagine your company's revenues fall 55 percent in 2 years while a key production cost rises threefold. Normally, that spells failure. South Korea Inc is not going bankrupt.
But the world's biggest producer of DRAM computer chips has seen chip prices more than halve since 2003, and the price of the fuel that it imports triple, making the country less profitable in global markets.
The result has been a sharp deterioration in South Korea's "terms of trade", a phrase that describes how much a country is able to import against every unit that it exports.
South Korea, and most of Asia, have taken a hit on their terms of trade in the past five years as prices of the computer parts and mobile phones that they manufacture slumped, while those of oil and other metals that they import sky-rocketed.
Because producers have been getting less value for their exports and paying more for imports, national incomes have been falling and governments have had a hard time boosting domestic consumption. Asia's currencies have underperformed and growth has been undermined.
Still, the only advice economists can give these countries is to accept and adjust to the bad terms of trade, and brace for it to worsen.
"Terms of trade will continue to deteriorate because the next great event which will come along is that the Chinese are going to have overcapacity in most of their industries and they are going to clear that overcapacity by exporting it," said Ray Farris, a strategist with CSFB.
"You live with it. In effect, it is a continual drain on gross national income," Farris said.
The likes of Korea and Thailand lack the clout to dictate terms in a market dominated by China's frenetic production of textiles and electronics and soaring demand for oil and raw materials.
"These countries cannot influence the price of oil and they have very little pricing power in their export markets. If prices change, they just suffer them," said ING's Tim Condon.
Government data shows South Korea's terms of trade, derived from dividing export prices by import prices in won, is around 75, meaning it gets only 75 units of imports for every 100 units it exports. Ten years ago, Korea was getting 130 units of imports for 100 units of exports.
The pressure began in 2000 with a slide in the prices of electronics and chips, which comprise 40 percent of South Korean exports.
Prices of dynamic random access memory (DRAM), the standard memory chip, have fallen to $2.3 a unit from $5.3 two years back. Television prices have more than halved in the past year.
Analysts at JP Morgan forecast another 25 percent erosion in DRAM prices over the next 12 months.
Oil prices have tripled to near $60 a barrel in 2 years, while prices of food grains and metals that Asia imports have multiplied.
Hong Kong, Singapore, Taiwan and Thailand also saw terms of trade turn negative this decade. Rising export volumes have helped Korea retain a trade surplus, but others such as Thailand and India have seen trade accounts slip into the red.
UBS's strategist Bhanu Baweja estimates terms of trade for Singapore, Taiwan, Thailand and Korea declined by 7 percent in the first nine months of 2005 from a year earlier.
Any improvement in export prices from a pick up in technology markets would be modest, he said.