The manufacturing sector grew at a slower pace than the nation's service industry for the first time in over three years in the third quarter.
According to the Bank of Korea on Thursday, it climbed 1.3 percent between July and September from a year earlier, while the service sector advanced nearly 2.5 percent.
Manufacturing growth has been mired in a slump recently, raising concern about the prospects for Korea's export-driven economy. But the figures have been skewed by a rising trend of companies relocating their operations to countries with cheaper labor costs like China or Southeast Asia.
In fact, some 80 percent of Korean smartphones, which lead the country's exports, were made outside the country in the first quarter of this year. This is up from just 16 percent two years ago.
In the auto industry, seven out of 10 Korean cars were manufactured abroad in the first half of 2012, with top automaker Hyundai Motor also now producing more cars overseas than at home.
Growing overseas production by large companies at the expense of domestic investment will inevitably have a negative impact on exports and the labor market. As such, the central bank has urged the government to come up with measures to encourage more Korean manufacturers to return home.