Maximizing International Trade with South Korea

By: Kelly Kasic, president of GLOBAL ID LLC

South Korea is strategically located in the heart of Northeast Asia and is the 13th largest economy in the world. The U.S. has had a long history of successful trade with Korea and opportunities are continuing to increase due to this country’s sophisticated consumer markets and high-tech industry focus. According to the U.S. Department of Commerce, the U.S. and Korea exchange nearly US$83 billion worth of goods and more than US$15 billion in services annually -- that is more than 70 percent of the total bilateral trade that the U.S. enjoys with all 10 trading partners with whom we have implemented Foreign Trade Agreements since 2000.

Due to their favorable business climate, there are numerous reasons to expand your Asian presence to South Korea. The country houses several Free Economic Zones (FEZs), which are self-contained living and business districts that provide numerous advantages to a variety of industries. These districts are located in Incheon, Busan-Jinhae, Gwangyang, Hwanghae, Daegu/Gyeongbuk, and Saemangeum/Gunsan; and feature air and sea transportation, logistics complexes, international business centers, financial services, residences, schools, hospitals, shopping, and entertainment.

The main industries in which South Korea ranks high in global competitiveness include: Semiconductors, Shipbuilding, Automobiles, and Displays. According to the Korean Trade-Investment Promotion Agency (KOTRA), this country has captured 11.3% of the global semiconductor market, with US$39 billion in exports (2007). Additionally, KOTRA states that South Korea is ranked number one globally in terms of new ship building orders; capturing 40% of all worldwide orders.

With US$981.9 billion GDP in 2007 (a 4.9% real growth rate) along with low unemployment, South Korea is a viable market that should be considered; particularly in the industries of Information Technology, Biotechnology and Life Sciences, Nanotechnology, Aerospace and Defense, as well as the Entertainment industry.

When conducting business with South Korean companies it is important to building strong relationships with the best agents and distributors. Koreans tend to be more straightforward and individualistic in comparison with other Asian neighbors. When making business deals it is important to be sincere and honest; conduct meetings in person whenever possible. Sales and marketing techniques will need to be adapted to fit the Korean market. Companies should also consider joint venture partnerships. Whichever market entry method is chosen, ensure that you obtain legal consultation. Last, Korea is a collective culture where decisions tend to be made by group consensus; be patient as the process is often slower than in Western cultures.

GLOBAL ID LLC is a management consulting and international market research company that specializes in assisting small- to medium-sized businesses with international market expansion. If your company falls into one of the emerging industries in South Korea, contact us for a free 1 hour consultation: be sure to mention that you read this article in our blog. We can be reached at 720-334-6982 or Kelly@globalidllc.com.