KOREA Total Population: Capital: Major cities: Language: GDP 2010: GDP Per Capita:
48.3 million Seoul 9.8 million Pusan 3.4 million Inchon 2.5 million Daegu 2.4 million Korean US$1.007 billion $30,000
A
s the 15th largest economy in the world in terms of Gross Domestic Product (GDP), US$1.007 billion in 2010, the Republic of Korea offers an attractive marketplace for international trade and foreign investors. The country recorded 6.2% economic growth in 2010, and Korean companies continue to perform well in the global market.
Global companies are using the Korean market as a test bed for their products. Major global corporations release their new products first in Korea because of its strong purchasing power and the rapid feedback from Korean consumers. Korea is also an attractive trading hub with easy access to large markets such as Russia, China and Japan, as well as the growing Latin America and Caribbean region. Yet, Korea is in many ways, an undiscovered country with vast potential for exporters and importers worldwide.
EXPORTS AND IMPORTS Topthreeexports:
Semiconductors, wireless telecommunications equipment, motor vehicles, computers
Topthreeimports
Machinery, electronics and electronic equipment, oil.
Majorexportpartners:
28% 18%
China 6%
Japan
6%
Other
U. S.
Majorimportpartners:
17,9% 16,2% 10,1%
China 5,2% Japan U. S
Source: INTRADE – Data Portal of the Integration and Trade Sector (IDB)
4,9%
Saudi Arabia Austr alia
45,7%
Other
MajorIndustries:
Electronics, telecommunications, automobile production, chemicals, shipbuilding, steel
Laborforce
24 million (50% of population)
Labor force by occupation
Services
68%
Industry
24%
Agriculture
7%
Corona in Korea Corona beer is currently ranked fifth in the imported beer market in Korea. The first and foremost success factor of this Mexican brand is the establishment of a nationwide distribution network with Oriental Brewery (OB), the oldest and largest brewery in Korea. Being the market leader with its own line of products, OB has also been aggressively expanding the domestic premium beer market by introducing a variety of imported beers to meet the diversified demand of Korean consumers. Corona has been active in cultural marketing like other global companies operating in Korea. For instance, the company collaborated with theaters which offered the famous play “Art� in 2005. They entertained audiences with quizzes and small prizes advertising Corona beer, and actors distributed simple gifts during the play embedding the Corona image within the production. Corona Korea continues to reach out to Korean consumers with more branding and visibility events in theater, film, sports and leisure industries.
F
ourteen Korean companies made the 2011 Fortune Global 500: Samsung Electronics, Hyundai Motor, SK Holdings, POSCO, LG Electronics, Hyundai Heavy Industries, GS Holdings, Korea Electric Power, Han Hwa, Samsung Life Insurance, LG Display, Doosan, Samsung C&T, and Korea Gas. In addition to these world-class companies, more than 610,000 smalland medium-sized companies were new founded over the past 11 years. That is an average of 56,000 new companies every year. About 200 to 300 small- and medium-sized companies are established every day, showcasing this dynamic aspect of the Korean economy.
EASE OF DOING BUSINESS TOP 20 COUNTRIES RANKING
8
11 Saudi Arabia
9
10
11
12
13
1
Singapore
2
Hon Kong
12 Georgia
3
New Zealand
13 Finland
4
United Kingdom
14 Sweden
5
United States
15 Iceland
4
17
6 Denmark
16 Korea
3
18
7 Canada
17 Estonia
8 Norway
18 Japan
9 Ireland
19 Thailand
10 Australia
20 Mauritius
Korea is ranked 16th out of 183 economies, according to the 2011 International Finance Corporation’s Doing Business reports. The reports present quantitative indicators on the ease of doing business in categories such as starting a business, protecting investors, enforcing contracts, and other areas. Source: International Finance Corporation
7
14 15
6
16
5
19
2 1
20
Chilean Wine: No. 1 Leader in the Korean Market 2002 was considered a breakthrough year for the penetration of Chilean wine in the Korean market, as exports exceeded $1 million. However, in the following decade Chilean wine grew 20 times (from $1.2 million in 2011 to $24 million 2011), while Korea’s total wine imports increased by less than five times during the same period (from $29 million to $112 million). As a result, the market share of Chilean wine grew from 2.5% in 2005 to 21% in 2010, making Chilean wine number one in market share. Chilean wine is highly regarded and respected in the Korean market for many reasons. First, its quality and affordability contributed to the creation of a mass market for wine in Korea where wine has long been regarded as a luxury. Second, the FTA effect played a crucial role in the promotion of Chilean wine in the market. Lastly, the accessible image of Chilean wine has been upgraded by deliberately introducing premium wines that are higher quality and more expensive. Currently, there are 83 Chilean wine importers in Korea, importing wine from over 140 wineries in Chile.
26,000
2.ooo
2.oo1
2.oo2
2.oo3
2.oo4
24,000 22,000 20,000
Investment in Smaller Countries
18,000 16,000 14,000 12,000 11,000 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000
Investment in Larger Countries
100,000 120,000 140,000 160,000 180,000 200,000 220,000 240,000 260,000
Total investments by year
Brazil Peru Mexico Guatemala Honduras Chile Colombia El Salvador Bolivia Nicaragua Argentina Venezuela
113,383
28,505 25,023 21,316 10,452 511 1,000 11,000 3,230 10,200 806 1,281 60
Brazil Peru Mexico Guatemala Panama El Salvador Bolivia Nicaragua Argentina Dominican Republic
77,529
18,823 16,641 17,870 2,011 17,000 493 1359 10 3,255 66
Brazil Peru Mexico Guatemala Honduras Panama El Salvador Bolivia Nicaragua Argentina Costa Rica Paraguay
178,220
3,073 86,921 43,916 4,448 18,480 4,500 4,547 4,330 500 6,655 250 600
Brazil Peru Mexico Guatemala Honduras Chile Panama Colombia El Salvador Bolivia Nicaragua Costa Rica Paraguay Dominican Republic
196,072
6,979 113,125 20,791 9,823 10,200 5,500 21,000 100 200 3,916 2,680 271 856 31
Brazil Peru Mexico Guatemala Honduras Chile Panama El Salvador Bolivia Nicaragua Costa Rica Paraguay
163,175
19,892 76,821 25,328 3,297 5,102 11,510 5,00 1,700 650 7,755 5,800 320
2.oo5
2.oo6
2.oo7
Korean Investments in Latin American countries (All figures are in thousands of U.S. dollars)
Total investments by country (Thousands of U.S. dollars)
627,273 514,916 381,004 61,469 50,132
ColorKey
48,829
Brazil Peru Mexico Guatemala Honduras Chile
Panama Colombia El Salvador Bolivia Nicaragua Costa Rica
Argentina Ecuador Paraguay Dominican Republic
47,500 38,072
Venezuela
20,745
Source: Korea Export Import Bank
24,113 21,571 19,571 11,821
Brazil 174,114 29,071 Peru 73,319 Mexico Guatemala 14,266 Honduras 6,775 599 Chile Colombia 188 El Salvador 1,353 970 Bolivia Nicaragua 4,500 Ecuador 120 Paraguay 100
305,374
Brazil Peru Mexico Guatemala Honduras Chile Colombia El Salvador Bolivia Nicaragua Costa Rica Argentina Ecuador Paraguay
266,116
107,660 63,833 58,596 113 9,064 9,064 4,859 7,290 146 3,458 3,630 3,251 93 197
6,506 Brazil Peru Mexico Guatemala Chile Colombia El Salvador Nicaragua Argentina Costa Rica Ecuador
574,459
5,081
268,227 102,882 119,868 17,059 26,295 21,925 5,300 1,035 5,129 1,750 4,988
1,874,327
2,073 97 60
Total Investment
DOING BUSINES
Reporting Country (1.52% o Source: INTRADE – Data Portal of the Integration and Trade Sector (IDB)
Trade Partners (58.04% of w FTA in process
SS WORLDWIDE
of world GDP)
world GDP)
Top 5 LAC Exporters to Korea 2007-2011
Brazil 30.2% Chile 29.2% Mexico 9.5%
Peru 8.1% Argentina 5.9%
Trade relations between Korea and LAC have advanced remarkably since the 1990s. Over the past two decades, LAC-Korea bilateral trade has expanded rapidly, growing at an annual average rate of 16.1%; a better performance than the one experienced with East Asia (15.1%) , the U.S. (9.8%), the E.U. (7.4%) or Japan (7.7%). Source: IDB/INT using data from MOFAT Korea. Data for 2011 reflects information from January to August.
Top 10 LAC Exports to Korea 2008-2009
Share
Accumulated Share
13.4%
13.4% Copper Ores and Concentrates
10.6%
24%
Refined copper: Cathodes and sections of cathodes
6.6%
35.5%
Semifinished products of iron or nonalloy steel
4.4%
39.9% Tankers
6,6%
30.6% Iron Ores and Concentrates
Share
Accumulated Share
3.2%
54.5% Natural Gas (Liquefied)
4.1%
44% Oil-cake, Solid Residues Resulting from Extraction of Soya-bean Oil
4%
48% Zinc Ores and Concentrates
3.3%
51.4% Iron Ores and Concentrates (Agglomerated)
3.1%
57.6%
Vessels for the transport of both persons and goods Source: INTRADE – Data Portal of the Integration and Trade Sector (IDB)
Mexican Beef in Korean market As one of five big beef producing countries in Latin America, Mexico has long been interested in exporting beef to other markets. However, of the 1.67 million tons of beef it produces a year out of 230,000 head of cattle, 198,000 are domestically consumed, while only 32,000 tons are exported. When Korea in 2003 suspended imports of U.S. beef due to the outbreak of BSE (Bovine Spongiform Encephaolopathy), Mexico stepped up as a new supplier. Since then, sales of Mexican beef to Korea have grown by over 500%. Although the current share of Mexican beef in the Korean imported beef market is under 2%, market potential looks very promising. In the first half of 2010 Mexico exported 1,235 tons of beef to Korea, a 40% increase over the same period in 2009. As a result, Korea has become the third biggest market for Mexican beef in the world (12%) after the U.S. (42%) and Japan (40%).
Top 5 LAC Importers from Korea 2007-2011
Mexico 26.4% Brazil 21.1% Peru 8.9% Chile 8.7% Colombia 2.4% Source: INTRADE – Data Portal of the Integration and Trade Sector (IDB)
K
orea’s top trading partner is Brazil, with almost $11.5 billion in trade. Mexico, Peru, Chile, and Colombia are the other top LAC trading partners. But there are also Central American countries such as Guatemala, Honduras, and Nicaragua, who are among the major recipients of Korean investments in the last decade. As Korea continues to build on its successful track record of trading with LAC countries, there are still many opportunities for LAC importers and exporters to be pioneers in this market.
Top 10 LAC Imports from Korea Share
Accumulated Share
19%
19%
Parts of Transmission Apparatus, Radar Apparatus or Television Receivers
7%
26% Monolithic Integrated Circuits
6.9%
32.9% Vehicles with spark-ignition enginel
6.5%
39.4% Liquid crystal devices
5.8%
45.3%
Petroleum Oils, Oils Obtained from Bituminous Minerals (light oils)
Share
Accumulated Share
3.1%
48.3%
Transmission Apparatus Incorporating Reception Apparatus
2.8%
51.1%
Parts of Electrical Apparatus for Line Telephony or Line Telegraphy
52.6%
1.5% Vehicles with spark-ignition enginel
1.3%
54%
Parts and Accessories of the Automatic Data Processing Machines
1.3%
55.2%
Petroleum Oils, Oils Obtained from Bituminous Minerals (other) Source: INTRADE – Data Portal of the Integration and Trade Sector (IDB)
In addition to the free-trade pact Korea has with Peru, Korea is also pursuing free trade accords with Colombia and Mexico
Trade with Peru: 1.9 billion, a 27% increase from 2009.
TRADE HIGHLIGHTS
Two-way trade with Bolivia showed the fastest growth: $233 million, a 200% increase from 2009.
Korea bought $4.7 billion in imports from Brazil in 2010 (up 26% from 2009).
After Chile and Korea signed their Free Trade Agreement, commercial trade between the two countries quadrupled between 2003 and 2010.
Source: Korea Ministry of Finance and Strategy
Hyundai – Establishing its manufacturing footprint in Brazil Hyundai Motor Company, the largest automaker in Korea, started construction of a new plant in Piracicaba, São Paulo, which represents its first plant in Latin America. Total investment by Hyundai on this project amounts to 600 million US dollars, and is supported by local authorities through tax incentives and infrastructure. The plant will have complete vehicle production facilities, and is expected to be up and running by the second half of 2012. All cars produced in this plant will be flex-fuel (ethanol-gasoline) to address the characteristics of the local market. Additionally, 8 parts suppliers will enter the market with Hyundai to provide for the plant’s needs.
www.iadb.org/int