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Market Overview

PROFILE

  • Population in March 2017 (Millions): 51.4
  • Capital: Seoul
  • Government: Republic

ECONOMY

2014

2015

2016

Nominal GDP (PPP - Billions US$)

1,707

1,750

1,816

GDP per head (Current US$)

28,188.0

27,402.0

27,733.0

Real GDP Growth Rate (% change)

3.3

2.6

2.7

Real GDP Growth Rate Per Capita (% change)

2.9

2.2

2.3

Consumer Prices (% change)

1.3

0.7

1.0

Unemployment (% of labor force)

3.5

3.6

3.7

Source: The Economist Intelligence Unit

TRADE

FOREIGN MERCHANDISE TRADE (US$ Millions)

2014

2015

2016

Korea, Republic of, Exports to World

572,665

526,900

495,000

Korea, Republic of, Imports from World

525,515

436,500

406,000

U.S. Exports to Korea, Republic of

44,625

43,446

42,266

U.S. Imports from Korea, Republic of

69,606

71,827

69,932

U.S. Trade Balance with Korea, Republic of

Position in U.S. Trade:

     

Rank of Korea, Republic of, in U.S. Exports

7

7

7

Rank of Korea, Republic of, in U.S. Imports

6

6

6

Korea, Republic of, Share (%) of U.S. Exports

2.7

2.9

2.9

Korea, Republic of, Share (%) of U.S. Imports

3.0

3.2

3.2

Principal U.S. Exports to Korea, Republic of, in 2016:

Principal U.S. Imports from Korea, Republic of, in 2016:

1. Transportation Equipment (19.5%)

1. Transportation Equipment (33.4%)

2. Computer & Electronic Products (14.6%)

2. Computer & Electronic Products (22.2%)

3. Chemicals (14.3%)

3. Chemicals (7.6%)

4. Machinery, excl. Electrical (12.4%)

4. Machinery, excl. Electrical (7.4%)

5. Food Manufactures (7.9%)

5. Electrical Equipment (5.9%)

DOING BUSINESS/ECONOMIC FREEDOM RANKINGS

  • World Bank Ease of Doing Business Ranking 2016: 5 of 190
  • Heritage/WSJ 2017 Index of Economic Freedom Ranking: 23 of 180
  • WEF World Competitiveness Ranking 2016 - 2017: 26 of 138

Market Challenges

  • The US$1.8 trillion Korean GDP is ranks 11th in the world and third in the East Asia region. As Korea’s traditional strengths in sectors such as shipbuilding, steel, and petrochemicals have declined somewhat in recent years, the country’s leaders are looking to move toward more technology-intensive industries. U.S. companies will find market opportunities in leading industries such as life sciences, healthcare (medical devices, pharmaceuticals, and biotechnology), industrial chemicals, IT components, semiconductor manufacturing equipment, aerospace/defense, energy, environmental technology, and transportation, to name only a few. U.S. companies are already partnering with local Korean companies and industries to expand market opportunities from Korea to third-country markets, including ASEAN, the Middle East, and other markets of the Asia-Pacific. Korea remains one of the world’s most trade dependent nations, with trade equaling 90 percent of GDP. Given Korea’s strong shipping and air cargo infrastructure, this is not only a market end-point for U.S. goods and services, but also a hub for expansion into other markets.
  • Unique industry standards, less than transparent regulations, resistance to foreign business models, competitive domestic manufacturers in many sectors and pressure to reduce prices to match local firms are some of the challenges that affect U.S. business in Korea. However, firms that bring an innovative edge, are patient, and exhibit a true commitment to the Korean market generally find business to be rewarding and Koreans to be loyal customers. Korean firms are quick to consume new technologies and many US firms have found good receptivity to new products brought into this market.
  • The Korea-U.S. Free Trade Agreement (KORUS FTA) helps make Korea an attractive market to pursue. With more than 90 percent of tariffs now reduced or at zero, U.S. products are becoming increasingly cost-competitive and bilateral trade should increase over time. EU products have had reduced or zero-tariff access to the market since mid-2011. Australia, Canada, and China have also have FTAs with Korea.
  • U.S. SMEs must remain flexible and ready to work with Korean business counterparts pertaining to contract terms or renegotiating price, quantity, and delivery terms, following a business deal or bilateral contractual agreement. The traditional Korean approach to business deals, where Koreans feel that the signing of a contract is only the beginning of a business relationship, differs significantly from the US model and SME firms should be well-aware of this when entering into negotiatons.
  • U.S. exporters of agricultural commodities also face market challenges related to import regulations and testing requirements. Please see the latest USDA/Agricultural Trade Office (ATO) Korea Exporter Guide at:

https://gain.fas.usda.gov/Recent%20GAIN%20Publications/Exporter%20Guide_Seoul%20ATO_Korea%20-%20Republic%20of_12-7-2016.pdf

Market Entry Strategy

Establishing and maintaining a strong business relationship is essential. Companies should visit Korea frequently to cultivate contacts and to better understand business conditions.

A local presence is essential for success. Retain a manufacturer’s representative, distributor, name a registered trading company as an agent, or establish a branch sales office.

  • The Commercial Service (CS) in Korea is eager to assist U.S. companies in developing the right connections/contacts through a wide range of marketing and due diligence services designed to identify and introduce potential buyers, distributors, and importers.
  • Consult: http://export.gov/southkorea/servicesforuscompanies/index.asp

For marketing support of U.S. agricultural commodities and processed foods, consult: https://gain.fas.usda.gov/Recent%20GAIN%20Publications/Exporter%20Guide_Seoul%20ATO_Korea%20-%20Republic%20of_12-7-2016.pdf


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