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Leading Sectors for U.S. Export and Investment

Aerospace Industry

ITA CODE: PR AIR

Overview

 

2012

2013

2014

2015 (Est.)

Total Market Size

5,193

5,766

6,402

6,393

Total Local Production

2,697

3,606

4,339

5,317

Total Exports

1,366

1,652

1,983

2,723

Total Imports

3,862

3,812

4,046

3,799

Source: Korea Aerospace Industries Association (KAI). Unit: USD Million.

Korea is the 13th largest market for U.S. aerospace exports. In 2014, total U.S. aerospace exports to Korea exceeded USD 2.9 billion (including aerospace products in the defense sector). In total value, U.S. aerospace sales constituted about 40 percent of Korea’s total aerospace imports in 2014.

Over 99 percent of all aerospace imports into Korea are for commercial and defense aircraft and their parts and components. Of this, 40 percent of Korea’s aircraft, parts and component imports were from the U.S. in 2014.

While imports are a significant portion of Korea’s high technology and aerospace products, Korean President Park’s stress on the ‘creative economy’ is giving more importance on the development and export of Korean indigenous technologies. Korea’s indigenous aerospace industry includes the production of military helicopters, super-sonic training jets (the T-50 was Korea’s first supersonic jet developed indigenously in conjunction with a U.S. defense company), UAVs, and even MRO parts and components for both Boeing and EADS-Airbus. Korea’s local production of aerospace products continued to grow, at USD 3.6 billion in 2013, while exports of these products grew to USD 1.7 billion in the same year. Although products are still in production Korea is making advances with their sophisticated indigenous products by securing the sale and export of such products as:

  • Korea’s supersonic trainer jet, the T-50 (16 units, USD 0.4 billion) to Indonesia in 2011;
  • the KT-1 trainer jet and KA-1 combat jet (20 units, USD 0.2 billion) to Peru in 2012;
  • the T-50IQ trainer and combat jet (24 units, USD 1.1 billion); and
  • the FA-50 light combat jet (2 units, USD 0.4 billion) to the Philippines in 2013.

A 2010, Ministry of Knowledge Economy (MKE) report “Aerospace Industry Primary Plan (2010 – 2019)” aims to raise Korea’s aerospace production from USD 2 billion (2009) to USD 20 billion by 2020, and raise exports to USD 10 billion, or 3 percent of global market share. The industry plan aims to take Korea from 16th place -- to the world’s seventh largest aerospace producer. Additionally, the goal is to: push Korean industry into importing core technologies, develop domestic capabilities to deliver a ‘complete aircraft,’ and bring effective R&D investment that will contribute to Korea’s aerospace industry.

Based on this plan, Korea will continue to focus on developing its indigenous:

  • mid-sized, fixed-wing aircraft and helicopters for the commercial sector;
  • Korean fighter and attack helicopter for the defense sector;
  • UAVs;
  • environmentally-friendly aircraft;
  • as well as supporting and exporting core components and MRO services.

Major Local Players

Korea’s aerospace industry is driven by Korea Aerospace Industries (KAI: www.koreaaero.com/English/main.asp ) and Korean Air Lines (KAL), one of the largest commercial airliners in Korea. KAI and KAL are also the leading companies which make and assemble parts for Boeing and Airbus. KAI and KAL are active in developing indigenous aircraft including UAVs, rotor-wings, and fixed wings. In 2008, KAI introduced its first non-military private aircraft, ‘Naraon’, making Korea the 28th nation in the world to build and fly an indigenous plane. In 2011, the Korean Aerospace Research Institute (KARI; http://eng.kari.re.kr/ ) succeeded in developing an unmanned tilt-rotor aircraft and, together with KAL, plans to commercialize it. If successful, Korea will be the first in the world, after the U.S., to commercialize a tilt rotor UAV. KAL is also active in providing MRO services for both commercial and defense aircraft.

In 2015, KAI won the KF-X project - Korea’s next generation fighter jets. The Korean government will invest 17 billion USD in the KF-X program until 2025.

Commercial Airliners

KAL has a total of 151 aircraft and is one of the largest consumers of aircraft, equipment, components, and various aerospace services -- as well as being one of the major exporters of aerospace parts and components. Asiana Airlines is the second largest airline in Korea, currently operating a total of 84 aircraft. Additionally, there are five Low Cost Carriers (LCC): Jeju Air, Jin Air, Air Busan, Eastar Jet, and T’Way Air. In 2014, 11.5 percent of all international travelers and 51.2 percent of domestic travelers used LCCs. LCCs demonstrated a dramatic sales revenue growth of 200~300 percent in the past two years.

Korea’s Space Program

Korea also continues to invest in space technology development. In January 2013, Korea succeeded in launching a two-stage rocket, the Korea Space Launch Vehicle-1 (KSLV-1), from its Naro-Space Center on Korea’s southwest coast. This launch makes Korea only the 11th country in the world to successfully send a rocket and satellite into space. In November 2013, the Ministry of Science, ICT and Future Planning (MSIFP; http://english.msip.go.kr/english/wpge/m_72/eng050101.do) and Korea Aerospace Research Institute (KARI) announced their joint ‘Space Development 2020 Roadmap.’ The revised Korean rocket development plan (2020-2040) and space technology industrialization strategy has numerous ambitious mid-to-long term space development goals, to include the Korean government’s plan to develop an indigenous rocket capable of launching a 1.5 ton satellite into higher orbit (600~800km) by 2020. According to the MSIFP, Korea expects that through its space technology industrialization strategy Korea’s space market will grow from its current 800 million USD to 2.5 billion USD. Ultimately, the Korean government plans to increase its space R&D budget and become the world’s fourth leading country in space technology by 2040.

Following is the budget allocated for space development announced by the Ministry of Science, ICT, and Future Planning:

(Unit: USD Thousand)

Project Name

2014 Budget

2015 Budget

Increase rate (percent)

Korea Multi-Purpose Satellite Development

7,293

8,242

13

Geostationary Satellite Development

39,127

64,416

65

Small Satellite Development

7,255

8,800

21

Korean Rocket Launcher Development

213,636

232,273

9

Space Core Technology Development

20,909

21,688

4

Next Generation Medium Size Satellite Development

0

2,727

New Budget

Building Science Rocket Center

0

909

New Budget

Space International Cooperation Support

91

118

30

Space Technology Development Planning Review and Evaluation

818

727

11

Total

289,129

339,901

18

Source: Ministry of Science, ICT, and Future Planning

Following is the list of Korean satellites:

Upcoming Korean Satellite Programs

Type

Satellite Name

Launched Date

Rocket Launcher

Communication and Broadcasting Satellite

KOREASAT 5A

2016 (4th quarter) Scheduled

U.S.Space X

‘Falcon 9’

KOREASAT 7

2016 (4th quarter) Scheduled

France Arianespace

‘Ariane 5’

KOMPSAT-3A

2015.3

Ukraine Yuzhnoye

‘Dnieper’

KOMPSAT-5

2019 Scheduled

TBD

KOMPSAT-6

2020 Scheduled

TBD

Note: For a list of all Korea’s satellite programs beginning in 1999, please contact Sunny Park.

Airports

Korea has two state-owned airport companies, Incheon International Airport Corporation (IIAC) and Korea Airport Corporation (KAC). IIAC is the nation’s largest and has its main international airport in Incheon City. Incheon Airport was voted the top in ‘airport service/quality’ for ten years in a row. It has also won the highest score in the Airport Service Quality (ASQ) category by the Airports Council International (ACI), which consists of 1,700 airports around the world. KAC operates a total of 14 airports in Korea (Gimpo, Gimhae, Jeju, Daegu, Ulsan, Chungju, Muahn, Kwangju, Yeosu, Pohang, Yangyang, Sacheon, Kunsan, and Wonju), of which seven have international status with routes mainly to either China or Japan.

Incheon Airport is presently building a second terminal. This 4.6 billion USD project is scheduled to be completed by 2017. This expansion will correspond to increased international travelers and will improve its strength as an international hub airport. With the second terminal, Incheon International Airport will be able to accommodate 6.2 million travelers and 1,000 airplanes.

At the end of 2015, the Ministry of Land, Infrastructure, and Transport (MOLIT– http://english.molit.go.kr/intro.do) will start construction of two new small airports in Ulleungdo (by 2020) and Heuksando (by 2019), designed to accommodate small aircraft with less than 50 passengers.

In February 2015, MOLIT (Airport Policy Division) initiated a feasibility study on a new airport in Korea’s southeastern region. This feasibility study is planned to be carried out for about a year. Based on the result of this study a decision will be made as to whether to construct a new airport in the southeastern region and specifically where to build it.

Best Products/Services

  • Aircraft and aircraft upgrades
  • Radar/surveillance devices
  • Avionics
  • Parts and components & MRO

Opportunities

Top U.S. aerospace exports to Korea include: complete commercial aircraft, commercial aircraft engines, equipment and parts, as well as military aircraft and their parts and components. The U.S. continues to be the dominant foreign supplier of aerospace/defense products and services, with a dominant import market share. This trend will continue for several years, due to the tremendous growth of low cost carriers (LCCs) in Korea, and due to Korea’s recent decision to purchase next generation fighters (40, RF-35s) and other defense aircraft. This will increase demand on MRO services in the future.

For Korea’s commercial airliners, media sources have disclosed the following procurement plans:

  • Korean Air will acquire four B747-8i, six B777-300ER, four A330-300, four B737-800 in 2015. They will also acquire new cargo planes including one B747-8F by 2015 and Six B777-F by 2016.
  • Asiana Air will acquire two A380, two A320 in 2015 and two more A380 in 2016. They will also acquire thirty A350 and twenty five A321 NEO by 2025.
  • Jeju Air will acquire four new 737-800 aircraft by 2015;
  • Eastar Jet will acquire three B737-800s by 2015;
  • Jin Air will acquire six more aircraft including four B737-800 and two B777-200ER.

KORUS FTA Impact

All of the U.S. aerospace exports are duty-free as of March 15, 2012 as a result of the Korean-U.S. Free Trade Agreement (KORUS).

Resources

Trade Shows

Seoul International Aerospace & Defense Exhibition 2015 (Seoul Air Show 2015)
October 20 - 25, 2015 - http://www.seouladex.com/eng/main.asp

For a complete list of the few small defense and aerospace trade shows please contact Commercial Specialist Ms. Sunny Park. The Seoul Air Show is Korea’s premier aerospace and defense trade show.

Key Contacts

Korea Aerospace Industries Association (KAIA) – http://www.aerospace.or.kr/dbhome/user/aeroe

Korea Aerospace Research Institute (KARI) – http://eng.kari.re.kr/

Ministry of Knowledge Economy (MKE) - http://english.motie.go.kr/

Ministry of National Defense (MND) - http://www.mnd.go.kr/mbshome/mbs/mnd_eng/

Ministry of Science, ICT, and Future Planning (MSIP) – http://english.msip.go.kr/index.do

Ministry of Land, Infrastructure, and Transport (MOLIT) – http://english.molit.go.kr/intro.do

Incheon International Airport Corporation (IIAC) – http://www.airport.kr/eng/

Korea Airport Corporation (KAC) – http://www.airport.co.kr/wwweng/subIndex/4397.do

Local Contact

Ms. Sunny Park
Commercial Specialist
Commercial Service Korea
U.S. Embassy Seoul
188 Sejong-daero, Jongro-gu
Seoul 110-710 Korea
Tel: 82-2-397-4164
Sunny.park@trade.gov

www.export.gov/southkorea

Cosmetics

ITA CODE: COS

Overview

 

2011

2012

2013

2014

Total Market Size

5,947

6,236

6,962

7,767

Total Local Production

5,763

6,326

7,280

8,519

Total Exports

805

1,067

1,290

1,800

Total Imports

989

978

972

1,048

Imports from the U.S.

257

270

285

323

Exchange Rate: USD1=KW1,108 (2011), 1,126 (2012); 1,095 (2013); 1,053 (2014)
Sources: Korea Pharmaceutical Traders Association (KPTA), Korea Cosmetic Association (KCA)
Unit: USD million
Total market size: Total local production – total exports + total imports

Korea is the 10th largest cosmetics market in the world, representing nearly 2.8% of the global market. In 2014, the size of Korean cosmetic market was estimated to be USD 7.8 billion, 11.5 % of increase from the previous year. This market is expected to grow at an average annual rate of approximately 7-8% over the next three years.

Meanwhile, total imports of cosmetics in 2014 reached USD 1 billion, which increased by 7.8% compared to the previous year. Of these, U.S. imports were USD 323 million representing approximately 30.7% of import market share. On a country by country basis, the U.S. is the lead importer, followed by France (USD 298 million) and Japan (USD 121 million).

According to Korea Customs Service statistics, skincare, haircare, and make-up products captured 81.3% of total cosmetic imports in 2014. Skincare products continued to be the largest import category with USD 749 million, accounting for 55.9% of total import market. Imports of skincare products from the U.S. in 2014 rose 17.4% to USD 277 million from USD 236 million in 2013. The U.S. maintained its position as the largest exporter with 37% market share in the skincare products, followed by France (24.6%) and Japan (11.1%).

The hair care product category which includes shampoos, rinses, preparations for hair perms, hair lacquers, hair creams, and hair dyes has become the second largest import category representing 14.3% of import market share. In this category, the U.S. ranked number one with USD 64 million (33.3%) in 2014, a 21.2% increase of the previous year. Japan was second with USD 42 million (21.9%) and the third place was taken by Thailand with USD 33 million (17.4%).

Imported cosmetics take approximately 40% market share in Korea. There is a large variety of products on the market; competitive imports differentiate themselves from existing offerings through brand identity, packaging, unique formulations, and ingredients. Imported cosmetics are primarily sold through department stores (31.9%), with some sold through multi-level marketing (17.7%), hypermarkets (12.3%),online sales (10.2%), brand shops (8.4%), clinics/drug stores (4.0%), home shopping channels (2.5%), and duty free shops (1.9%).

The significant features of Korean cosmetics distribution in 2014 include the stagnation of the premium end market while the lower-priced, mass market is booming. Consumer buying habits are changing; they are focusing on purpose and functionality rather than brand awareness. This change of consumption pattern directly affected the distribution structure, resulting in the rapid growth in low- and middle-priced market including brand shops, TV home shopping and online shopping while the high-priced market of door-to-door sales and department stores strived to hold the line.

In Korea, cosmetics are regulated by the Ministry of Food and Drug Safety (MFDS) and fall under two categories: functional cosmetics and regular cosmetics. Functional cosmetics include whitening, anti-wrinkle, and sunscreen & tanning products. MFDS reviews only functional cosmetics for pre-market approval. For all other regular cosmetics, the Korea Pharmaceutical Traders Association (KPTA) has been authorized by MFDS to review and certify import permission requests submitted by the Korean importer.

According to industry sources, the growth of parallel imports and reduced tariff rates will contribute to increasing demand for quality foreign cosmetics. Of note to U.S. exporters, remaining Korean tariffs on imported U.S. cosmetics will be eliminated over a ten-year period under the KORUS FTA. These market trends signal good opportunities for U.S. companies in the years ahead.

Best Prospects/Services

  • Convergence/multifunctional products such as a combination of aging-care, skin whitening, and/or sunscreen.
  • Functional cosmetics
  • Natural/organic skincare products
  • Hair care cosmetics with special functions (e.g., to protect against hair loss)
  • Men’s cosmetics from simple skincare to facial scrubs, facial masks, SPF products and other functional products

Opportunities

Pharmacies/drug stores, online shopping malls, and television home-shopping channels (such as QVC) have emerged as challengers to traditional retail channels like direct selling, multi-level marketing, "mom and pop" stores, specialty retail establishments, department stores, and discount stores.

There are currently three major franchise drug stores competing in the local market: Olive Young by CJ, W-Store by Kolon, and GS Watson’s by GS (in partnership with Watson’s). These retailers target customers focusing on wellness products by providing organic/natural cosmetics, nutritional supplements, OTC drugs, and general consumer goods. In addition, some major Korean cosmetics manufacturers are interested in importing well-known U.S. cosmetics.

Since the demand for new retail channels has become bigger, various channels such as select shops and multi shops are entering the market. For example, Belport, benchmarking Sephora, launched its first store in September 2014. It then quickly expanded its footprint in Korea, and we continue to monitor its development. In 2015, it is expected that select shops similar to retail multi shops, brand shops would become the primary distribution channel.

In addition, sales via mobile shopping have been and will continue expanding as the number of internet and mobile shoppers increase. Above all, the social and e-commerce market is emerging as one of the top distribution channels.

Resources

Trade Shows

Seoul Cosmetics & Beauty Expo 2016

http://www.cosmobeautyseoul.com

Key Contacts

Ministry of Food and Drug Safety (MFDS) - http://www.mfds.go.kr/eng/index.do

Korea Pharmaceutical Traders Association (KPTA) - http://www.kpta.or.kr/eng/main/main.asp

Korea Cosmetic Association (KCA) - http://www.kcia.or.kr/ENG/_Document/About/about01.html

Local Contact

Ms. Heesook Baik
Commercial Specialist
U.S. Embassy Seoul
188 Sejong-daero, Jongro-gu
Seoul 110-710 Korea
Tel: 82-2-397-4172
heesook.baik@trade.gov

Defense Industry Equipment

ITA CODE: PR DFN

Overview

The Republic of Korea (ROK) has the world’s sixth largest military force following China, U.S., India, Russia, and North Korea. South Korea’s defense industry has grown far faster than the regional average in recent years in order to face the increasingly antagonistic actions of North Korea. Korea continues to be a major defense and security ally of the U.S. in the Pacific region.

As a consequence of North Korea’s attack of ROK’s navy vessel “Cheonan” (March 2010) and artillery attack on ROK’s Yeonpyung Island (November 2010), Ministry of National Defense (MND) has announced Defense Reform Plan 307 (DRP 307) in 2011 consisting of short-term plans (2011-2012), mid-term plans (2013-2015), and long-term plans (2016-2030). DRP 307 is mainly designed to strengthen the defense against North Korea’s localized military attacks and asymmetric threats as well as optimize a military command structure. In 2014, MND announced its Defense Reform Mid-term Plan 2016-2020 and stated that 212.5 billion USD will be allocated for the next five years to: 1) improve overall conditions ROK military forces, 2) re-prioritize the military power focusing on Kill Chain and Korea Air and Missile Defense (KAMD), 3) optimize the troop structure, and 4) increase defense R&D initiatives.

Kill Chain is an offense-oriented defense system that detects missiles in real-time. The goal is to detect any potential threats from the North and take a head start in attacking the nuclear weapon within 30 minutes. The Kill Chain’s main attack means are the fighters and bombing aircraft of the Navy and Air Force. Korea Air and Missile Defense (KAMD) is a lower ground (approx. 20km above ground) defense system where patriot missiles, AMD cells and early warning radar play an indispensable roles. Some of the major procurements of the ROK government are decided on based on establishing these two systems, which includes HUAV (Global Hawk) and patriot missiles (PAC-2/PAC-3).

It is expected that there will be continued review of platform procurement requirements as Korea continues to revise what products/systems are needed in light of this new threat assessment. It is also expected that the force improvement plan will focus more on command and control, surveillance, maritime patrol/littoral support and armor.

Market Demand

 

2012

2013

2014 (Estimated)

2015 (Projected)

Total Market Size

9,386

13,055

16,261

11,493

Total Local Production

9,586

10,666

10,719

10,773

Total Exports

2,353

3,416

3,600

3,780

Total Imports

2,153

5,805

9,142

4,500

Exchange Rate: 1USD is equivalent to 2012: 1,126 won, 2013: 1,069 won, 2014: 1,054 won, and 2015: 1,100 won.

Note: The statistical data above is based on figures announced by Defense Acquisition Program Administration (DAPA). Estimated and projected figures are based on an unofficial estimate from CS Korea based on the budget of Korea’s Force Improvement Plan (FIP), Defense Acquisition Program Administration (DAPA)’s procurement plan, and media reports. Unit: USD Million.

* In an effort to modernize the force and in part to meet the Alliance’s operational requirements, the ROK government has initiated $12-14 billion worth of U.S. Foreign Military Sales (FMS) acquisition programs over the past three years, an amount that exceeds the cumulative ROK defense procurements for the proceeding decade. The ROK government recently approved the acquisition of the Global Hawk Unmanned Aerial Vehicle, AH-64E Apache Heavy Attack Helicopters, the F-35 Joint Strike Fighter, and Patriot PAC-3 upgrades. Along with these significant U.S.-origin defense items, the ROK is pursuing an ambitious domestic procurement plan, with its KF-X advanced fighter, Long Range Surface-to-Air Missile (L-SAM) system, Medium Range Surface-to-Air Missile (M-SAM) system, and others. Currently, the ROK government is also seeking to acquire four Aerial Refueling Tankers at a cost of $1.3 billion.

For 2015, a total of USD 34.05 billion has been announced for Korea’s defense budget which includes USD 24.04 billion for the force improvement plan (FIP). The total budget and FIP budget has both increased by 4.9 percent compared to the previous year. Korea’s defense budget is around 2.3 percent of its GDP and constitutes about 9.99 percent of total national budget and Korea is the 10th country in the world for the defense spending budget.

Breakdown

2014

2015

Total Defense Budget

32,459

34,050

Force Improvement Plan (FIP)

9,554

24,038

Operation & Management (O&M)

22,905

10,012

Unit: USD million ’14,’15 Currency rate 1 UDS = 1,100 KRW

Following is the major plans and budgets allocated under FIP which is part of the Defense Reform Mid-term Plan announced by MND in 2014:

Improving Core Military Strength

Ensuring Necessary Power for Reorganization of Unit

  • Kill Chain (5.5 billion USD)
  • Secure pinpoint strike capability, HUAV, long range air to surface missile, GPS guided missile
  • KAMD (2.5 billion USD)
  • Build capability to strike North Korea’s missile before it hits the ground, PAC, GEMT,M-SAM’s improvement
  • Enforcing battle capability (1.6 billion USD)
  • Enforce Corp’s UAV capability, new detect radar, long range fire control, main facility surveillance system and harbor surveillance system.
  • Ensuring surveillance and command capability (4.7 billion USD)
  • Division patrol UAV, thermal detection devise, TICN (Tactical Information Communication Network)
  • Improving combat strength of battalion (2.2 billion USD)
  • Multipurpose observation glasses, improved 81mm mortar and new 7.62mm machine gun
  • Building necessary facilities for reorganization of unit (1.2 billion USD)

Enhancing Defense Capability

National Defense R&D and Defense Industry Deveopment

  • Ensuring real time surveillance, and status sharing (1 billion USD)
  • Multidimensional high-speed maneuver warfare (4.6 billion USD)
  • Bullet proof command and combat vehicle, improve LAH and K9 self-propelled artillery
  • Securing maritime control & landing operation (10 billion USD)
  • Build Jang Bo Go -3, Ulsan class convoy, high speed boat, landing ship
  • Securing air superiority and pinpoint strike capability (11 billion USD)
  • KF-X, air tanker, multipurpose cluster bomb
  • Ensuring survivability & continuous combat capability (0.36 billion USD)
  • New CBR mask, 30mm multi anti-aircraft firearm
  • Improve R&D environment
  • Increase R&D budget percentage from 6.5 percent to 8.4 percent of the total defense budget by 2020
  • Creating Innovative economy by collaborating military and commercial sector
  • Technology transfer
  • Support defense export and its competitiveness
  • Export T-X (to U.S.)
  • Increase export from 3.6 billion USD (2014) to 5 billion USD by 2020
  • Ensuring creative national defense
  • Apply IoT, ICT, rail gun and etc.

Korea has announced the following plans on acquisition contracts of several major defense projects:

  • Marine Operation Helicopter: Acquisition of 12 naval combat helicopters
  • KF-16: Improvement of combat planes by 2021 at a cost of USD 1.6 billion by 2021
  • P-3C Marine Patrol Aircraft: Improvement of marine patrol aircraft
  • Aerial Refueling Tanker: Acquisition of 4 aerial refueling tankers worth USD 1.4 billion by 2018
  • PAC-3 Missile: Acquisition of 136 ballistic missile worth USD 0.2 billion by 2018
  • Maritime surveillance aircraft: Acquisition of 20 maritime patrol aircrafts
  • LAH/ LCH: Research and development project worth USD 0.7 billion by 2022
  • THX (Basic Flight Training Helicopter): Acquisition of 42 training helicopters worth USD 0.1 billion from 2016
  • KF-X: Developing a new Korean fighter jet; 120 fighters will be manufactured by 2025 at a cost of USD 16 billion.
  • KF-X engines: 120 fighter aircraft engines are needed.
  • Aegis KDX-III Batch-II will apply U.S. Aegis battle system by 2028

Source: DAPA and media

ROK’s defense industry is mainly focusing on establishing an independent defense competence and on modernizing their infrastructure. The Ministry of National Defense (MND) has recently announced a continuation of their plan to: optimize indigenous production, diversity suppliers, bolster air and space power, and procure sophisticated technology in the country’s continual process of modernization and advancement.

Indigenous technology and the drive for defense exports

In 2014, around 6.5 percent of the total budget was allocated to the defense research and development. MND has announced its plan to increase defense R&D budget up to 8.5 percent of the total defense budget by 2018 and maintain 15 percent level in future. To develop high added-value core technologies dominated by a few defense technologies and leading countries, around 10 percent of Korea’s total defense R&D budget will be allocated for the development of these core technologies and the budget will be increased up to 15 percent in the future. With current government putting a great emphasis on the indigenous technology development, the ROK government set up in 2014 a Defense Technology Support Center under ADD (Agency for Defense Development). DTSC will run as an independent entity by 2017. The Korean government is continuously supporting various indigenous technology development programs including Korean helicopter, fighter jet, cruise missile, destroyer ship, and various sized-UAVs.

In 2014, total exports of defense products exceeded USD 3.6 billion, almost triple the amount in 2010 (USD 1.18 billion). Korea is becoming an active player and one of the top countries in the Asia in defense exports. Korea not only increased its exports regionally but also managed to export at a global level, expanding to Europe and South America. Korea exported its defense products to 47 countries in 2006 and utilized some 47 Korea defense companies to do so. In 2014 Korea exporting and expanded its defense exports to 80 countries utilizing some 119 Korean companies to do so. exporting. In the past Korea exported mostly ammunition and fire extinguishers; currently Korea is exporting warships, submarines, propeller training aircrafts and, most recently, light supersonic combat aircraft.

Market Access & Obstacles
The ROK’s defense procurement agency, Defense Acquisition Program Administration (DAPA) is a sole government agency in conducting and executing the procurement of defense equipment. Established in 2006, DAPA is the primary government agency conducting ROK’s defense procurement and is the only agency that is authorized to negotiate on behalf of the Ministry of National Defense (MND) for defense products and services, as well as being the only agency that can authorize offset credits, dictate terms and conditions, and make changes to delivery schedules or required deliverables. DAPA controls all formal negotiations on price, technology transfer, local work share, and offset packages, which are required by the Korean government for all projects in excess of USD10 million. A large portion of Korea’s defense products for export are a result of DAPA’s defense offset program.

In 2010, DAPA announced new guidelines on the utilization of commissioned agents. The new policy requires DAPA to enter into contract directly with foreign prime contractors without the intervention of commission agents for major acquisition programs exceeding USD 2 million. The policy applies only to Force Improvement Programs (FIP), which includes purchases, development, upgrades, and associated installations. Smaller value FIP projects and sustainment projects are not affected.

US Position in Korea’s Defense Industry

There are over 28,500 U.S. troops stationed in Korea on more than 100 bases stretching from the DMZ south to the port city of Busan. Plans call for consolidating the troops onto fewer than 50 bases, with the majority stationed in regional hubs in the areas around Pyeongtaek/Osan and Daegu. Progress is being made with regards to relocating the U.S. troops in Yongsan, Seoul to Pyeongtaek, south of Seoul and the construction of housing, schools and medical and recreational facilities on bases south of Seoul has long been considered a key element in the U.S. plan to allow more troops to bring along their families to South Korea, allowing for longer tours and greater stability among the ranks on the peninsula.

For 61 years the U.S. has been Korea’s most significant military ally, owning largely to the presence of U.S. troops in Korea as a deterrent to any aggression from North Korea. U.S. standards are generally accepted in Korea and most Korean defense systems are based on American standards. This has affected defense procurement decisions. U.S. provided weapon systems to Korea totaling USD 1,931 million in 2012, which accounts for 87 percent of Korea’s total defense imports.

Although, the U.S. continues to be a primary supplier in Korea, the U.S.’s strict export control policies and the aggressive marketing of European and Israeli suppliers come as a challenge for U.S. firms.

Commercial sales (called ‘DCS’ or Direct Commercial Sales) in the defense industry account for 44 percent (an average from 2009-2013) of DAPA’s procurement. It should be noted that over the last two to three years the ROK government has shown its preference for DCS over Foreign Military Sales (FMS) in an effort to purchase items at a less expensive price range. DCS procurements/purchases are also simpler and faster.

End-users

The principal point of contact for major defense projects are the service branches (ROKAF, ROKA, ROKN) and DAPA (Defense Acquisition Program Administration). These branches of the military conduct their procurement of necessary equipment and systems through DAPA. For projects requiring local co-production or co-development, foreign firms very often participate in consortia with leading local firms such as KAI, Korean Air, Doosan, Hyundai, Hanhwa, LIG NEX1, and Samsung Thales etc.

Sub-Sector Best Prospects

  • C4ISR
  • Military Aerospace (fighters, multi-role airlift aircraft)
  • Avionics
  • Maritime Defense Electronics and Systems

Opportunities

  • Aircraft Upgrade (fighters, multi-role airlift aircraft)
  • Asymmetric warfare/littoral/coastal surveillance and patrol
  • Support for Combat Equipment (Fighter aircraft, etc.)

Web Resources

Trade Shows

Seoul International Aerospace & Defense Exhibition 2015 (Seoul Air Show 2015)

October 20 - 25, 2015 - http://www.seouladex.com/eng/main.asp.

Naval & Defense 2015

October 20-23, 2015 - http://www.marineweek.org/eng/index.asp

Defense Expo Korea (DX Korea) 2016

September 7 -10, 2016 - http://www.dxkorea.org/

For a complete list of the niche defense and aerospace trade shows please contact Commercial Specialist Ms. Sunny Park. The Seoul Air Show is Korea’s premier aerospace and defense trade show.

Key Contacts

Defense Acquisition Procurement Agency (DAPA) – http://www.dapa.go.kr/mbshome/mbs/dapa_eng/

Ministry of National Defense (MND) – http://www.mnd.go.kr/mbshome/mbs/mnd_eng/

Agency for Defense Development (ADD) – http://www.add.re.kr

Local Contact

Ms. Sunny Park
Commercial Specialist
US Commercial Service Korea
US Embassy Seoul
188 Sejong-daero, Jongno-gu
Seoul 110-710 Korea
Tel: 82-2-397-4164
sunny.park@trade.gov

http://www.export.gov/southkorea

E-Commerce

ITA CODE: ECC

Overview

E-commerce is a key component of the overall consumer market in Korea, a country with nearly 100 percent broadband Internet penetration, and over 70 percent smartphone phone penetration. Characteristics of e-commerce in Korea include:

  • Domestic online purchases, including purchases on PCs and mobile phones, reached $43 billion in 2014 up from $36 billion in 2013. Domestic electronic commerce, in 2014, comprised 16.9 percent of Korea’s total retail industry and was worth $253 billion.
  • High penetration of smartphones is the main factor driving market growth. While purchases on PCs decreased from $30 billion in 2013 to $29 billion in 2014, purchases on mobile phones increased from $6 billion in 2013 to $14 billion in 2014.
  • The most popular products sourced from domestic online retailers are fashion (18 percent), travel & other services (17 percent), home & car accessories (12 percent), IT (11 percent), and food (8 percent).
  • Online purchases from foreign retailers have also been rapidly increasing because Koreans find less expensive prices on overseas websites even after adding-in international shipping fees and import duties. Sales reached $1.5 billion in 2014, up from $274 million in 2010. In 2015, on-line purchases from foreign retailers are expected to grow to one percent of Korea’s total retail industry.
  • Under the KORUS FTA, express courier service mailed goods under $200 are duty free when sourced from the U.S., and ‘made in the USA’ items under $1,000 are exempt from KORUS FTA documentation.
  • Multi-brand on-line retailers such as Amazon.com and eBay are the most frequently used foreign on-line shopping sites visited by Koreans.
  • The most popular sourced products by Koreans of products from foreign on-line retailers are apparel (19 percent), dietary supplements (14 percent), footwear (13 percent), food (11 percent), cosmetics (11 percent), and handbags (8 percent).
  • Following the implementation of Korea’s privacy for personal data in 2014, Korea Customs continues to push importers of record to clear shipments with a Customs Clearance Indigenous Code (CCIC), a Korea Customs-issued ID number, rather than a national ID number.
  • U.S. based e-commerce companies should review the Personal Information Protection Act (PIPA) and ministerial data privacy/spam regulations, which may restrict e-commerce for firms managing user-data on international servers.

CS Korea completed a 16-page International Market Insight (IMI; April 2015) describing how Koreans make purchases from foreign online retailers. This IMI document can be found under ‘market research’ on the CS Korea’s website www.export.gov/southkorea, or by going to: http://buyusainfo.net/docs/x_958961.pdf.

Best Products/Services

  • Fashion: Apparel, footwear, and accessories
  • Dietary supplements
  • Food
  • Cosmetics
  • Travel and other services

Opportunities

Many Koreans plan to increase the amount of their purchases from foreign online retailers. Purchases from foreign online retailers were $1.5 billion in 2014, and are expected to reach $8 billion by 2018.

U.S. firms should carefully develop a thorough strategy for promoting their products to Korean consumers via E-commerce.

Resources

Trade Shows

FCS Korea was not able to identify any trade shows focusing on electronic commerce. Although Coupang, a major social commerce company in Korea, had an exhibit booth at Korea Pet Show 2014. At present, it is not common for on-line retailers to participate in trade shows.

FCS Korea does have an extensive list of Korean retail trade shows which can be obtained upon request. However most of these trade shows tend to be B2C instead of B2B.

Key Contacts

Ministry of Trade, Industry and Energy (MOTIE) - http://www.motie.go.kr/language/eng/index.jsp

Ministry of Strategy and Finance (MOSF) - http://english.mosf.go.kr/

Korea Customs Service (KCS) -http://www.customs.go.kr/kcshome/site/index.do?layoutSiteId=english

Local Contact

Ms. Jinjoo Lee
Commercial Specialist
Commercial Service Korea
U.S. Embassy Seoul
188 Sejong-daero, Jongro-gu
Seoul 110-710 Korea
Tel: 82-2-397-4324
Jinjoo.Lee@trade.gov

www.export.gov/southkorea

Education Services

ITA CODE: SV EDS

Overview

2013

2014

(est.)

2015

(estimated)

2016

(estimated)

Total Market Size

42,409

41,280

39,750

38,460

Total Local Production

38,361

37,570

36,252

35,180

Total Exports

70

95

107

120

Total Imports

4,118

3,805

3,605

3,400

Imports from the U.S.

1,030

982

955

910

Exchange Rate: 1 USD

1,095

1,053

1,100

1,100


Sources: Bank of Korea, Ministry of Education, Science & Technology, and Statistics Korea. Note: Total Market Size = Total Local Production + Total Imports – Total Exports. Total Local Production=Total educational expenditures by Korean families. Total Exports=Total educational expenditures of foreign students in Korea. Total Imports =Total educational expenditures of Korean students studying abroad. Imports from U.S = Total educational expenditure of Korean students studying in the U.S. Unit: USD millions.

Education, from pre-kindergarten to college, has played an extremely significant role in Korean culture for millennia. Education is a very important ‘ingredient’ of the Korean economy and the Korean ‘psyche’. While this market is very attractive to a wide-swath of the U.S. educational industry, it has become, over the last six years, an increasingly tough market for a number of reasons. Good opportunities do exist, albeit with smaller numbers of U.S.-bound Korean students, if and when U.S. educational entities are prepared to meet a highly sophisticated, demanding, and brand-oriented market. This U.S. service export to South Korea constitutes 11 percent of our service exports to our sixth largest trading partner. According to the Organization for Economic Cooperation and Development (OECD), Korea is one of the world’s largest investors in education among developed countries. As a country, Korea’s educational system is consistently ranked as one of the top three in all major global educational indices.

Korea’s dynamic and constantly evolving education market is best characterized by the speed and power of the referrals and information that flow by word-of-mouth. Changes occur in this sector, most promulgated by the Ministry of Education, almost on a monthly basis. This desire and tendency to ‘change’ the educational landscape is one of the challenges encountered by many education service providers (Korean, U.S. or foreign service providers). The life-span of a popular program in the education sector is relatively short, and typically lasts two to three years, on average. A new trend is taken up quickly after an old one disappears. Thus Korean students and their parents are quick to abandon one program and move on to new opportunities.

From about 2008 to 2013, the Korean educational market changed fairly dramatically, and it is continuing to evolve. Bottom-line, to attract Korean students and penetrate the dynamic and highly saturated Korean education market, U.S. educational entities should not make the episodic/once-a-year-trade-fair -- but rather take an approach based on a creative, dynamic, on-going and growing relationship with Korea, with Korean students, their schools, and with Korean parents. This approach ensures a more permanent, consistent and profound commitment to the market.

According to the Student and Exchange Visitor Information System (SEVIS), a total of 87,384 Korean students are currently enrolled in U.S. institutions (1st quarter of 2015). Korea, with a population of just over 50 million, ranked third, behind China and India, in terms of the number of foreign students studying in the U.S. in 2014. With the lowest birthrates in the world at around 1.2 children per family, the total number of Korean high school graduates is expected to decline by 37 percent within a 10 year period, from 631,000 (2013) to 397,000 by 2023. This has started to have a serious impact on both Korea’s existing educational system as well as the number of students that will travel abroad for their studies.

There are over 175 four year universities and over 145 two year community colleges in Korea. These universities average 15 to 30 buildings/structures. Maintaining this developed infrastructure in light of a severely decreasing student body is a major concern of the Ministry of Education.

Although a university’s reputation is still a key element for a Korean student seeking a degree programs, recently more Korean students are employing strategies to lower the cost of their education by studying at a community college before transferring to a four-year school or state university with less expensive living costs. Another noticeable trend is that the fields of study of Korean students in the U.S. have now become more diversified (and promoted by the Ministry of Education). Currently 30 percent of Korean students are seeking STEM majors, while 17 percent are studying business management, 13 percent are studying fine and applied arts, while 12 percent are studying social studies. The remaining 4 percent are enrolled in English language programs.

Sub-Sector Best Prospects

  • Community colleges
  • One or two-semester exchange programs for college students

Opportunities

Korean parents are increasingly savvy about how they acquire information on educational opportunities for their children. Agents or representatives are utilized less. Educational entities should consider employing a combination of on-line advertising, blogging, Facebook, Twitter, and advertisements in popular search engines within their promotional campaigns. Koreans prefer educational entities that have a long-term commitment to Korea and its students. Building people-to-people networks through alumni advocacy as well as developing and broadening exchange programs, which could, in turn, raise the profile of the U.S. institution, definitely helps U.S. schools attract Korean students to the United States.

Additional opportunities, insights and strategies about Korea’s education sector and how to enter it -- can be found in the eight-page International Market Insight (IMI) document on the Korea’s educational market which can be found at: http://buyusainfo.net/info.cfm?loadnav=&id=14272754&keyx='36CD131BDFE060A77D5FFA1F15084C79.

Web Resources

Trade Shows

Korea Study Abroad & Emigration Fair - http://www.yuhak2min.com/new_www/intro.html

MBA Tours - http://www.thembatour.com/index.html

University Fair organized by Linden Tours - http://www.lindentours.com

Korea Student Fair - http://www.aief-usa.org/

For a complete listing of all of Korea’s many educational trade shows please go to the above mentioned IMI, or http://buyusainfo.net/info.cfm?loadnav=&id=14272754&keyx='36CD131BDFE060A77D5FFA1F15084C79.

Key Contacts

Ministry of Education - http://english.moe.go.kr/enMain.do

Fulbright (Korean-American Educational Commission) - http://www.fulbright.or.kr/xe/?mid=index_en

KOSA (Korea Overseas Studying Agencies) - http://www.kosaworld.org/

Local Contact

Ms. Young Hee Koo
Commercial Specialist
U.S. Commercial Service Korea
U.S. Embassy Seoul
188 Sejong-daero, Jongno-gu
Seoul 110-710 Korea
Tel: 82-2-397-4396
younghee.koo@trade.gov

http://www.export.gov/southkorea

Energy: New and Renewable (NRE)

ITA CODE: PR REQ

Overview

 

2012

2013

2014

(estimated)

2015

(estimated)

Total Market Size

4,197

5,412

5,828

6,583

Total Local Production

5,744

6,863

7,381

8,336

Total Exports

2,523

2,604

2,808

3,119

Total Imports

976

1,153

1,255

1,366

Imports from the U.S.

NA

NA

NA

NA

Korean government investment plan

886

777

761

709

Exchange Rate: 1 USD

1,126

1,095

1,053

1,100(est)

Total Market Size = (Total Local Production + Total Imports) – (Total Exports), Imports from U.S.: NA, Unit: USD mil.

Sources: Korea Energy Management Corporation (KEMCO), Statistics Korea (KOSTAT), and other industry sources.

Note: The above statistics are unofficial estimates by Commercial Service Korea, based on above information sources.

South Korea retains industries that are highly energy intensive (i.e., ship, oil and petrochemical, cement, steel etc.). Given that the country also lacks sufficient natural resources, it relies on imported energy sources to meet almost 96% of its energy requirements. Korea is considered the world’s fifth largest importer of crude oil, second largest importer of liquefied natural gas, and the fourth largest importer of coal. According to Korea Electric Power Corporation (KEPCO), these fossil fuels accounted for approximately 70% of Korea’s power generation in 2013. South Korea is also ranked as one of the largest CO2 emission countries in the world. In an effort to mitigate the effects of overdependence on imported energy sources, South Korea has taken measures to expand the deployment of new and renewable energy.

Generally, in terms of deployment, the supply of new and renewable energy was 5.8 million TOE for 2008 and 9.8 million TOE in 2013, respectively, with a 2008-2013 CAGR (Compound Annual Growth Rate) of 11%.

[Table 1 New and Renewable Energy Supply]

2008

2009

2010

2011

2012

2013

5,858

6,086

6,856

7,582

8,850

9,879

Source: KEMCO (Korea Energy Management Corporation), Unit: Thousand TOE (Ton of Oil Equivalent)

Korea’s Renewable Portfolio Standard (RPS) quota % mandate took effect in 2012. State-owned power generation companies (GENCOs) and independent power producers (IPPs) that generate over 500MW are required to include a certain percentage of new and renewable energy in their production portfolio. GENCOs and IPPs that meet 500MW threshold must generate 10% of its electricity from new and renewable energy by 2024. Due to the difficulties of meeting the Renewable Portfolio Standard (RPS) quota %, the 10% target by 2022 has been postponed to 2024, with revised target goals in the intervening years as shown in table 2-2.

[Table 2-1 Previous: Renewable Portfolio Standard (RPS) quota%]

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2%

2.5%

3%

3.5%

4%

5%

6%

7%

8%

9%

10%

Source: KEMCO (Korea Energy Management Corporation)

[Table 2-2 Revised: Renewable Portfolio Standard (RPS) quota %]

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2%

2.5%

3%

3%

3.5%

4%

4.5%

5%

6%

7%

8%

9%

10%

Source: KEMCO (Korea Energy Management Corporation)

As shown below, as of 2015, there are 17 companies that are applicable to the Renewable Portfolio Standard (RPS) quota % mandate and thereby required to include a certain percentage of new and renewable energy in their power production portfolio:

1.

2. Korea Hydro & Nuclear Power (KHNP),

3. Korea Southern Power (KOSPO),

4. Korea Midland Power (KOMIPO),

5. Korea Western Power (WP),

6. Korea East-West Power (EWP),

7. Korea South-East Power (KOSEP),

8. Korea District Heating,

9. Korea Water Resources,

10. SK E&S,

11. GS EPS,

12. GS Power,

13. POSCO Energy,

14. MPC Yulchon Generation,

15. Pyeongtaek Energy Service,

16. Daeryun Power,

17. S-Power,

18. Pocheon Power

In March of 2014, the Korea Electric Power Corporation (KEPCO), along with the GENCOs, announced plans to invest approximately KRW 42.5 trillion (i.e., equivalent to approximately USD 40 billion) by the year 2020 in new and renewable energy.

Sub-Sector Best Prospects

Biomass – The thermal power Korea GENCOs are expanding the usage of biomass wood pellets as part of fulfilling their Renewable Portfolio Standard (RPS) quota % requirements, via mainly co-firing with coal to produce electricity.  According to industry sources, majority of the wood pellet demand is in the power generation segment. Currently, 5 thermal power generation GENCOs import and use/co-fire biomass wood pellets. Overall, wood pellet imports increased by more than 3 times during 2013-2014 and by almost 4 times during the 2012-2013 period.

[Table 3 South Korea, ‘14 Wood Pellet Imports]

Country

Quantity (tons)

Share (%)

Vietnam

742,794

40.16

Canada

344,261

18.61

China

287,063

15.52

Malaysia

168,336

9.10

Thailand

110,752

5.99

USA

61,977

3.35

Others

134,458

7.27

Total

1,849,641

100

(Source: Korea Association of Pellet)

Hydrogen & Fuel Cells – South Korea’s Gyeonggi Green Energy is considered to be one of the world’s largest hydrogen & fuel cell power plant, with an estimated capacity of 58.8MW. With ROKG’s policy support, this industry is forecasted to grow in the future. The installed capacity for fuel cell has increased by more than 36 times during 2012-2013.

[Table 4 South Korea, Fuel cell installation in terms of MW capacity]

Year

2010

2011

2012

2013

MW

14

24

3

109

(Source: Meritz Securities Research Center and others)

Integrated Gasification and Combined Cycle (IGCC) – Due to the efficiency and environmental feature of this technology, Korea has plans to adopt integrated gasification and combined cycle (IGCC) for one of its new coal-fired plants. The 300 MW demonstration plant is expected to be completed by 2015 (Korea Western Power Company’s Taean IGCC power plant project).

Opportunities

As of 2014, Korea Electric Power Corporation’s (KEPCO) wholly owned power generation subsidiaries, collectively referred to as the GENCOs, produced approximately 85.4% of the nation’s power generation, while local Independent Power Producers (IPPs) generated approximately 14.6% of the electricity. The Korea Electric Power Corporation (KEPCO) is the government-run power company and is responsible for the nation’s transmission and distribution. The GENCOs are one of the primary end-users of NRE products and services. The trend of shifting the power source to NRE will continue under the Renewable Portfolio Standard (RPS) requirements.

The six GENCOs are:

Independent Power Producers (IPPs) include, but not limited to:

  • POSCO Power: http://www.poscoenergy.com
  • GS EPS: http://www.gseps.com
  • GS Power: http://www.gspower.co.kr
  • SK E&S: http://www.skens.com
  • Pocheon Power: http://www.pocheonpower.com
  • Pyeongtaek Energy Service: http://www.pyeongtaekes.co.kr

As end-users, the GENCOs and the Independent Power Producers (IPPs) exert strong influence in choosing what NRE core parts to use. Many NRE power plant construction projects are led by business consortia that consist of end-users, EPC companies, financial service entities, and equity investors. These consortia collectively influence major procurement decisions.

Web Resources

Trade Shows

Expo Solar/PV Korea (Sep 9-11, 2015)

http://www.exposolar.org/2015/

World Clean Coal Conference Korea 2015 (Oct. 21-22, 2015)

http://www.worldcleancoal.org/KR/

Energy Korea 2015 (Nov. 17-20, 2015)

http://www.energykorea.or.kr/eng/main/main.aspx

Key Contacts

Korea Energy Management Corporation (KEMCO): www.kemco.or.kr

Ministry of Trade, Industry and Energy (MOTIE): www.motie.go.kr

Local Contact

Seuk Bong (S.B.) SHIN, Mr.
Commercial Specialist
U.S. Commercial Services Korea
U.S. Embassy
188, Sejongro, Sejong-daero, Chongno-gu
Seoul, Korea
Tel: +82-2-397-4186
sb.shin@trade.gov

www.buyusa.gov/korea

Entertainment and Media

ITA CODE: N/A

Overview

 

2013

2014

2015 (E)

2016 (E)

Total Market Size

3,005.95

3,088.84

3,110.62

3,113.84

Total Local Production

4,750.70

4,775.77

4,791.29

4,801.12

Total Exports

2,385.35

2,391.59

2,399.42

2,412.41

Total Imports

640.60

704.66

718.75

725.13

Imports from the U.S.

356.24

393.11

421.55

465.67

Exchange Rate:

USD1

1,095

1,053

1,100

1,100

Source: Korea Creative Content Agency (KOCCA), Korea Film Council (KOFIC); Unit: USD million.

Sub-Sector Best Prospects

Films

Market Share of Films by Country

 

Korea

U.S.

China

Europe

Japan

Others

2014

50.1

45.3

0.3

2.9

1.2

0.2

2013

59.9

35.5

0.3

3.1

0.8

0.4

Source: Korea Film Council (KOFIC); Unit = %

The total number of movie goers in 2014 was over 215 million, an increase of 7.3 percent over 2013. At the same time, the market share of Korean films decreased to 50.1 percent from 59.9 percent in 2013. For the first time, foreign films had over 100 million viewers in 2014. U.S. film market share increased by approximately 10 percent and was the key driver for the growth of the foreign film market share.

In 2014, 248 Korean films were produced and 217 films were released. Likewise, 1,036 foreign films were imported and rated –a dramatic increase of almost 33% over 2013—and 878 were released. Although the number of screens is limited to a little less than 2,300 per year, imported content is increasing, due to the competition among the various platforms and the fact that there is not sufficient locally produced content to cover the needs of all platforms.

Number of Korean Films Produced, Foreign Content Imported, and Total Films Released

 

Korean Films

Foreign Films

Total films released

# of films produced

# of films released

# of films imported

# of films released

2012

229

175

773

459

634

2013

217

183

780

722

905

2014

248

217

1,036

878

1,095

Source: Korea Film Council (KOFIC)

Opportunities

Growth of Digital On-Line Market

Video-on-Demand (VoD) service, which makes possible to watch content anytime viewers want, is growing explosively. Although VoD service started as a complementary cable TV service using terrestrial TV content, gradually paid VoD services are increasing. As of 2014 November, the number of households subscribing to IPTV is approximately 11 million, while 7.11 million subscribe to digital cable TV. In total, this is 4 million more households than in 2013. According to the ‘Korea Media Panel Survey’ conducted by the Korea Economic Association (http://eng.kea.ne.kr/main/?load_popup=1&filter=on), approximately 89 percent of digital TV service subscribing households use VoD service.

Sales of VoD services were USD 394 million in 2014, an increase of 45% over 2013. The three IPTV service providers, KT, SKT and LGU+, dominated the VoD market. They recorded sales of USD 266 million, representing 67.7 percent of total VoD sales. The other 32.3 percent, with a value of USD 128 million, was from cable TV VoD services.

The growth of the digital on-line market was led by IPTV VoD and digital cable TV VoD in 2014. The share of TV VoD is increasing considerably year after year. In 2012 it was 60.7 percent, in 2013, 64.9 percent and in 2014 it was 75.8 percent. In 2010, film VoD sales were around USD 91 million. In 2014, market demand went up to USD 271 million and was 15 percent of total film market demand, valued at USD1.8 billion.

Although VoD consumers prefer box office hits, the popularity of films in the VoD market is not exactly the same as at the box office. The price of the content and the genre are equally important. The price of films released at the same time as in the cinema is approximately USD10. It drops to around USD 4 within a year after cinema release, and it becomes lower after that.

The rapid growth of the VoD TV market is leading to change in the film industry. The number of films released on IPTV, but not released in the cinemas, is small, but increasing. Recently, major film production companies such as Warner Brothers and Sony Pictures are joining this trend. “22 Jump Street”, “No Good Deed” and “Tammy” were first released through IPTV. These three films were successful in the U.S. market. “Horrible Bosses 2” was released through IPTV in December of 2014 at about the same time that the film was released in the States. VoD market growth also provides various opportunities to the film industry. Certain niche genres which do not get attention from the cinemas have more chances to be released. More diverse film makers, importers and distributors are entering the film market in Korea, which reflects this trend. According to one industry expert, there are more cases of VoD releases that never are released in cinemas making profits. Further, he expects that there will be noticeable changes in the areas of film production and distribution. This presents good opportunities to U.S. content providers who offer both diversity of content and box office hits.

Web Resources

Trade Shows

Busan Int’l Film Festival: http://www.biff.kr

KCTA Show: http://www.kctashow.com/eng/main.html

Busan Contents Market: http://www.ibcm.tv/eng/index.php

Asian Film Market: http://www.asianfilmmarket.org/structure/eng/default.asp

Key Contacts

Ministry of Science, ICT and Future Planning: http://english.msip.go.kr/english/main/main.do

Korea Communications Commission: http://eng.kcc.go.kr/user/ehpMain.do

Ministry of Culture, Sports and Tourism: http://www.mcst.go.kr/english/index.jsp

Korea Creative Content Agency: http://www.kocca.kr/eng/index.html

Korea Cable TV Association: www.kcta.or.kr (Only Korean available)

Korea Film Council: http://www.koreanfilm.or.kr/jsp/index.jsp

Local Contact

Ms. Alex Choi
Commercial Specialist
U.S. Commercial Service, Korea
U.S. Embassy Seoul
188, Sejong-daero, Chongno-gu
Seoul 110-710 Korea
Tel: 82-2-397-4466
E-mail:alex.choi@trade.gov
http://www.export.gov/southkorea

Environmental

ITA CODE: PR POL

Overview

Despite the 2008-2009 global financial and economic downturn, the global environmental industry recorded annual growth rates between 2.5 and 5 percent during the last five years. The biggest driving force for the industry is the national economic stimulus from countries like China, U.S., Germany, Japan, France and Canada. Government investment supported the industry, and much of the spending is forecasted to continue. According to Environmental Business International Inc., a leading industry publishing and research firm, the global environmental industry recorded 3.6 percent growth in 2013, generating revenue of USD 1.047 trillion. Several industry experts expect even a greater growth in 2015, led by negative environmental impact of redundant use energy and natural resources, rapid economic growth of emerging countries and improving living standards.

Korea also devoted its effort to keep pace with the global trend and become competitive in the market in advance. In 2001, the Korean government announced a ten year program called “Environmental Technology Action Plan (ETAP)” within the promotion of cleaner technology R&D and nurtured environmental sub-sectors and technologies in water and wastewater, solid waste, hazardous waste, air pollution, environmental engineering & consulting services. ETAP invested approximately USD 1 billion until 2011. As a result, Korea gained competitiveness in twenty (20) different technologies such as liquid phase injection system, low emission engines, recycling of electronic wastewater and water filtration membranes. The government is encouraging various industries to implement pollution abatement production processes. Since 2011, Korea implemented a successor to the ETAP called “the Eco-Innovation Action Plan (EcoAP) which seeks to foster a comprehensive range of eco-innovative product and service sectors. Korea’s environmental industry is still less than one percent of the global market. Nevertheless the double-digit annual market growth during recent years has been encouraging. Also, over 95 percent of manufacturers in the industry consist of SMEs with an average annual sales revenue of USD 1.5 million and average number of employees is 6.3.

Unit: Million USD

 

2010

2011

2012

2013 (est.)

2014 (est.)

2015 (est.)

Total Market Size

48,054

53,576

73,000

92,256

112,064

140,235

Total Local Production

50,159

57,268

78,621

101,292

125,841

161,684

Total Exports

2,847

4,492

6,484

9,987

14,784

22,547

Total Imports

742

800

863

951

1,007

1,098

Imports from the U.S.

223

240

259

286

302

329

Exchange Rate: 1 USD

1,156

1,108

1,126

1,094

1,053

1,100

Note: The above statistics are unofficial estimates by Commercial Service Korea, based on information published by the Ministry of Environment, Korean Statistical Information Service (KOSIS) and industry experts.

Korea’s environmental industry size by sub-sector Unit: Million USD

 

2010

2011

2012

Pollution control equipment

7,858

9,103

17,972

Resource management equipment

7,015

13,278

22,926

Pollution control construction services

6,796

10,096

6,965

Resource management product distribution business

13,966

12,845

6,035

Other general pollution control services

12,420

8,252

19,103

Total

48,054

53,576

73,002

Source: by the Ministry of Environment, Korean Statistical Information Service (KOSIS)

Korea has implemented policies including the Low Carbon, Green Growth Strategy in 2009 and continues to demonstrate a strong commitment to environmental improvement. CS Korea forecasts that the size of the environmental industry will be worth USD 140 billion in 2015. According to several industry sources, Japan has been the leading exporter to Korea, with approximately 50 percent import market share, followed by the U.S. at 30 percent, then Germany and France.

Local environmental equipment manufacturers in Korea have supplied a major portion of Korea’s environmental projects with medium-level technology and moderate cost products. While they have significantly improved technical levels, mostly via technology transfer and mergers with non-Korean suppliers, Korean manufacturers still lack value-added advanced technologies to supply products that meet the stringent global standard. There is, therefore, demand for advanced imported products and technologies from US.

Sub-Sector Best Prospects

The US is considered as a global leader in many environmental technologies. US companies with competitiveness in price should be able to penetrate into the Korea’s market with new and state-of-the art products and services.

U.S. environmental technology exports by sub-sector in 2008 Unit: Billion USD

Equipment

US ind.

%export

Water Equipment & Chemicals

28.5

36.2%

Air Pollution Control

18

16.2%

Instruments & Info. Systems

5.9

46.0%

Waste Mgmt Equipment

11.4

25.0%

Process & Prevention Tech.

1.9

8.0%

Services

 

 

Solid Waste Management

53.1

0.3%

Hazardous Waste Mgmt

9.2

1.0%

Consulting & Engineering

27.1

12.8%

Remediation/Industrial Services

12.5

6.0%

Analytical Services

1.9

7.4%

Water Treatment Works

40.7

0.6%

Resources

 

 

Water Utilities

39.2

0.2%

Resource Recovery

28.5

58.0%

Clean Energy Systems & Power

21.5

16.0%

Total

299.5

14.6%

Source: Environmental Business International, Inc. (San Diego, CA) and the Office of Energy and Environmental Industries (OEEI), the International Trade Administration (ITA) of the US DOC

Note: U.S. Industry is equal to revenues generated by U.S. companies worldwide. U.S. market refers to revenue from U.S. customers. Exports do not include ownership of overseas companies but do include repatriated profits.

Opportunities

The Korean government plays a key role in the pollution control equipment industry, serving as both the regulator and the largest end-user in this area. To stimulate the Korean economy, the 2015 national expenditure for environmental protection increased approximately 4 percent from the previous year. The national expenditure for environmental protection for 2015 is set at USD 6 billion.

Korean government project tenders are announced on the Korean government procurement (PPS) website, with detailed information on project scope and contact information (http://www.pps.go.kr/english/). For more information on PPS, readers are encouraged to review the “Selling to the Government” section of chapter three of this guide.

To enter the environmental technology market, we recommend that U.S. suppliers partner with qualified and capable Korean companies, which maintain existing sales networks to serve end-users and which are fully aware of the regulatory changes that drive the market. Exhibiting at local environmental trade shows can also be a good platform to explore the market, as well as gain exposure to end-users.

Web Resources

Trade Shows

International Exhibition on Environmental Technologies (ENVEX 2015), June 2-5, 2015 - http://www.envex.or.kr (English website available)

Water Korea, August 25-28, 2018 - http://waterkorea.kr (English website not available)

Key Contacts

Ministry of Environment - http://eng.me.go.kr/main.do

Korea National Cleaner Production Center - http://www.kncpc.or.kr/en/main/main.asp

Public Procurement Service (PPS) - http://www.pps.go.kr/english/

Local Contact

Nathan Huh
Senior Commercial Specialist
U.S. Commercial Service, Korea
U.S. Embassy Seoul
188 Sejong-daero, Jongno-gu
Seoul 110-710 Korea
Tel: 82-2-397-4130
Nathan.Huh@trade.gov

http://www.export.gov/southkorea

Medical Equipment and Devices

ITA CODE: PR MED

Overview

                                                                                                         Unit: USD thousands

 

2013

2014

2015

(estimated)

2016

(estimated)

Total Market Size

4,229,724

4,850,548

5,335,602

5,722,160

Total Local Production

3,857,689

4,324,153

4,721,099

5,051,575

Total Exports

2,356,952

2,445,220

2,535,693

2,637,120

Total Imports

2,728,987

2,971,615

3,150,196

3,307,705

Imports from the U.S.

1,230,563

1,299,247

1,370,705

1,446,093

Exchange Rate: 1 USD

1,095

1,053

1,100

1,100

Total Market Size = (Total Local Production + Total Imports) – (Total Exports)

Source: Korea Medical Devices Industry Association, KMDIA

The Korean medical device market is estimated to reach USD 5.3 billion in 2015. Korea depends on high-end medical devices from the U.S., EU, and Japan to supply about 60 percent of total market demand. Korean companies make comparatively lower-end (mid-technology) medical devices. Another factor favoring the use of imported advanced medical equipment and devices is the growing elderly population, as well as Korean doctors educated in the U.S. and Europe, who are accustomed to using advanced medical devices. At the same time, U.S. medical device manufacturers carefully watch government pricing and reimbursement policy as Korea grapples with cost containment under its national healthcare system.

In 2014, total imports of medical devices were USD 3.0 billion, with U.S. imports totaling over USD 1.3 billion. However, the Korean economy has not fully recovered to its pre-global financial crisis levels. While U.S. market share represents approximately 45 percent of the import market, estimates are that market demand for foreign advanced and innovative medical devices showed relatively slow growth in 2014.

The importation of medical devices requires the assignment of an importer or representative based in Korea to manage medical device approvals and to ensure regulatory compliance. As part of pre-market approval requirements, the Government of Korea requires testing reports on safety and efficacy. In addition to medical device approvals, companies also need to negotiate pricing terms with the Korean Health Insurance Review & Assessment Service (HIRA). For further details on the medical device import process, please contact Ms. Yoonshil Chay of CS Korea at the e-mail address below.

Current issues for the medical device industry in Korea include reimbursement pricing and the healthcare technology assessment system for medical devices. The U.S. Embassy in Korea works closely with key associations, including AdvaMed and the American Chamber of Commerce in Korea, to ensure that U.S. medical device industry interests are well represented.

The KORUS FTA was implemented on March 15, 2012. U.S. medical device and pharmaceutical companies now have the ability to request a review of government pricing and maximum reimbursement determinations for their products through the Independent Review Process. Established to regulate medical devices and drug prices, this review process is independent of the Ministry of Health and Welfare (MoHW), the National Health Insurance Service (NHIS), and the Health Insurance Review and Assessment Service (HIRA).

Sub-Sector Best Prospects

  • Stent
  • Soft contact lens
  • Sight corrective ophthalmic lens
  • Dialyzers for hemodialysis
  • Knee joint prosthesis
  • MRI device
  • Analyzing products, Analyzing products, Chemiluminescence immunoassay(CLIA)
  • Intravascular catheter
  • CT system
  • IVD reagents for clinical immunochemistry

Opportunities

A potential area for U.S.-Korea cooperation in the healthcare technology sector is in the area of clinical trials. Korea is interested in developing a more robust clinical trial environment for medical devices and pharmaceuticals. U.S. companies that need clinical trials for their medical devices may wish to contact the Medical Device Policy Division of the Ministry of Drug and Safety for details specific to their products, through their Korean importer.

Web Resources

Trade Shows
Korea International Medical, Clinical, Laboratories & Hospital Equipment Show 2016 -

www.kimes.co.kr

Key Contacts

Ministry of Health and Welfare (MoHW) – www.mw.go.kr

Ministry of Food and Drug Safety – www.mfds.go.kr

Health Insurance Review & Assessment Service (HIRA) - www.hira.or.kr

Local Contact

Ms. Yoon-Shil Chay
Senior Commercial Specialist
U.S. Commercial Service, Korea
U.S. Embassy Seoul
188 Sejong-daero, Jongno-gu
Seoul 110-710 Korea
Tel: 82-2-397-4439
yoonshil.chay@trade.gov

http://www.export.gov/southkorea

Semiconductors

ITA Code: N/A

Overview

 

2013

2014

2015 (E)

2016 (E)

Total Market Size

39,676

42,211

42,473

45,273

Total Local Production

62,200

68,400

71,820

75,411

Total Exports

57,143

62,650

67,631

70,336

Total Imports

34,619

36,461

38,284

40,198

Imports from the U.S.

4,016

4,232

4,417

4,859

Exchange Rate : 1USD

1,095

1,053

1,100

1,100

Source: Korea Semiconductor Association (KSIA), Korea Association for ICT Promotion (KAIT), and Ministry of Trade, Industry & Energy (MOTIE); Unit: USD million.

The memory semiconductor industry is one of the major IT industries in Korea. Korean conglomerates Samsung and SK Hynix cover almost 70 percent of DRAM and approximately 50 percent of NAND Flash in the global market. However, memory chips are less than 30 percent of the total semiconductor chip industry.

More than 70 percent of system semiconductor chip applications cover diverse wireless and wired market demand such as smart phones, tablet PCs, smart home appliances, energy, automobiles and aerospace. The diversity of chip applications allows the Korean semiconductor industry to experience steady market growth. Korea is competitive in certain sectors of the system semiconductor chip industry, but it has only 5.8 percent of that market globally. The market demand for analogue semiconductor chip applications includes automobiles and sensors for smart devices. This trend will continue as the wired and wireless environment evolves.

Sub-Sector Best Prospects

Automobile related Semiconductors:

Electronic Controller Units (ECU)

Micro Controller Units (MCU)

Tire Pressure Monitoring Systems (TPMS)

Sensors for sound, pressure and temperature

System Semiconductors: High-Definition Multimedia Interface (HDMI)

Display ports

Mobile High-Definition Links (MHL)

Power Control – Discrete/IC/Diode

Opportunities

Digital IT devices are being developed to recognize, imitate, interpret and act as if they are human beings. With the expansion of “smart” IT devices, the market demand for analog semiconductors is rapidly growing. Korea is one of the major global producers of smart IT devices, high-end TVs (Digital TV, Smart TV and other high-end flat screen TV), and automobiles. These industries drive the demand for Korean system and analog semiconductors.

Samsung manufactures image sensors and APs (Application Processors) which are a part of system semiconductors. In this area it has more than 20 percent of the global market share. However, Korean semiconductor chip manufacturers other than Samsung have an insignificant market share. The major suppliers of analog and system semiconductors are from the U.S., Taiwan, Germany, and Japan.

Import Requirements

Korea is a member country of the World Trade Organization Information Technology Agreement (ITA); as such, 92% of U.S. ICT products enjoy duty-free treatment into Korea. The remaining 8%, enter duty-free under the Korea-U.S. FTA (KORUS) except several items, which are duty free from this year, 2015. These include chemicals related to the batteries and semiconductor related products.

Semiconductors have been duty-free under the Information Technology Agreement since 1996. However, emerging semiconductor devices may or may not be subject to duty. This issue had been handled at the Governments/Authorities Meeting on Semiconductors (GAMS). In 2006, the U.S., Japan, Korea, Europe, China and Chinese Taipei agreed to eliminate tariffs on Multi-Component Packages (MCPs). However, the definition was not as broad as hoped. Efforts continue to broaden tariff free coverage for the next set of products, Multi-Component Integrated Circuits (MCOs). At the 2012 World Semiconductor Council Meeting, industry reached a consensus definition of MCO and recommended that WSC governments and authorities provide duty free treatment for MCOs however, the status is still pending.

There is no regulation applied to semiconductor chips, per se. However, when chips are utilized in electronic devices, the devices are subject to KC Mark conformity assessments. As the assessment procedure can be complicated, U.S. firms should consult with their Korean partners before exporting products containing these chips to the Korean market. The guidelines for the KC Mark can be found at: http://rra.go.kr/eng/approval/process/about.jsp

Web Resources

Trade Shows

Korea Electronics Show - www.kes.org

Semicon Korea 2015 - www.semiconkorea.org

LED Korea 2015 - www.led-korea.org

World IT Show 2015 - http://www.worlditshow.co.kr/eng/index.php

Key Contacts

Ministry of Science, ICT and Future Planning - http://english.msip.go.kr/index.do

Ministry of Trade, Industry and Energy – www.motie.go.kr/language/eng/index.jsp

Korea Semiconductor Industry Association - https://www.ksia.or.kr/new/eng/main/

Korea Institute for ICT Promotion - http://www.kiat.or.kr/site/main/index/index002.jsp

Korea Electronics Association - http://www.gokea.org/neweiak/eng/

Local Contact

Ms. Alex Choi
Commercial Specialist
U.S. Commercial Service, Korea
U.S. Embassy Seoul
188, Sejong-daero, Chongno-gu
Seoul 110-710 Korea
Tel: 82-2-397-4466
E-mail: alex.choi@trade.gov
http://www.export.gov/southkorea

Travel and Tourism

SV TRA

Overview

 

2011

2012

2013

2014

2015 (estimated)

Global Outbound Travel

12,693,733

13,736,976

14,846,485

16,689,000

17,400,000

Outbound Travel to the U.S

1,145,216

1,251,432

1,359,924

1,449,538

1,514,000

Global Inbound Travel

9,794,796

11,140,028

12,175,550

13,500,000

15,500,000

Source: Korea Ministry of Culture, Sports and Tourism (MCST), Tourism Organization (KTO), U.S. Department of Commerce National Travel & Tourism Office (USDOC, NTTO).

In 2014, over 16.6 million Koreans - roughly one fourth of the population - traveled abroad. International travel is a rapidly-growing activity for Koreans and offers opportunities for U.S. tourism exports. Rising disposable incomes, gradual increases in vacation time, heightened globalization, and greater awareness of developments outside the Korean Peninsula are causing more Koreans to travel overseas. Korea's per capita GDP rose to almost USD 33,100 in 2013 (World Bank), placing it securely in the ranks of middle-income countries. Korean consumer confidence has also increased gradually, including a rise in discretionary spending for such activities as overseas travel for business and leisure.

Positive economic indicators, Korea’s addition to the U.S. Visa Waiver Program (late-2008) and the U.S.-Korea Free Trade Agreement (KORUS FTA), which entered into force in March 2012, should help spur even more leisure and business-related travel to the U.S. Currently, 12.4% of Korean travel to the U.S. is for business purposes. Korean mass media is influenced by U.S. movies, advertising, popular culture, and the Internet, which continue to stimulate interest in U.S. travel destinations. The recent boom of social commerce (social networks and websites that give product/service sellers access to a large pool of international travel consumers) is also contributing to this growing trend as they offer all types of travel products. Moreover, South Korean’s positive perception of overseas travel and the abundance of information sharing through mass media and social media are expected to continue to boost growth of outbound tourism in the coming years.

The U.S. remains one of top five destinations for Korean outbound travelers. Koreans overwhelmingly choose the U.S. as their non-Asian long-haul destination, primarily because of the diversity of tourism opportunities not generally available in Asia, including U.S.-style shopping, theme parks, cultural attractions in major U.S. cities, relatively inexpensive golf experiences, and U.S. National Parks.

According to the U.S. Department of Commerce, a total 1.45 million Koreans traveled to the U.S. in 2014, up 6 percent from the prior year. The increase is attributed to the stabilization of Korea’s economy after the global financial crisis in 2008 and the Visa Waiver Program that Korea joined in 2008. By 2015, it is estimated that 1.51 million Koreans will travel to the U.S. On average, a Korean visitor to the U.S. spends approximately USD 3,320 per trip. This number translates to over USD 4 billion annually of tourism revenue from Korean outbound travelers to the U.S. Korea is currently the ninth-largest source of inbound travel to the U.S., behind Canada, Mexico, the United Kingdom, Japan, Brazil, Germany, China and France.

Sub-Sector Best Prospects

  • Free and independent travelers
  • Group package tours
  • Family vacation packages
  • Honeymoon packages
  • Cultural tours and scenic/nature tour packages, especially designed for Korean travelers
  • Luxury packages catering to Korea’s single, professional women, traveling for leisure
  • Educational travel
  • Outdoor activities
  • MICE

Opportunities

The U.S. is the leading non-Asian destination for Koreans as it offers a variety of activities, climates, and cultural experiences. However, there is room for growth. U.S.-bound Koreans account for only 9.2 percent of Korea’s outbound market. Los Angeles, San Francisco, Las Vegas, and Seattle, followed by the New York-Washington, DC corridor, are the most popular destinations. Koreans use group tours or travel individually to visit friends and relatives. Group tours should focus on price-competitive products that entice travel agencies in Korea to sell these products. Korean travelers are generally interested in visiting museums, amusement parks, finding bargains at fashion outlets, purchasing OTC pharmaceuticals/vitamins and U.S. cosmetics, playing golf, and visiting restaurants and wineries.

To enter this market, travel and tourism entities should provide materials and guide experiences in the Korean language, continue knocking on doors (i.e., visit Korean travel wholesalers), and cultivate long-term relationships with the travel trade in Korea. There are approximately 9,000 tour agents in Korea. Promotional information and product training programs on the U.S. is urgently needed for developing this market. Contact CS Korea for more details.

Web Resources

Trade Events

June 5-7, 2015

Hana Tour International Trade Show 2015 - http://www.hits2015.co.kr

October 29-November 1, 2015

Mode Tour International Trade Show 2015

June 11-14, 2015

The 30th Korea World Travel Fair (KOTFA) – http://www.kotfa.co.kr/eng/main/main.htm

May 16-17, 2015

Weddex Korea – http://www.weddex.com

Key Contacts

Korea Tourism Organization http://kto.visitkorea.or.kr/eng.kto

Ministry of Culture, Sports & Tourism http://www.mcst.go.kr/english.index.jsp

Brand USA http://discoveramerica.co.kr

Local Contact

Ms. Jessica Son
Commercial Specialist
U.S. Commercial Service, Korea
U.S. Embassy Seoul
188 Sejong-daero, Jongno-gu
Seoul 110-710 Korea
82-2-397-4587
Jessica.son@trade.gov

http://www.export.gov/southkorea

Agricultural Sectors

For information on agricultural products including bulk commodities or processed foods and the distribution channels in Korea, please see the US Department of Agriculture (USDA) Exporter Guide 2014.

When considering the Korean market, US food exporters should conduct preliminary research to determine if the market is appropriate for the product. Possible sources of market information include Korean importers, US state departments of agriculture, the US Agricultural Trade Office in Seoul and the US Department of Commerce. Lists of Korean importers, by product, can be obtained from the US Agricultural Trade Office. The next step might include sending catalogues, brochures, product samples, and price lists to prospective importers as a way of introducing the company and products.

Once contact is established, it is advisable to visit the importer(s) in person, which will increase the seller's credibility with the Korean importer and give an opportunity to see the Korean market first hand. In Korea the clichés about "seeing is believing" and "one visit is worth a 1,000 e-mails" are especially true. Especially in Korea, there is no substitute for face-to-face meetings. The supplier or exporter should bring samples as well as product and company brochures including price lists, shipping dates, available quantities, and any other information needed for negotiating a contract. While information in English is acceptable, having it in Korean is especially helpful. A general overview of the firm in Korean is a good place to start.

The Seoul Food and Hotel Show 2015 presents an excellent opportunity to explore possible market opportunities in Korea. This show is a trade only show and targets importers, wholesalers, distributors, retailers, hotels, restaurants, food processors, media, etc.


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