south korea (afable, vicedo, villanueva)
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Export Market ResearchTRANSCRIPT
SOUTH KOREA
South Korea occupies the southern portion of
the Korean Peninsula, which extends some 680
miles (1,100 km) from the Asian mainland. This
mountainous peninsula is flanked by the Yellow
Sea to the west, and the Sea of Japan (East Sea)
to the east. Its southern tip lies on the Korea
Strait and the East China Sea. The country's total
area is 38,462.49 square miles or 99,617.38
square kilometres.
South Korea can be divided into four general
regions: an eastern region of high mountain
ranges and narrow coastal plains; a western
region of broad coastal plains, river basins, and
rolling hills; a southwestern region of mountains
and valleys; and a southeastern region
dominated by the broad basin of the Nakdong
River.
South Korea's land is mountainous, and most of it
is not arable. Lowlands, located primarily in the
west and southeast, constitute only 30% of the
total land area.
Land Area
The total land area of South Korea
PopulationThe current population
of the Republic of
Korea is about 50.004
million people, which
is an approximate
0.45% increase from
the population taken in
the last census.
Based on the total
land area and the total
population, the
population density of
the country is about
1,271 people per
square mile.
ClimateThe climate of Korea
is characterized by
four distinct seasons:
spring, summer,
autumn and winter.
Winter occurs every January with the
temperature ranging from -5 degrees to 5 degrees.
Spring begins during the middle of April in the
central part of the country.
Summer can be divided into two periods;
Jangma, a rainy period which occurs during the
early summer months and Hanyorum, a hot and
humid period which occurs during late summer.
Autumn is the season with crisp weather, much
sunlight and changing autumn leaves.
SOUTH KOREAPeople & Lifestyle
Family Values
The family is the most important part of Korean life.
In Confucian tradition, the father is the head of the family and it is his responsibility to provide
food, clothing and shelter, and to approve the marriages of family members.
The eldest son has special duties: first to his parents, then to his brothers from older to younger,
then to his sons, then to his wife, and lastly to his daughters.
Family welfare is much more important than the needs of the individual.
Members of the family are tied to each other because the actions of one family member reflect
on the rest of the family.
In many cases the family register can trace a family's history, through male ancestors, for over
500 years.
SOUTH KOREAPeople & Lifestyle
Meeting Etiquette
Greetings follow strict rules of protocol.
Many South Koreans shake hands with expatriates
after the bow, thereby blending both cultural styles.
The person of lower status bows to the person of
higher status, yet it is the most senior person who
initiates the handshake.
The person who initiates the bow says, "man-na-
suh pan-gop-sumnida", which means "pleased to
meet you."
Information about the other person will be given to
the person they are being introduced to in advance
of the actual meeting.
Wait to be introduced at a social gathering.
When you leave a social gathering, say good-bye
and bow to each person individually.
Appointments are required and should be made 3 to 4
weeks in advance.
You should arrive on time for meetings as this
demonstrates respect for the person you are meeting.
Individuals who have established mutual trust and respect
will work hard to make each other successful.
South Koreans treat legal documents as memorandums
of understanding.
They view contracts as loosely structured consensus
statements that broadly define agreement and leave room
for flexibility and adjustment as needed.
Sensitive matters may often be raised indirectly through
the intermediary that first made the introductions.
South Koreans are extremely direct communicators.
They are not averse to asking questions if they do not
understand what has been said or need additional
clarification.
This is a culture where "less is more" when
communicating. Respond to questions directly and
concisely.
Since there is a tendency to say "yes" to questions so
that you do not lose face, the way you phrase a question is
crucial. It is better to ask, "When can we expect
shipment?" than "Can we expect shipment in 3 weeks?",
since this question requires a direct response.
Business Relationship & Communication
South Koreans prefer to do business with people with
whom they have a personal connection.
It is therefore crucial to be introduced by a third-party.
Relationships are developed through informal social
gatherings that often involve a considerable amount of
drinking and eating.
SOUTH KOREA
Internet Speed Ranking
SOURCE: Statista, The Statistical Portal
Having the highest percentage of Internetpenetration with a rate of 82.7% suggests thatthe most efficient and effective channel tocommunicate with the audience is through thedifferent online tools and social mediaaccounts where most of the Koreans spend anaverage of 14 hours weekly.
SOUTH KOREAGovernment
The government of South Korea is divided into three branches: executive, judicial, and legislative. The
executive and legislative branches operate primarily at the national level, although various ministries in the
executive branch also carry out local functions. Local governments are semi-autonomous, and contain
executive and legislative bodies of their own. The judicial branch operates at both the national and local levels.
As with most stable three-branch systems, a careful system of checks and balances is in place. For instance,
the judges of the Constitutional Court are partially appointed by the executive, and partially by the legislature.
Likewise, when a resolution of impeachment is passed by the legislature, it is sent to the judiciary for a final
decision.
Legislative Branch
At the national level, the legislative branch consists of the National Assembly of South Korea. This is a
unicameral legislature; it consists of a single large assembly. Most of its 299 members are elected from single-
member constituencies; however, 56 are elected through proportional representation. The members of the
National Assembly serve for four years. The Assembly forms 17 standing committees to deliberate matters of
detailed policy. For the most part, these coincide with the ministries of the executive branch. Bills pass through
these committees before they reach the floor. However, before they reach committee, they must already have
gained the support of at least 20 members, unless the president has introduced them. To secure final
passage, a bill must be approved by a majority of those present; a tie vote is not sufficient. After passage, bills
are sent to the president for approval; they must be approved within 15 days.
Executive Branch
The executive branch is headed by the president. The president is elected directly by the people, and is the
only elected member of the national executive. The president serves for one five-year term. The president is
head of government, head of state, and commander in chief of the South Korean armed forces.
Judicial Branch
The judicial branch includes the Constitutional Court, the Supreme Court, regional appellate courts, and local
district, branch, municipal, and specialized courts.
SOUTH KOREAEconomic Data
$1.67TRILLION
GDP
1.1%Inflation
Rate
3.2%Unemployment
Rate
16%Population
Below Poverty
Line
Credit RatingSouth Korea’s credit rating outlook was
raised by Moody’s Investors Service to
positive from stable, boosting demand for
the nation’s assets.
“Very strong and improving fiscal
fundamentals,” were a key reason for the
change, along with resilience in the country’s
external financing position, Moody’s said in a
statement today. The rating remains at A1,
the company’s fifth- highest grade.
SOUTH KOREA
Import Export
Imports in South Korea decreased to 42064
USD Million in February of 2014 from
44822.33 USD Million in January of 2014.
Imports in South Korea is reported by the
Ministry of Trade, Industry & Energy
(MOTIE). Imports in South Korea averaged
10568.33 USD Million from 1966 until 2014,
reaching an all time high of 45614.49 USD
Million in October of 2013 and a record low
of 38.61 USD Million in January of 1966.
South Korea imports mainly oil (23 percent
of total imports), semiconductors (6
percent) and natural gas (5 percent). Other
imports include coal, steel and iron ore.
Main import partners are China (16 percent
of total imports), Japan (12 percent), United
States (8 percent) and Saudi Arabia (7
percent). Others include: the European
Union (9 percent), ASEAN (10 percent) and
Australia (5 percent).
Exports in South Korea decreased to 42,989
USD Million in February of 2014 fror South
Korea has an export oriented economy. Major
exports are high-tech manufactured products
like semiconductors (9 percent), machinery (9
percent), automobiles (9 percent), ships (7
percent), LCD devices (5 percent) and
wireless communication devices (4 percent).
Other exports include: steel (7 percent) and
petrochemicals (10 percent). Major export
partners are China (25 percent of total
exports), ASEAN (14 percent), the United
States (10 percent) and the European Union
(9 percent). Others include: Japan, India,
Brazil and Paraguay. This page provides -
South Korea Exports - actual values, historical
data, forecast, chart, statistics, economic
calendar and news.
SOUTH KOREA
Major economic players have lists of grievances that run into scores of pages. Here is a look at just a few
of the reported trade barriers in South Korea:
BASIC PROBLEMS - Foreign goods and services that run into direct competition with South Korean
offerings are often subject to market access barriers. Both South Korean and foreign goods and services
often face regulatory issues coming from excessive government oversight, which leads to increased costs.
AGRICULTURE - South Korea uses high tariffs to protect its politically important farm sector while farm
activists have used mass protests to target wholesalers and retailers to block sales of imported foods. The
pact with the United States is aimed at cutting out beef tariffs that can range up to 40 percent.
AUTOMOBILES - The deal with the United States is supposed to end a tax on engine displacement that
U.S. automakers have said hurts sales of their products. The EU and United States have complained of
numerous non-tariff barriers to trade in the sector. The EU has complained that South Korea keeps foreign
auto technologies out of the country through regulatory barriers and may not enforce market-opening
conditions in a consistent manner.
BEVERAGES - The EU says South Korea has five government agencies overseeing labelling, with
foreign liquor companies are asked to provide 18 pieces of information for labels. The layers of
bureaucracy add significant costs.
CONSTRUCTION - An import tax of 8 percent on building materials hurts foreign firms who use the
materials more.
MOBILE PHONES - Up until April, South Korea required all mobile phones sold to contain Korean-market
specific technology, which led many firms to avoid the country due to re-engineering difficulties. Those who
try to enter face stiff competition due to to market saturation by LG and Samsung handsets.
INTELLECTUAL PROPERTY - While South Korea has made progress in addressing intellectual property
infringement, the EU has complained of lax enforcement of existing laws.
COPYRIGHT AND TRADEMARKS - South Korean data indicate that Hollywood loses at least $1 billion a
year due to pirated movies and TV shows distributed over the Internet. Luxury goods makers have charged
South Korea-based operations with making illegal knock-offs of their products, which has undermined their
brands.
OTHER INDUSTRIES - The list of sectors complaining of trade barriers includes: banking, chemicals,
cosmetics, financial services, insurance, legal services, media, medical devices, pharmaceuticals and real
estate
Barriers to Market Entry
SOUTH KOREA
Bilateral relations between South Korea and the Philippines was established
on March 3, 1949 upon the recognition of Republic of Korea as a sovereign
state by the Philippines. The Philippines was the fifth state to recognize the
Republic of Korea and the first ASEAN country to established relations with
South Korea. The relations were cemented when the Philippines aided South
Korea in the Korean War by sending the Philippine Expeditionary Force to
Korea.
South Korea is the sixth biggest trading partner of the Philippines, while the
Philippines is the third most attractive Southeast Asian country for South
Korean investors in 2011. South Korea also provides the biggest tourist
market for the Philippines. Most tourists who went to the Philippines on 2011were South Koreans, followed by Japanese and Americans.
Philippines & South Korea
SOUTH KOREAProposed Import to SK
Import Export
$42,064M $42,989M
*Import and Export of SK for the month of February 2014
SugarWith a lack in natural resources, South Korea has a
high dependence on import of capital goods, raw
materials and industrial supplies.
In 2005, the Philippines is the 9th
largest sugar producer in the world and 2nd largest
sugar producer among the ASEAN countries second
to Thailand according to Food and Agriculture
Organization of the United Nations Statistics Division.
At least 17 provinces located in 8 regions of the Philippine archipelago have grown sugarcane crops, of
which Negros island accounts for half of the country’s total production. As of Crop Year 2009-2010, 29 mills
are operational divided as follows: 6 mills in Luzon, 13 mills in Negros, 4 mills in Panay, 3 mills in Eastern
Visayas and 3 mills in Mindanao.
Most of these mills are located in the island of Negros. Sugarcane is not a sensitive crop and can be grown
on almost all type of soils, from sandy loams to clay loams and from acidic volcanic soils to calcareous
sedimentary deposits. The harvest period begins from October to December and ends in May.
SOUTH KOREA
Philippine Sugar Supply-Demand & Trade
for the Past 10 Crop Years
Philippines Sugar Industry
Self-sufficient in sugar for the past 3 years
100% allocated volume for US Quota
Exported to the world in the past 3 years, at more than the target
Capacity of 35% of mandated ethanol volume
Two mills and two distilleries exporting electricity. Four more are on various stages of development
SOUTH KOREACompetition
1. Brazil: Annual production: 37,800 metric tonnes
2. India: Annual production: 29,750 metric tonnes
3. China: Annual production: 13,065 metric tonnes
4. Thailand: Annual production: 10,850 metric tonnes
5. USA: Annual production: 7,779 metric tonnes
SOUTH KOREAMarketing
Television
Television is the second most popular method of advertisement in South Korea.
Advertisements take place during commercials between each television
programs. An interesting fact about television advertisements in South Korea is
that “junk food” advertisements have been prohibited to air at the primetime
schedule, which is between 5pm to 7pm.
Newspaper
The newspaper is approximated as to be the second most important medium for
advertisements. Just like the television, advertisements are also frequents in
Korean newspapers. However, this form of advertisement is now threatened
since Internet has become more popular in streaming or publishing
advertisement.
Internet
South Korea has a high world Internet penetration rate of 82.7% recorded in
2011. Most of its users spend an average of 14.7 hours a weekly and almost half
of this group spends more than 14 hours or more. That being said, Internet has
been proven to be the most effective way to reach potential customers within the
country.
Product Placement
Product placement or the practice of strategically placing the company’s products
or their logo within a film, video games and television programs is said to be one
of the rising advertising tool in South Korea. Due to its success, the price for
product placement has been raised by different agencies in the country.
SOUTH KOREAAdvertising Agencies
Daehong Communications is a marketing
communication partner that knows the
contact points of lifestyles and culture,
from distribution such as department
stores and marts to various services such
as food, beverage and hotels. Daehong
Communications has firmly established
theirposition as the best marketing partner
through various success advertising
campaigns. Daehong Communication is a
very diverse company that offers their
clients a wide variety of services such as
marketing strategic solution, creative
solution, media solution, BTL solution,
digital solution, and design marketing
solution.
SK Planet, established in October 2011 as a
wholly owned subsidiary of SK Telecom, leads
the revolution of online and mobile service
platform with its Digital Contents, Integrated
Commerce and Advertising & Marketing
Businesses. Through its merger with SK
Marketing & Company on February 2013, the
new SK Planet became a truly integrated
service platform that encompasses both the
online and offline marketing channels.
Direct selling in South Korea is expected to increase in constant value at a CAGR of 1% over theforecast period. Beauty and personal care direct selling, consumer health direct selling and mediaproducts direct selling are all expected to record healthy growth rates during the forecast periodas there is a marked preference among South Korean consumer to purchase these productsthrough direct selling. The loyalty of South Korean consumers to their favorite direct sellingcompanies is stronger in these categories. On the other hand, home care direct selling and otherdirect selling are two categories which are expected to decline in South Korea over the forecastperiod as store-based retailing channels such as hypermarkets, variety stores are expandingrapidly, while the development of internet retailing in South Korea, especially through mobiledevices such as smartphones remains very dynamic. Many South Korean consumers are likely toprefer store-based retailing channels or Internet retailing due to the diversity of productsavailable through these channels.
SOUTH KOREA
Distribution Mediums
Producer-Customer
This is the simplest and shortest channel in which
no middleman is involved and producers directly
sell their products to the consumers. It is fast and
economical channel of distribution. Big firms adopt
this channel to cut distribution costs and to sell
industrial products of high value. Small producers
and producers of perishable commodities also sell
directly to local consumers.
Producer-Retailer-Customer
This channel of distribution involves only one
middleman called 'retailer'. Under it, the producer
sells his product to big retailers who in turn sell to
the ultimate consumers. This channel relieves the
manufacturer from burden of selling the goods
themselves and at the same time gives them
control over the process of distribution. This is
often suited for distribution of consumer durables
and products of high value.
Distribution Channels
SOUTH KOREAReferences
"Philippines-South Korea Relations". Philembassy-seoul.com. Retrieved 2013-06-10.
http://www.korea.net/NewsFocus/Policies/view?articleId=113844
"PH welcomes 1 millionth Korean visitor this year". ABS-CBN News. 2012-12-27. Retrieved 2013-
06-10.
http://www.korea4expats.com/article-business-practices-etiquette.html
http://www.euromonitor.com/sugar-in-south-korea.html
http://www.sra.gov.ph/annual-report-accomplishments/
https://www.cia.gov/library/publications/the-world-factbook/geos/ks.html
http://www.indexmundi.com/south_korea/demographics_profile.html
http://en.wikipedia.org/wiki/List_of_free_ports
http://in.reuters.com/article/2009/11/06/korea-trade-idINSEO27897920091106
http://www.bloomberg.com/news/2012-04-02/korea-s-credit-rating-outlook-raised-to-positive-by-m
oody-s-1-.html
http://en.wikipedia.org/wiki/Government_of_South_Korea
http://en.wikipedia.org/wiki/Sugar_industry_of_the_Philippines
http://www.kwintessential.co.uk/resources/global-etiquette/south-korea-country-profile.html
http://www.southkoreagovernment.com/government.htm
http://www.euromonitor.com/direct-selling-in-south-korea/report
http://business.gov.in/manage_business/channels_distribution.php
http://www.tradingeconomics.com/south-korea/inflation-cpi
http://www.slideshare.net/etorr021/mmc3602-south-korea-presentation