South Korea - opportunities and trends
Date Added: 28 Nov 2013 from BusinessNZ
I have recently been in South Korea which hosted the most recent meeting of the Global Federation of Competitive Councils (GFCC). The GFCC brings together a range of countries to talk about the best policies to achieve competitiveness. At the meeting in South Korea the GFCC explained a new benchmarking tool they are developing so we can compare our performance with countries with similar attributes. I will share more on this once they have refined the tool. Policy people interested in competitiveness can read more here: www.thegfcc.org.
While in Korea I took the chance to meet with NZ Ambassador in Seoul Patrick Rata, and NZTE Trade Commissioner Ryan Freer email@example.com
The NZTE team in Korea is around 6 people, and they have specialists in food and beverage, high tech manufacturing, etc. Ryan Freer says there is some level of help for any NZ company wanting to get into the market, from pre-existing market research to help with import regulatory requirements, to a more tailored package for the companies requiring it.
NZTE is working with between 60-80 companies in the market and the dominant category from New Zealand is food and beverage, where there are lots of opportunities.
The GDP per capita is ahead of NZ on a ppp basis, and it certainly looked like there were plenty of well-off sophisticated people in the city. With a population of over 50 million, there are plenty of potential customers.
It seems there is robust growth in the demand for organics and bio-actives, and there is lots of value in the New Zealand brand/reputation. Another area showing promise for New Zealand exporters is the film and creative sectors, and NZTE hosted a successful booth at the recent film festival and trade show BIFCOM.
Obviously we would like to conclude an FTA with Korea, as we have to face high tariffs on our agricultural and horticultural products, and we would like them to be competitive with imports from other countries. I was told that talks had resumed on the FTA since the Prime Minister's visit and there was good forward momentum on both sides.
While at the Embassy I met with a couple of ex-pat Kiwis who have based themselves in Seoul to help NZ exporters because they saw great opportunities in the market for many of our products. Lewis Patterson is the chair of the Kiwi Chamber of Commerce and has numerous Kiwi clients he is helping in the market firstname.lastname@example.org and Simon Walsh, President of Tiwi, and has lots of well-known food and beverage clients email@example.com
Some tips they passed on to me to share include the following:
- You do need representation in market in Korea – ideally your own people on the ground or, in the interim, if cost is an issue do it via consultants based in the market
- Sustainability, eco-friendly, healthful food are all current trends
- Korea is a very trend sensitive market, so is fast paced and competitive
- A good market to learn to do business in because lessons learned here translate well to other Asian countries.
- Relationships, staying power and a market entry strategy are all key – need to be thinking of 3, 4 and 5 year plans.
- Market research is important and don't dabble because you don't get a second chance if you don't execute well – it is a small and connected market and you need to stay focussed with resources on the ground.
- You can't let importers and distributors down by prevaricating – you will get a bad reputation. If a Korean business shows interest in your product or service be prepared to move quickly and be totally professional – people live to work there, rather than work to live, so quick turn-around times etc are expected.
- Be clear about setting expectations at the outset and get ducks lined up before you go.
- Often order numbers will be predicted (over-estimated) by middle management and will be revised down higher up the tree.
- Keep control of your brand and don't sign up with the first distributor that comes along or it can be hard to extricate yourself (this is true of most markets).
- Know your customer and where to find them
- "Face" is important in Korea
- It is relatively easy to access all the distribution channels in Korea as it is half the size of New Zealand with 10 times the population. There are lots of big franchises – so if you get a deal with one you are everywhere quite fast. Having said that you have to nurture the channel and deliver.
Competitiveness tips from the GFCC meeting - South Korea
The general theme of the meeting held in Seoul was talent driven innovation and creative economies.
As the era of low cost competitiveness changes due to higher incomes and increasing costs around the globe, countries are realising that to keep up growth they will need to move to a more sustainable set of policies to lock in a competitive advantage.
Increasingly the catch-call is innovation, talent and creativity.
The Chairman of the Korean Chamber of Commerce and Chairman of the Doosan Group, Mr Yongmaan Park spoke about the new economy being the dream economy – imagination and creativity will determine competitiveness.
The Ministry of Science in Korea has a new brief for a creative economy and innovation. They have 58 business plans that have been announced and an increase in budget of 12.3%. The private sector needs to step up as well and there will be public/private collaborations.
Chairman of the GFCC, Mr Charles O Holliday (and chairman of Bank of America), spoke about the speed of change due to global connectivity. Where in the past, paradigm shifts took decades, they now take weeks or days. To prepare, his tips were:
- Talent should be deep and wide
- Have robust systems in place
- Embrace change as an on-going process.
The GFCC has published a summary of the policies that various countries are pursuing to achieve competitiveness www.thegfcc.org.
Another quotable quote I wrote down was that "we need artists that think like engineers and engineers that think like artists"
The UK Ambassador spoke about the Olympic Games as a showcase for UK creativity. He said the £36 billion a year generated by the creative industries is worth more than the financial sector in the UK. The focus in the UK is on 8 "great technologies":
- Big data
- Synthetic biology
- Regenerative medicine
- Advanced materials
Another speaker spoke of the convergence of science, technology, art and design and on the "creative economy index", in which New Zealand ranked quite high at number 11.
The Chief Technology Officer for Lockheed Martin (who has 65,000 engineers under him) said engineers need to have design and business skills in their degrees.
Another quote to end with is a Korean saying… "If you wish to go fast, go alone; if you wish to go far, go together".
By Catherine Beard, November 2013.