Published on January 9th, 2013 | by Lewis Parker
The Korean connection
Let’s not put it mildly – South Korea is booming.
According to the Organisation for Economic Co-operation and Development, South Korea’s economy has grown faster than any of its other member countries. It’s also Asia’s fourth largest market, which means it’s predicted to make as big a contribution to the world economy as France or Britain in the next five years.
Whether it’s selling luxury goods in the duty-free section of Incheon airport or being involved with their super-efficient supply chain, South Korea is a vibrant and dynamic place to do business.
Thankfully, our friends at UK Trade and Investment have known this for some time, and have been letting us in on a few poorly kept secrets south of the 38th Parallel.
Foreign businesses have long catered to the Westernised tastes of the South Korean consumer. But in 2011, the EU signed a free trade agreement which will dissolve 97 per cent of trade barriers in the next three years. A deal worth an estimated £500m a year to the UK alone, €1.6bn of duties for EU exporters will be abolished.
“The importance of this cannot be over-emphasised,” says Douglas Barrett, head of UKTI in Seoul. “Companies which sell goods that carry duty have done very well as tariffs have dropped. Sales of cars from the UK, such as Land Rovers, Jaguars and Minis, have almost doubled.”
The capital Seoul is one of Asia’s biggest retail centres. From baby clothes to luxury goods, Koreans look to the West for influence. Turnover at the Louis Vuitton store at Incheon airport just outside the capital saw a turnover of $140m last year.
Buouyed by the 2012 Olympics, UKTI ran a series of events with department stores last summer which proved the nation’s love of Western goods. Meanwhile, a lifestyle event promoting British SMEs saw swaths of business visitors through its doors.
South Koreans are the most connected people on the planet with the fastest broadband connections in the world. According to the OECD, they are the first nation to achieve more than 100 per cent broadband penetration, which adds up to more wireless broadband connections than there are people.
This means Koreans, like the Japanese, are already engaging with high-tech forms of shopping and networking everywhere they go. Even users of Seoul’s subway system can get a zippy internet connection on their phone or tablet. With the government and private sector’s continued investment in 4G technology, South Korea is likely to stay top of the league for quite some time.
With its skyscrapers, wi-fi connections and designer drapes, Seoul may be easily mistakable for Paris or New York. But things do work a little differently out there. For example, South Korean contractors are known for their efficient work, and the transport system is super-effective, but that’s not all.
As Douglas Barrett explains: “The way of doing business is completely different from Europe. Korean society is based on contacts, hierarchy and introductions. Business is about personal connections and who you know.”