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Leading Sectors for U.S. Export and Investment

Aerospace Industry

ITA CODE: PR AIR

Overview

 

2010

2011

2012

2013 (Est.)

Total Market Size

5,141

5,930

5,193

5,492

Total Local Production

2,365

2,358

2,697

3,338

Total Exports

935

1,019

1,366

1,653

Total Imports

3,711

4,591

3,862

3,807

Source: Korea Aerospace Industries Association. Unit: USD Million.

Korea is the 10th largest market for U.S. aerospace exports. In 2012, total U.S. aerospace exports to Korea exceeded USD 3.4 billion (including aerospace products in the defense sector). In total value, U.S. aerospace sales constituted about 80% of Korea’s total aerospace imports.

While imports are a significant portion of its high technology and aerospace products, over the last few years, Korea has continued to develop its capabilities to produce indigenous aerospace products, especially those requiring highly-advanced technologies. The country increasingly endeavors to emerge as an exporter of parts and components, as well as being a major industry player and supplier for some of the world’s major manufacturers, including Boeing and Airbus. Korea’s local production of aerospace products continues to grow, at USD 2.8 billion in 2012, while exports grew to USD 1.5 billion in 2012.

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

Korea’s indigenous aerospace industry includes the production of military helicopters, super-sonic training jets (the “T-50” was the first supersonic jet developed in Korea, in conjunction with a U.S. defense company), UAVs, and MRO parts and components for both Boeing and EADS-Airbus.

In 2008, Korea Aerospace Industries (KAI) introduced its first non-military private aircraft, ‘Naraon’, making Korea the 28th nation in the world to build and fly an indigenous plane. Following that, in 2011, Korea Aerospace Research Institute (KARI) succeeded in developing an unmanned tilt-rotor aircraft with Korean Airlines (KAL), Korea’s largest airline. If successful, Korea will be the first nation in the world, after the U.S., to commercialize a tilt rotor UAV. Additionally, in March 2013, KAI won a $1.22 billion contract to exclusively supply wing parts to Europe's Airbus SAS. The contract calls for the building of wing bottom panels (WBP) for Airbus’ very popular A320 passenger jets. This marks the single largest civilian aircraft components deal won by a local company in Korea.

On 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 southwestern coast. Korea is only the 11th country in the world capable of sending a rocket and satellite into space.

Korea’s aircraft parts and components industry is driven by Korean Airlines (KAL), which has one of the largest commercial fleets in Asia. KAL plays an important role in Korea’s civil aerospace market. It has a total of 148 aircraft and is the largest consumer 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 80 aircraft. Additionally, there are five Low Cost Carriers (LCC): Jeju Air, Jin Air, Air Busan, Easta Air, and T-Way Air. All of these airlines have ‘growth’ in their forecasts.

In the first half of 2012, despite Korea’s sluggish growth (2.3% GDP), over 22 million Koreans traveled outside Korea. This was twice the number compared with the first half of 2011. Some 1.5 million passengers utilized LCCs (over six percent of all Korean air travelers). This usage is expected to go to 10 percent in the near future.

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 #1 in the ‘airport service quality’ survey for the eighth year in a row and has won the highest score in the Airport Service Quality (ASQ) category, organized by the Airports Council International (ACI), consisting of 1,700 airports around the world. It is also consistently named Best Airport in the Asia-Pacific and Best Airport in the 25 to 40 million passenger category.

KAC operates a total of 14 airports in Korea (Gimpo, Kimhae, Jeju, Daegu, Ulsan, Chunju, Muahn, Kwangju, Yeosu, Pohang, Yangyang, Sacheon, Kunsan, and Wonju), of which seven have international status, with routes mainly to either China or Japan.

Best Products/Services

  • Air Traffic Control Systems
  • Radar
  • Avionics
  • Unmanned Aero Vehicle Systems

Opportunities

Top U.S. aerospace exports to Korea include: complete aircraft, civilian aircraft engines, equipment and parts, military airplane parts, and helicopters. Korea is continuing to develop its indigenous aerospace industry, including the production of military helicopters, super-sonic jets, unmanned vehicles, MRO parts & components, and continued work-share for commercial aircraft components for Boeing and EADS-Airbus. 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 at least several years.

In April 2013, media sources disclosed the following growth plans for Korea’s airlines:

  • Korean Air will acquire nine new aircraft in 2013 and another 53 by 2018;
  • Asiana Air will acquire four new aircraft in 2013; and
  • The five LCCs have disclosed plans to acquire two new aircraft (each) in 2013.

Additionally, Korean Air and Boeing have recently announced a plan to build Asia’s largest flight training center, to include a flight simulation center, in Incheon, Korea.

KORUS FTA Impact

All of the U.S. aerospace exports are duty-free as of March 15, 2012, as a result of the implementation of the Korea-U.S. FTA (KORUS).

Resources

Trade Shows

Korea Aerospace & Defense Exhibition (Seoul Air Show 2013)

Bi-annual: October 29 - November 3, 2013, KINTEX

Key Contacts

Korea Aerospace Industries Association (KAIA) – www.aerospace.or.kr

Korea Aerospace Research Institute (KARI) – www.kari.re.kr

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

Ministry of National Defense (MND) – www.mnd.go.kr

Local Contact

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

Cosmetics

ITA CODE: COS

Overview

2010

2011

2012 (E)

Total Market Size

5,457

5,947

6,538

Total Local Production

5,203

5,763

6,627

Total Exports

597

805

1,067

Total Imports

851

989

978

Imports from the U.S.

225

257

270

Exchange Rate: USD1= KW1,156 (2010), 1,108 (2011), 1,126 (2012);
Sources: Korea Pharmaceutical Traders Association (KPTA), Korea Cosmetic Association (KCA);
Unit: USD million.

Total imports of cosmetics in 2012 were estimated to be USD 978 million. Of these, U.S. imports were USD 270 million, representing an approximately 28 percent import market share. It is estimated that by 2013, the Korean cosmetics market will increase by approximately 10 percent over 2012 and reach a value of approximately USD 7 billion. The market is expected grow at an average annual rate of approximately 10-15 percent over the next several years.

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

The Korean cosmetics market is polarized, with products focused both at the premium end and at the lower-priced, mass-market end. Thus, cosmetics companies focus their offerings towards two distinct groups of consumers or target audiences: consumers shopping at low-cost cosmetics franchise stores and those that are shopping for high-end luxury cosmetics, at more expensive department stores.

Sales of men’s cosmetics have been and will continue expanding. This growth reflects the interest of Korean male consumers expanding from simple skincare to other cosmetics, such as facial scrubs, facial masks, concealers, SPF products, and other cosmeceutical products. With this trend, men’s skincare salons have opened in business districts and now provide one-stop total beauty and hair care services, including hair cutting, perms, treatments, and facials. To meet this increasing demand for men’s skincare products, many department stores have opened men’s cosmetics counters on the men’s floor, featuring recognized international brands like Clinique, Clarins and Biotherm, that offer after-shave lotions, cleaning foams, facial scrubs, facial packs, essences, and other functional cosmetics.

Best Prospects/Services

  • Natural/organic skincare products
  • Functional cosmetics for both women and men
  • Hair care cosmetics with special functions (e.g., to protect against hair loss)

Opportunities

Pharmacies and drug stores, catalogue sales, and newer channels such as on-line 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. Furthermore, some major Korean cosmetics manufacturers are interested in importing well-known U.S. cosmetics.

Resources

Trade Shows

Seoul Cosmetics & Beauty Expo 2014
http://www.cosmobeautyseoul.com

Key Contacts

Korea Food & Drug Association (KFDA) - http://eng.kfda.go.kr/index.php

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

Korea Cosmetic Association (KCA) - http://www.kcia.or.kr/eng/company/greeting.asp

Local Contact

Ms. Yoon-shil Chay
Senior Commercial Specialist
U.S. Embassy Seoul
188 Sejong-daero, Jongro-gu
Seoul 110-710 Korea
Tel: 82-2-397-4439
E-mail: Yoonshil.Chay@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, the U.S., India, North Korea, and Russia. South Korea’s defense industry has grown far faster than the regional average in recent years, in order to counter the increasingly antagonistic actions of North Korea. The ROK continues to be a major defense and security ally of the U.S. in the Pacific region.

Continuing threats from North Korea, including the sinking of South Korea’s navy vessel “Cheonan” (March 2010) and an artillery attack on South Korea’s Yeonpyung Island (November 2010), plus the launch of a rocket in December of 2012 and a third nuclear explosion in February 2013, have prompted the ROK to allocate significant resources to develop its defense industry.

The ROK’s defense industry is mainly focused on establishing an independent defense competence and modernizing infrastructure. The Ministry of National Defense (MND) has recently announced a continuation of their ambitious 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.

In March 2011, the MND announced its revised “DRP 307” plan, designed to strengthen its defense against North Korea’s localized military attacks and asymmetric threats, as well as to optimize a military command structure.

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

Market Demand

 

2010

2011 (Estimated)

2012 (Projected)

2013 (Projected)

Total Market Size

8,275

8,812

8,994

9,180

Total Local Production

7,707

9,342

10,086

11,152

Total Exports

1,188

2,400

3,000

3,920

Total Imports

1,756

1,870

1,909

1,948

Imports from the U.S.

1,159

1,234

1,260

1,286

Exchange Rate: 1 USD

1,100

1,100

1,100

1,100

Note: The statistical data above is 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.

For 2013, a total of USD 30.66 billion has been allocated for Korea’s defense budget, which includes USD 9.03 billion for the ROK’s force improvement plan (FIP). The total budget and FIP budget received a 5.8 percent and a 2.2 percent increase, respectively, compared to the previous year.

Breakdown

2012

2013

Total Defense Budget

29,269

30,665

Force Improvement Plan (FIP)

8,787

9,032

Operation & Management (O&M)

20,482

21,633

Exchange Rate: 1 USD

1,126

1,120

USD millions

The FIP 2013 budget was increased to prepare for the increasing threat from North Korea and for the promotion and investment in local production capabilities and exports.

Korea has announced the following acquisition plans for several major defense projects:

  • NF-III Next Generation Fighter (F-35 vs. F-155E): Acquisition of 60 aircraft worth USD 8 billion
  • KF-X: Acquisition of 60 Next Generation Korean Fighters, worth USD 4.4 billion
  • Air tanker/refueler: Acquisition of 4 refuelers, worth USD 6.5 billion
  • Global Hawk: Acquisition of 4 HALE UAVs, worth USD 780 million
  • AEW&C (E-737): Acquisition of 4 AWACs, worth USD 1.6 billion
  • AH-X: Acquisition of 36 heavy attack helicopters, worth USD 2.5 billion
  • KDX-III (AEGIS) Destroyer: Acquisition of 3 destroyers, worth USD 4 billion
  • KSS-II Diesel Submarines: Acquisition of 9 submarines, worth USD 3 billion

Source: ROK Ministry of Strategy and Finance

With around 7.1% of the total budget allocated to defense R&D, the ROK is continually supporting local production capabilities, with great emphasis placed on exports, aiming for the total export of defense items from the ROK to reach USD 10 billion in five years.

In 2011, total exports of defense products were USD 2.4 billion, more than double 2010 levels (USD 1.1 billion) and 10 times higher than five years ago (USD 0.25 billion). This impressive growth is largely attributable to two major export contracts: T-50 trainer jet exports (16 units, USD 400 million) and submarine exports (3 units, USD 1.1 billion, Korea’s biggest-ever defense export sale) -- both to Indonesia.

In recent bilateral meetings between the ROK and the U.S., the two countries have reaffirmed previous plans to transfer wartime military operational control to Seoul by December 2015. Wartime military operational control will be handed over to Korea’s Joint Chiefs of Staff, from the Korea-U.S. Combined Forces Command.

Additionally, progress is being made regarding the relocation of the U.S. troops in Korea to Pyeongtaek, south of Seoul. The relocation comes under an agreement first reached in 2004, and then finalized in 2011, to relocate the American military bases in and around Seoul to Pyeongtaek, by the end of 2016. There are currently 28,500 U.S. troops stationed on more than 100 bases in Korea, 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 areas around Pyeongtaek/Osan and Daegu. 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 families to South Korea, allowing for longer tours and greater stability among the ranks on the Korean peninsula.

Market Access & Obstacles

The ROK’s defense procurement agency, the Defense Acquisition Program Administration (DAPA), is the sole government agency conducting and executing the procurement of defense equipment. Established in 2006, DAPA is the only agency 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 USD 10 million. A large portion of Korea’s export of defense products is 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 a commissioned agent for major acquisition programs (those 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.

U.S. Position in Korea’s Defense Industry

The U.S. remains Korea’s most significant military ally, owing largely to the presence of 28,500 U.S. troops in Korea as a deterrent to aggression from North Korea. This has historically affected defense procurement decisions. The U.S. continues to be a primary supplier in Korea, but the presence of other major suppliers (like Germany and Israel) is increasing. Recently (January 2013), Korea selected AugustaWestland, a Finmeccanica company, over U.S. companies, to supply AW159 helicopters to meet its maritime operational helicopter requirement. With increasing competition from European competitors, U.S. companies still maintain a significant position in the Korean defense market and are expected to do so into the future.

The U.S. provided weapons systems to South Korea totaling USD 1,159 million in 2010, which accounted for 66 percent of Korea’s total defense imports. U.S. standards are generally accepted in Korea and most Korean defense systems are based upon American standards.

Direct commercial sales in the defense industry account for 54 percent of DAPA procurement (an average figure, from 2004 to 2011), but the MND encourages more government-to-government (FMS - Foreign Military Sales) programs, in an effort to reduce costs.

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 procure all 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, Hyundai Heavy Industries (HHI), and Samsung Thales, etc.

Sub-Sector Best Prospects

  • C4ISR
  • Military aerospace (fighters, multi-role airlift aircraft)
  • Avionics
  • Maritime defense electronics and systems

Opportunities

  • Aircraft upgrades (fighters, multi-role airlift aircraft)
  • Asymmetric warfare/littoral/coastal surveillance and patrol
  • Support for combat equipment, including fighter aircraft

Web Resources

Trade Shows

Seoul International Aerospace & Defense Exhibition 2013 (Seoul Air Show 2013), October 29 to November 3, 2013 (http://www.seoulairshow.com). Please contact Kallman Worldwide, Inc. (http://www.kallman.com/), the official U.S. Pavilion organizers for ADEX 2013, for the U.S. Dept. of Commerce.

Naval & Defense 2013

October 22-25, 2013 - http://www.marineweek.org/naval_defence/main.php?lang=EN

As the Defense Acquisition Program Agency (DAPA) conducts formal contracting in South Korea, presentations to DAPA can be effective marketing tools to introduce new products/systems/services. DAPA provides this opportunity every two or three months. Consult: http://www.dapa.go.kr to confirm future scheduling.

Local Contact

Ms. Sunny Park
Commercial Specialist
U.S. Commercial Service, Korea
U.S. Embassy Seoul
188 Sejong-daero, Jongno-gu
Seoul 110-710 Korea
Tel: 82-2-397-4164
E-mail: sunny.park@trade.gov
http://www.export.gov/southkorea

Education Services

ITA CODE: SV EDS

Overview

2011

2012

(estimated)

2013

(estimated)

2014

(estimated)

Total Market Size

42,946

42,409

42,500

42,650

Total Local Production

38,476

38,361

38,330

38,442

Total Exports

55

70

85

97

Total Imports

4,525

4,118

4,255

4,305

Imports from the U.S.

1,129

1,030

1,132

1,142

Exchange Rate: 1 USD

1,108

1,126

1,126

1,126

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.

In Korea, education, from pre-kindergarten to college, is ‘king.’ It plays a very significant role in the Korean economy and is part of the Korean psyche. There are good opportunities for a wide swath of U.S. educational institutions, if they are prepared to meet a highly sophisticated, demanding and brand-oriented marketplace. According to the Organization for Economic Cooperation and Development (OECD), Korea is one of the largest investors in education among all developed countries.

Higher education is synonymous with privilege and power in Korea. A degree from a well-known institution is a status symbol and essential for finding the ‘right job in the right company.’ Coveted spaces in Korea’s top schools are open to competition from all students, but attainable for only a few. Many talented students instead opt for the best schools outside the country and obtain a diploma from an accredited overseas school. This translates into opportunities for U.S. schools to recruit some of Korea’s most talented students. Koreans remain willing to spend a substantial portion of their income on education.

According to the Student and Exchange Visitor Information System (SEVIS), a total of 98,471 Korean students are enrolled in U.S. institutions (2013). Korea, with a population of 50 million, has ranked second behind China (with a population close to a billion), followed by India, in terms of the number of foreign students studying in the U.S. over the last few years. Some 289,288 students are studying abroad, per the Korean Ministry of Education. Korean students are generally going to the following markets: the U.S., 25 percent; China, 22 percent; Australia, 12 percent; Japan, 9 percent; the UK, 6 percent; Canada, 5 percent; other countries, 21 percent.

Korea recorded one of the lowest birthrates in the world, with around 1.2 children per family in 2012 (OECD). While the overall number of Koreans going abroad peaked in 2011, it decreased by 9% in 2012, for the first time in four years. Despite the decline of Korea’s young population, Korea will likely continue as one of the top sources of international students who have the financial resources to travel abroad. As well, these students will uniformly achieve high academic performance at the U.S. institutions they attend.

The reputation of an educational institution has been key for students seeking a degree in higher education, whereas students studying in short-term programs (including university-to-university programs) focus on things like cost, living conditions, and also reputation. Since the global financial crisis of 2008 to Korea’s present sluggish economy, the trend has been that Korean families are increasingly employing strategies to lower the cost of education. One way is by studying at a community college before transferring to a four-year school, or studying English in a low-cost country before applying to an American school.

Sub-Sector Best Prospects

  • One-year exchange programs for elementary and secondary school students
  • Community colleges
  • One- or two-semester exchange programs for college students

Opportunities

Recently, a growing number of Korean students began taking advantage of exchange programs or ‘one-way’ programs (i.e., Korean students pay the tuition to U.S. institutions that combine English language and credit courses). Korean students also express a high interest in programs that incorporate other value-added components, such as internships or training in job interview techniques.

Korean parents are now savvier about acquiring information on educational opportunities for their children. Agents or reps are utilized less often. Educational entities should consider employing a combination of on-line advertising, blogging, personally visiting middle and high schools, alumni groups, social media, advertisements via popular search engines, Korean-American newspapers in the U.S., and advertising in business newspapers and/or on cable TV/radio in Korea. Koreans prefer educational entities that have a long-term commitment to Korea and its students.

Web Resources

Trade Shows

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

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

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

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

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
E-mail: younghee.koo@trade.gov
http://www.export.gov/southkorea

Energy: New and Renewable (NRE)

ITA CODE: PR REQ

Overview

 

2010

2011

2012 (estimated)

2013

(estimated)

Total Market Size

4,002

7,289

8,205

8,285

Total Local Production

6,988

13,481

17,391

17,538

Total Exports

4,532

7,650

10,700

10,486

Total Imports

1,547

1,458

1514

1530

Imports from the U.S.

NA

NA

NA

NA

Korean government investment plan

466

622

588

617

Exchange Rate: 1 USD

1,156

1,108

1,126.00

1,120.00

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

Data Sources: Korea Energy Management Corporation (KEMCO); Korea Energy Management Corporation (KEMCO) and Ministry of Knowledge Economy (MKE); Imports from U.S.: NA; Unit: USD million.

According to the Korea Energy Management Corporation (KEMC), Korea’s energy consumption has increased sharply since the mid-1970s, due primarily to the rapid economic growth propelled by the heavy and chemical industries. Total primary energy consumption, which stood at 43.9 million tons of oil equivalent (TOE) in 1980, increased more than six-fold, to 275.7 million TOE in 2011, ranking Korea as the 10th largest energy consuming nation in the world. Energy consumption per capita also increased rapidly, from 1.1 TOE in 1980 to 5.1 TOE in 2011.

As of the end of 2011, NRE supply totaled 7,583 thousand TOE and comprised 2.75 percent of total primary energy consumption. Of the total supply of NRE, waste energy contributed the largest proportion, with 67.54 percent, following by hydro power, with 12.73 percent, and other types of energy, such as photovoltaic (PV), with 19.73 percent. KEMC estimates that the NRE share of primary energy supply will account for 4.3% in 2015, 6.1% in 2020, and 11.0% in 2030.

NRE power generation has increased rapidly, in particular in the PV and wind areas, thanks to the introduction of the FIT (Feed in Tariff) and RPS (Renewable Portfolio Standard) systems. In terms of PV, power generation has increased nearly 30 times, to 917,198 MWh in 2011, from 31,022 MWh in 2006; Wind increased to 862,884 MWh from 238,911 MWh. Fuel cells appeared as an electricity source in 2006; as of 2010, their output was almost 44 times higher, at 294,621 MWh. NRE generation accounted for 17,345 GWh (1.24%) of the total 501,527,009 GWh of electricity generated in 2011 (waste power generation accounted for 58.8%).

In the Korean government’s 3rd national NRE basic plan, waste and hydro are projected to decrease, while marine energy, geothermal, solar thermal and wind energy are expected to increase. The bio-energy share will grow to 31.4% and take the second largest position, just behind waste energy.

Sub-Sector Best Prospects

Photovoltaic power: Next-generation solar cells, including thin-film modules and roof-top systems, are expected to generate substantial demand in the future.

Wind power: With oceans on three sides, Korea’s focus on wind-power is rapidly shifting from ground applications to offshore applications.

Fuel cells: Korea is home to some of the world’s largest hydrogen & fuel cell power plants. With ROKG’s strong policy support and Korean industry’s active participation, the fuel cell industry is forecast to grow to be one of the most rapidly growing NRE sectors in the future.

Marine energy: Korea has abundant access to marine energy and is aggressively emphasizing such developments through on-going R&D projects and pilot construction projects.

Integrated gasification and combined cycle (IGCC): Due to the high efficiency and environmental feature of this technology, Korea has plans to adopt it for new coal-fired plants, including one with a capacity of 300 MW currently planned to be completed by 2013 (project of the Korea Western Power Company).

Opportunities

The Korea Electric Power Corporation (KEPCO) is the government-run power company and the primary end-user of NRE products and services. It supplies more than 90 percent of Korea’s entire electricity needs from its six generating subsidiaries (Gencos) that include five fossil fuel-fired companies and one nuclear-hydro company. Required by the ROK’s NRE policy initiatives, the Gencos have diversified their energy sources and are now generating a stable amount of electricity from low-carbon methods. There will be a need to continue to shift the power source to NRE, since RPS will be fully in effect by 2013.

The six Gencos are:

As end-users, the Gencos and the fledgling independent power producers (IPPs) exert strong influence in choosing what NRE core parts to use. Under the current supply chain, engineering & construction companies (E&Cs) which provide turn-key construction services are typically the buyers of most NRE technologies and parts. There are several large EPC companies, which are mostly subsidiaries of Korea’s business conglomerates (Samsung, Hyundai, SK, GS, etcetera). 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

Solar Con Korea - Feb.12-14, 2014/COEX, Seoul, Korea-http://www.semiconkorea.org/en/

Expo Solar/PV Korea – September 4-6, 2013/KINTEX, Ilsan http://www.exposolar.org/2013/

International Green Energy Expo Korea 2014, April 2014 (TBD), EXCO, Daegu - http://www.energyexpo.co.kr/eng/

Solar Wind Earth Energy Trade Show (SWEET), 2014 (TBD), KDJ Center - http://www.sweet.or.kr/eng/index.php

Korea Energy Show - October 16-19, 2013/COEX - http://www.koreaenergyshow.or.kr/ab-2966015-2&tpa_index192=10

Key Contacts

Korea Energy Management Corp. (KEMCO) - www.kemco.or.kr/new_eng/main/main.asp

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

Korea Customs Service (KCS) - http://english.customs.go.kr

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

Entertainment and Media

ITA CODE: N/A

Overview

 

2011

2012

2013 (E)

2014 (E)

Total Market Size

2,542.06

2,663.34

2,775.95

2,940.37

Total Local Production

3,910.86

4,097.44

4,270.70

4,697.77

Total Exports

1,955.43

2,097.44

2,135.35

2,391.59

Total Imports

586.63

614.62

640.60

634.19

Imports from the U.S.

234.65

245.62

256.24

258.50

Exchange Rate: USD1

1,108

1,126

1,120

1,100

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

Films

Market Share of Films by Country

 

Korea

U.S.

China

Europe

Japan

Others

2012

57.6

35.7

0.3

4.8

1.2

0.4

2011

48.9

46.7

0.3

1.8

1.6

0.7

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

In 2012, the Korean film industry had some of the best revenues and profitability results in recent memory.

The total number of filmgoers in 2012 was over 114 million, an increase of 21.9 percent from 2011. The market share of Korean films increased to 57.6 percent, from 48.9 percent in 2011. In 2012, 229 Korean films were produced, though only 175 films were released. Likewise, 773 foreign films were imported and rated, an increase of 40% over 2011, and 456 were released. Although the number of screens is limited to a little over 2,000 per year, imported content is increasing, due to competition among the various platforms and the fact that locally-produced content insufficient 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

2010

152

140

383

286

426

2011

216

150

551

289

439

2012

229

175

773

456

631

Source: Korea Film Council (KOFIC)

Opportunities

Growth of Digital On-Line Market

The consumption of content in Korea is increasingly via on-line services, utilizing both wired and wireless communications. Through various on-line services such as IPTV, Video-on-Demand/VOD (downloading and streaming) and mobile services, the digital content market is growing rapidly. In 2012, demand for digital on-line services, which has shown more than 20% growth for three consecutive years, was over USD 200 million. This rapid growth is led by IPTV and digital cable TV.

As of 2012, the number of IPTV subscribers was 6.4 million, with digital cable TV subscribers at just over 5 million. More than 11 million households have the capability to watch digital content and each household may have multiple members accessing different types of content. The growth of digital subscribers also resulted in increases in on-line services utilizing content. Sixty-one percent of market demand for digital on-line services is for IPTV and digital cable TV.

The growth of on-line services has led to a change in one of TV’s main characteristics. In the past, TV provided programmed broadcasts to viewers, who had no choice in what they could watch at a particular time on any one channel. Today, viewers can choose any program at any time. This change in the environment has resulted in increasing competition among platforms. Thus, they need more content than ever. TV is the most competitive platform as far as consumption of content by individuals, as the utilization rate of TV is approximately 98 percent.

Broadcasting Content

According to a survey conducted by the Korea Creative Content Agency (KOCCA), the import of broadcasting content has increased by 6.2 percent over 2010. The import of cable TV content increased by 8.0 percent over 2010, while that of terrestrial TV content actually decreased. Terrestrial TV imported US$ 3.7 million worth of content, representing 3.4 percent of total content imports. Cable TV recorded US$153 million in imports, which was 96 percent of total imports. Independent production companies imported US$654,000, or 0.6 percent of imports.

By genre, 55.4 percent (US$57.5 million) of total imports were films, followed by television dramas at 38.1 percent (US$ 40 million). Documentary imports were recorded at 3.6 percent of total imports (US$ 3.7 million). For terrestrial TV, documentaries were 63.7 percent of total imports, followed by films (16.1 percent), animation (11.4 percent), and drama (8.6 percent). For cable TV and the independent production companies, 56.7 percent of total imports were films, followed by dramas (39.1 percent), entertainment programs (2.2 percent), and documentaries (1.6 percent).

By country, North America, including the U.S., has an overwhelmingly high share of imported broadcasting content, at 94.4 percent, followed by the UK, at 1.7 percent, and Europe and Japan, each with a share of 1.2 percent.

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

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

Franchising

ITA CODE: SV FRA

Overview

Franchising in Korea is a USD 84.3 billion (2012) industry, with potential to grow in a wide array of service and new food sectors. Koreans are avid and demanding consumers.

Nearly 3,034 franchises were registered in Korea in 2011. According to the 2012 Yearbook of Retail Industries, some 21,121 convenience store franchises are operating in Korea, of which 5,085 opened in 2011. Nearly 2,145 were food service franchises, 276 were retail franchises, and 613 were service franchises. On average, a master franchise operates 68.5 stores across its industry in Korea.

Over the past few years, CS Korea has discovered that the Korean franchise market is heavily concentrated with food service and other retail franchise operations. In fact, the number of food service franchises (1,962) was three times bigger than that of non-food service franchises (593) registered in Korea in 2011. This is differentiated by the situation in the United States and other economically-advanced countries, where non-food service franchises account for an exceptionally large part of the total market. Franchise experts in Korea note that future U.S. investors should try tapping into the non-food service franchise segments.

Franchising Market Sales in Korea – 2011

Industry Sector

Sales

Food Service

USD 7.8 (22.4%)

Service

USD 6.6 (19.0%)

Retail

USD 20.4 (58.6%)

Total

USD 34.8 (100%)

Sources: Korea’s Franchising Industry - 2011 by Korea Chamber of Commerce & Industry Retail db (KCCI).

Franchisors interested in this market must:

  • Meet the rules promulgated under Korea’s Fair Transactions in Franchise Business Act
  • Be registered with the Korea Fair Trade Commission
  • Comply with the sub-franchisee’s Fair Trade Act requirements, which stipulate the need for disclosure of all business information to potential sub-franchisees, at least 14 days before signing an agreement. This Act closely parallels the rules that exist for sub-franchisees in the U.S.

Since the 1980s, all the major first-, second- and third-tier U.S. food chain franchises have either (1) been successful in Korea, (2) have been here and failed, or (3) are trying to return -- a very difficult proposition in a country that doesn’t forget a failed enterprise. Interested parties should consult our 2012 Industry Sector Analysis (ISA) report on franchising (available upon request).

The March 2013 entry into force of the KORUS FTA is positively affecting this industry in many ways, including:

  • Expedited Customs Procedures: Improved transparency through the publication of Customs measures ensures that U.S. companies have access to Customs laws and regulations. In addition, KORUS requires simplified Customs procedures, for the timely and efficient release of goods.
  • Protected U.S. Investment: A stable legal framework protects all forms of U.S. investment. With few exceptions, U.S. investors will be treated just like Korean investors in the establishment, acquisition and operation of investments in Korea.

As part of Korea’s efforts in 2012 and 2013 to bring about ‘economic democratization,’ the National Commission for Corporate Partnership (NCCP) recommended that regulations be imposed on large companies/conglomerates, to provide opportunities and raise the competitiveness of SMEs in the franchise sector. The NCCP classifies large companies/conglomerates and those with annual sales of over 20 billion Korean won with more than 200 employees under the Minor Enterprise Basic Law. A whole series of restrictions, such as denying a conglomerate the ability to open a new store located less than 500 meters from an existing shop of the same brand, is expected to go into force in 2013. At present, there are no exceptions for foreign companies operating in Korea, if their annual sales are over 20 billion won and with more than 200 employees.

The NCCP’s new regulations will be in effect for approximately three years, from approximately mid-2013 to mid-2016. Franchise brands must follow these rules or will be penalized with fines imposed by Korea’s Small and Medium Business Administration (KSMBA). At this writing, with regulations still in draft form, it is assumed that about 30 companies (chaebols) will be affected by these regulations or ‘semi-official rules.’ Chaebols are already proving unwilling to ‘rock-the-boat’ in reference to these regulations.

While the effects of economic democratization and the NCCP’s new regulations will likely have a dampening effect on U.S. franchisors, opportunities do exist in Korea’s nearly half-dozen new cities or communities that are growing and gaining momentum.

Resources                                                                                         

Trade Shows

The 29th Korea Franchise Business Expo 2013
http://www.kfaexpo.kr
(English website is not available)

Franchise Seoul 2013 (Spring)
http://franchiseseoul.co.kr
(English website is not available)

Franchise Seoul 2013 (Fall)
http://franchisechangup.co.kr
(English website is not available)

Key Contacts

Korea Franchise Association (KFA) - http://www.ikfa.org

National Commission for Corporate Partnership (NCCP) - http://www.winwingrowth.or.kr

Korea Chamber of Commerce & Industry (KCCI) - http://english.korcham.net

Korea Fair Trade Commission (KFTC) - http://eng.ftc.go.kr

Local Contact

Ms. Grace Sung
Commercial Specialist
U.S. Commercial Service, Korea
U.S. Embassy Seoul
188 Sejong-daero, Jongro-gu
Seoul 110-710 Korea
Tel: 82-2-397-4324
E-mail: Grace.Sung@trade.gov
(Interim contact until Fall 2013: Ms. Yujin Jo - yujin.jo@trade.gov)

Laboratory Scientific Instruments


ITA CODE: PR LAB

Overview

 

2011

2012

(estimated)

2013 (estimated)

2014

(estimated)

Total Market Size

2,992

3,520

3,942

4,336

Total Local Production

1,283

1,510

1,691

1,860

Total Exports

136

160

179

197

Total Imports

1,845

2,170

2,430

2,673

Imports from the U.S.

553

651

729

802

Exchange Rate: 1 USD

1,108

1,126

1,126

1,126

Source: Korea International Trade Association (KITA) & National Research Facilities & Equipment Center.

Unit: USD millions.

Korea’s market demand for laboratory scientific instruments was estimated at US$ 3.5 billion in 2012, an 8% increase from the previous year. Korea depends heavily on imports in this sector and over 62% of total market demand is met by foreign suppliers. U.S. companies are leading suppliers, with a 30% share of the market, followed closely by Japan with 26% and Germany with 23%. The U.S. dominates the upper-end, high value-added segment of the market.

For the last five years, Korea’s R&D budgets have recorded an annual increase of 15%, with a 10-12% increase expected over the next five years, reaching $58 billion by 2014. Investment in laboratory scientific instruments alone takes up an average of 8% of Korea’s total annual R&D expenditures. The healthy increase of R&D budgets is expected to generate steady demand for laboratory scientific instruments.

The largest end-users of laboratory scientific instruments over the past six years were the 25 government-funded research institutes. These institutes consumed 36% of all of Korea’s total investment in scientific instruments.

Universities ranked second, with 19%. Private enterprises took a 13% share, including the electronics, automotive, chemicals, materials, and pharmaceutical sectors. The main private buyers included private research labs affiliated with major Korean conglomerates, including Samsung, LG, SK and Hyundai, as well as independent pharmaceutical/biotechnology companies.

Sub-Sector Best Prospects

The following six industrial and technological areas have the best sales potential:

  • Environment
  • Biotechnology
  • Nanotechnology
  • Information technology
  • Semiconductors
  • Computers

Opportunities

Technology development related to Korea’s New Growth Engine segments will continue to provide lucrative opportunities for laboratory scientific instruments and include:

  • Green technology industries, i.e., water treatment, green transportation systems, IT convergence, and LEDs, to name a few
  • High-tech convergence, to include broadcast and communications media, intelligent robots, biopharmaceutical and medical devices, IT, food industry, and nano-convergence.

Web Resources

Trade Shows

The 10th Int’l R&D · Analysis Equipment Exhibition 2013 (AnaLab 2013), Korea (http://analab.or.kr/)

The 7th KOREA LAB 2013, Korea (http://eng.korealab.org/)

Key Contacts

National Research Facilities & Equipment Center - http://www.nfec.go.kr/html/kr/index.html

National Science and Technology Commission - http://www.pps.go.kr/english/

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
E-mail: younghee.koo@trade.gov
http://www.export.gov/southkorea

Medical Equipment and Devices

ITA CODE: PR MED

Overview

                                                                                                         Unit: USD thousands

 

2011

2012

(estimated)

2013

(estimated)

2014

(estimated)

Total Market Size

3,886,000

4,313,000

4,744,000

5,219,000

Total Local Production

3,038,000

3,372,000

3,709,000

4,080,000

Total Exports

1,673,000

1,857,000

2,043,000

2,247,000

Total Imports

2,521,000

2,798,000

3,078,000

3,386,000

Imports from the U.S.

1,119,000

1,253,000

1,378,000

1,516,000

Exchange Rate: 1 USD

1,108

1,126

1,126

1,126

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 4.9 billion in 2013. One factor that may slow import growth will be pricing and reimbursement measures the Korean government grapples with under its national healthcare system.

Korea depends on high-end medical devices, as listed below, from the U.S., EU, and Japan, to supply about 65 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.

In 2011, total imports of medical devices were USD 2.5 billion, with U.S. imports totaling over USD 1.1 billion. The U.S. market share represents 44 percent of the import market. Market demand for foreign advanced and innovative medical devices is estimated to have experienced slow growth in 2012. The Korean economy has not fully recovered to its pre-global financial crisis levels.

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 of imported devices for 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) and the National Health Insurance Corporation (NHIC).

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 associations, including AdvaMed and the American Chamber of Commerce in Korea, to ensure that U.S. interests are well represented in the medical device industry.

The KORUS FTA was implemented on March 15, 2012. U.S. medical device and pharmaceutical companies now have the ability to voice their objections to pricing and maximum reimbursement conditions, imposed on U.S. 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 (MHW), the National Health Insurance Corporation (NHIC), and the Health Insurance Review and Assessment Service (HIRAS).

Sub-Sector Best Prospects

  • Stents
  • CT systems
  • MRI systems
  • Knee implants
  • Soft contact lenses
  • Kidney dialysis devices
  • Catheters
  • Lenses for eye glasses
  • Ultrasound imaging systems
  • Intraocular lenses

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. To attract foreign clinical trials to Korea, the Korean government will support and enhance the quality of relevant medical industries, such as globally-certified hospitals and high-end medical technologies, to be able to participate in clinical trials more frequently. U.S. companies that need clinical trials for their medical devices may contact the Director of Clinical Trials/Management Division, through their Korean importer, at ctmt@korea.kr, for details.

Web Resources

Trade Shows
Korea International Medical, Clinical, Laboratories & Hospital Equipment Show 2014

www.kimes.co.kr

Key Contacts

Ministry of Health and Welfare (MHW) – 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
E-mail: yoonshil.chay@trade.gov
http://www.export.gov/southkorea

Pollution Control Equipment

ITA CODE: PR POL

Overview

Unit: Million USD

 

2007

2008

2009

2010

2011 (est.)

2012 (est.)

2013 (Projected)

Total Market Size

5,609

4,510

5,075

6,979

8,032

8,534

9,338

 

Total Local Production

6,166

5,421

5,642

7,858

9,018

9,759

10,795

Total Exports

1,135

1,539

1,250

1,621

1,787

2,088

2,388

Total Imports

578

628

683

742

800

863

931

Imports from the U.S.

173

188

205

223

240

259

279

Exchange Rate: 1 USD

929

1,105

1,276

1,156

1,108

1,126

1,120

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

Since Korea’s implementation of its Low Carbon, Green Growth Strategy in 2009, the country continues to demonstrate a strong commitment to environmental improvement. The pollution control equipment industry continues to grow in various areas, such as water treatment, power plants and steel mills, with support from the government. Korea established a national-level industry technology road map, called “Eco-TRM 2022,” in 2012, and began to embrace the development and dissemination of environmental technologies under the Support for Environmental Technology and Environment Industry Act of 2011.

CS Korea estimates the size of the pollution control equipment industry at USD 8.5 billion in 2012. According to industry experts, imports account for about 10 percent of the total market. Japan has been the principal foreign suppler, with about a 50 percent import market share, followed by the U.S. with about 30 percent market share, followed by Germany and France.

Local environmental equipment manufacturers in Korea have supplied a major portion of environmental projects with medium-level technology and moderate cost products. While they have significantly improved technical levels, mostly via technology transfers and mergers with non-Korean suppliers, local manufacturers still lack core technologies to supply products that meet the government’s stringent regulatory requirements. They are therefore seeking more advanced imported products and technologies. Because most competing Korean manufacturers target larger volumes and export markets, highly customized solutions for specific applications, like in-house recycling and ultra-pure water treatment, offer potential for U.S. exporters.

Sub-Sector Best Prospects

  • Carbon capture & storage technologies and equipment
  • Volatile organic compounds (VOCs) control in oil refineries and petrochemical plants
  • Dioxin abatement in municipal and industrial incinerators
  • Advanced sulfur oxides/nitrogen oxides abatement in power plants and steel mills
  • Energy saving and waste-to-energy in steel mills and municipal landfills
  • Pollution-free and low-emission vehicles in engineering technology, engine components and parts for CNG
  • Pollution abatement technologies for the automobile and oil refinery industries
  • Advanced water pollution control technologies
  • Environmentally-friendly construction materials

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. The 2013 national expenditure for environmental protection increased by approximately 5.3 percent from the previous year and is set at USD 5.49 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 pollution control equipment 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 2013) -

http://www.envex.or.kr/english/main/main.asp

Water Korea 2012 - http://www.wakoex.co.kr/main/index.asp

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
E-mail: Nathan.Huh@trade.gov
http://www.export.gov/southkorea

Semiconductors

ITA Code: N/A

Overview

 

2011

2012

2013 (E)

2014 (E)

Total Market Size

36,909.58

38,619.56

39,466.84

41,498.80

Total Local

Production

57,422.44

60,293.56

63,308.24

66,473.66

Total Exports

54,763.56

59,692.28

65,661.51

67,631.36

Total Imports

34,250.70

38,018.28

41,820.10

42,656.50

Imports from the U.S.

13,700.28

15,207.31

16,728.04

17,062.60

Exchange Rate : 1USD

1,108

1,126

1,120.00

1,100.00

Source: Korea Communications Commission (KCC), Korea Electronics Association (KEA), and Ministry of Knowledge, Economy (MKE); Unit: USD million.

The semiconductor industry is one of the major IT industries in Korea. Both Samsung and SK Hynix cover 67.4 percent of memory chips (DRAM, NAND Flash) in the global market and Korea is also very competitive in the memory chip industry. However, memory chips are approximately only 20 percent of the total semiconductor industry.

Eighty percent of system semiconductor applications cover diverse wireless market demand for smart phones, tablet PCs, smart home appliances, automobiles, and aerospace, generating steady market growth. The market demand for system semiconductor major applications include communications applications (smart phones and others) and data processing applications (media tablets, solid state drives and others). This trend will continue as the mobile environment evolves.

Sub-Sector Best Prospects

Analog Semiconductors - Automobiles

Logic semiconductors for automobiles

32-bite Micro Controller Units (MCU)

Tire Pressure Monitoring Systems (TPMS)

Sensors for light, sound, pressure and temperature

System Semiconductors - High-Definition Multimedia Interface (HDMI)

Display ports

Mobile High-Definition Links (MHL)

Opportunities

As digital IT devices become smarter and smarter, they are evolving and working toward being able 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. Samsung manufactures image sensors and APs (Application Processors) and has more than 30 percent of global market share. However, Korean semiconductor manufacturers other than Samsung have an insignificant market share.

Korea is one of the major smart IT device, high-end TV (Digital TV, Smart TV and other high-end flat screen TV), and automobile manufacturing countries. These industries lead Korean market demand for system semiconductors and analog semiconductors. The major suppliers of analog and system semiconductors are from the U.S., Taiwan, Germany, and Japan.

Import Requirements

Korea is a party to 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%, most of which would currently face eight percent tariffs in Korea, enter duty-free under the Korea-U.S. FTA (KORUS). These include radio and television parts, certain static converters, and some telecommunications apparatus.

Semiconductors have been duty-free under the Information Technology Agreement since 1996. However, next generation semiconductor chips, currently in development, may or may not be subject to duty. This issue is being handled at the Governments/ Authorities Meeting on Semiconductors (GAMS). Since 2000, GAMS has been an annual government-to-industry and government-to-government consultation between the World Semiconductor Council and the U.S., the EU, Japan and Korea.

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 2013 - www.semiconkorea.org

LED Korea 2013 - www.led-korea.org

World IT Show 2013 - http://www.worlditshow.co.kr/eng/index.php

Key Contacts

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 Advancement of Technology - 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

(estimated)

2014 (estimated)

Outbound Travel

12,693,733

13,736,976

15,000,000

16,500,000

Outbound Travel to the U.S

1,145,216

1,283,000 (E)

1,385,000

1,482,000

Inbound Travel

9,794,796

11,140,028

12,300,000

13,500,000

Source: Korea Ministry of Culture and Tourism, tour.go.kr, Tourism Organization (KTO), U.S. Department of Commerce Office of Travel & Tourism Industries (USDOC, OTTI).

International travel is a rapidly-growing leisure activity for Koreans and offers opportunities for continued service industry growth. International travel by Koreans has been spurred by rising disposable incomes, gradual increases in leisure time, heightened globalization, and greater awareness of developments outside the Korean peninsula. Korea's per capita GDP rose to almost USD 32,400 in 2012, 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.

Continuing positive economic indicators, coupled with Korea’s addition to countries included in the U.S. Visa Waiver Program (late 2008) and the recent 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, 22% 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.

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, it is estimated that 1.28 million Koreans traveled to the U.S. in 2012. 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. Korea is currently the ninth-largest source of inbound travel to the U.S., behind Canada, Mexico, the United Kingdom, Japan, Germany, Brazil, China and France.

Sub-Sector Best Prospects

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

Opportunities

The U.S. is the leading non-Asian destination for Koreans as it offers a variety of activities, climates, and cultural experiences. U.S.-bound Koreans account for 9.3 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, and cultivate relationships amongst travel agencies and other tour entities in Korea. There are approximately 9,000 tour agents in Korea and promotional information on the U.S. is urgently needed for developing this market.

A three-country USA Travel and Tourism Pavilion, including Korea, Taiwan and Japan, is being planned for March 2014. Contact CS Korea for more details.

Web Resources

Trade Events

May 24-26, 2013

Hanatour Exhibition

May 30-June 2, 2013

The 25th Korea World Travel Fair (KOTFA) - http://www.kotfa.co.kr/eng/main/main.htm

January 2014 (dates TBC)

Weddex Korea - http://www.weddex.com/html/weddexkorea/exhibit_intro.html

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

Local Contact

Ms. Hae Lyong Kim

Commercial Specialist
U.S. Commercial Service, Korea
U.S. Embassy Seoul
188 Sejong-daero, Jongno-gu
Seoul 110-710 Korea
82-2-397-4459
E-mail: haelyong.kim@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 2012.

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, or through the Foreign Agricultural Service in Washington, D.C. 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 2013 Exhibition 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.