Building and construction to Korea

(Last updated: 26 Jul 2007)

Trends and opportunities

The market

The Korean construction industry has grown at a healthy pace over the last few years driven primarily by a strong growth in housing construction. Housing construction, which stagnated in the late 90s prompted by the financial crisis of 1997, rebounded in 2001 increasing 22 per cent over the previous year in terms of total housing units. Led by the continued strong growth of the housing construction sector, the construction industry grew at 5.6 per cent in 2002 creating a record of sorts in being the only industry to register a growth while most other industries and the economy in general registered a slowdown.

Going forward, the prospects for the housing sector continue to remain bright as the government implements large housing projects to provide a total of 550,000 new homes every year for the next five years. Meanwhile the Korean construction market, which was valued at $8.3 billion in 2004, is expected to grow at a scorching pace over the next few 15 years to reach $230 billion.

There is a strong preference for overseas products in luxury buildings and accommodation, with more than half the building materials used in luxury buildings and housing being imported goods. The remodelling industry is a strong opportunity area and industry experts expect that the market size for this is about US$17 billion. 

There are a number of key market factors that improve the prospects for Australian suppliers:

• Innovative products to help reduce construction times are desired as building up-market, hi-tech buildings is usually twice that of other advanced countries.
• Cheaper, high quality imports are of considerable interest as average construction costs are relatively high.
• There is a lot of construction activity with an increasing demand for reconstruction due to the relative short 20-year life cycle of Korean buildings.
• Greater recognition of Australian building material brands is driving an increasing interest in Australian suppliers.
• Prefabricated housing, port projects, theme parks and big commercial buildings.

Opportunities

The best opportunities for Australian suppliers are:

• timber (radiata pine log, hardwood log, hardwood sawn timber, hardwood woodchip, softwood sawn timber)
• timber-related products (MDF, particle board)
• bricks and pavers
• decorative concrete
• fibre cement board
• kit homes
• paints
• doors
• remodelling products

Competitive environment

While Korea's building material industry manufactures a full range of building materials and components, major ‘luxury’ products are generally imported from the USA, Japanese and European suppliers.

Tariffs, regulations and customs

Tariffs on imported timber and building materials generally range from three to eight per cent. Imports into Korea are controlled by the Ministry of Commerce, Industry and Energy.

Industry standards

Korean industry standards vary for all building products. These standards are controlled by the Korea Standard Association. As a general rule, Australia suppliers need to manufacture their products to comply with Korean standards and should work with their agent to determine standards compliance.

Marketing your products and services

Market entry

There are four main components for entering the building and construction market in Korea:

• Research standards, pricing, and product acceptance.
• Have a clear price and quality advantage over domestic competition.
• Focus on building long-term relationships with potential customers as this is a relationship-based market.
• Appoint capable agents and work with them to modify products if needed to meet local standards.

Successful marketing of products and services requires a reliable and well-connected distributor.

Trade exhibitions such are also a good way to gauge market acceptance. To market effectively you need to consider:

• Producing brochures in Korean
• Designing product to meet Korean standards
• Bringing buyers to Australia periodically
• Examining alliances with manufacturers
• Advertising in industry news
• Meeting specific buyer requirements
• Having a regular presence in the market to support your agent

E-marketplaces are emerging in the building materials sector with more than 10 companies operating such sites. Local building suppliers and buyers are very happy to use e-marketplaces for product transactions. An example of a leading e-marketplace is Builders Net.

The trade volume through e-marketplaces is rapidly growing. In order to tap into this, you need to work with your Korean distributor as many Korean companies are registered on such sites.

Distribution channels

Distribution is generally from overseas supplier to distributor, who then sells directly to end users in the construction trade, including builders and construction companies. For example, a brick importer (distributor) imports pavers from Australia and then sells them directly to a builder.

Links and industry contacts

Building and construction–related resources

Builders Net - www.buildersnet.co.kr
Construction Association of Korea - www.cak.or.kr 
Korea Housing Corporation - www.jukong.co.kr

Government, business and trade resources for Korea

Korea Customs Service - www.customs.go.kr
Korea Standard Association – www.ksa.or.kr
Ministry of Construction & Transportation – www.moct.go.kr

Media

Wood Korea Newspaper - www.woodkorea.co.kr