Current business situation
The Republic of Korea (ROK, also known as South Korea) is home to some of the world’s largest and most diversified companies and is a dynamic and vibrant place to do business. With a population of 50 million and a gross domestic product (GDP) per capita of more than US$25,000, the ROK is the 11th largest economy in the world and the fourth largest in Asia (Source: World Bank 2016).
The ROK’s economy is dominated by:
- automotive manufacturing
- steel production.
The ROK is Australia’s third largest export market, largely due to the county’s dependence on imported energy, resources and agriculture, and Australia’s fourth largest two-way trading partner. The level of investment between Australia and ROK has grown significantly over the past decade, from just A$600 million in 2003 to A$22.7 billion in 2014-5 (Source: Australian Bureau of Statistics 2015).
Despite already being such a major market, there is untapped potential for Australian businesses in the ROK in other sectors. ROK consumers will continue to demand high quality food, beverage, consumer goods and education that Australia can provide.
Australian technology and services can help solve complex problems for its industry as it faces increasing competition from markets such as China and transitions from the sectors that have underpinned its growth to new areas such as medical technologies, financial services as well as pursuing large scale infrastructure projects offshore.
The Korea-Australia Free Trade Agreement (KAFTA) which came into force on 12 December 2014 strengthens these opportunities by improving market access for Australian companies, creating new services opportunities, enhancing protection for Australian investors in the ROK and safeguarding Australia’s competitiveness in this large market.
Under KAFTA, tariffs have been eliminated on 84 per cent of the ROK’s imports (by value) from Australia. On full implementation of KAFTA, 99.8 per cent of Australian exports will enter the ROK duty free.
Australia and the ROK enjoy a close relationship and there are many opportunities in industries such as:
- health and biotechnology
- financial services
- food and beverage and consumer goods
- business services
- advanced manufacturing.
Having a basic understanding of the ROK culture and business etiquette will encourage better business relationships. One of the most important aspects of the ROK society that Australian business people should be aware of is a respect for hierarchy, influenced by its strong Confucianist cultural heritage.
Formal introduction – Companies in the ROK prefer to do business with people they have a personal connection with. It can help if you are introduced to a prospective business associate through an intermediary. The higher the social standing of the intermediary, the more successful you are likely to be at making contact with the right people. Note that cold calling typically has limited success.
Business cards – In ROK businesses, everyone has a distinctive place in the organisational hierarchy. Most ROK business people are not comfortable until your position and company name is known. Business cards should be left on the table in front of you for easy reference. When translating your card into Korean it is only necessary to translate your name and title, although please note that many titles have a different meaning in Korean. It is preferable to avoid using Japanese or Chinese language business cards in ROK.
Building relationships – it is vital that you build personal relationships with the people you are doing business with in the ROK. Relationships are developed through informal social gatherings that often involve a considerable amount of drinking and eating. Such informal gatherings also present both sides with an opportunity to discuss business in more relaxed and friendly surroundings. Companies often prefer to discuss business over dinner however it is becoming more common place to conduct lunch meetings.
Don’t be too pushy - Business people in the ROK are reputed internationally to be good negotiators. Be prepared to be patient, gentle, but firm. Be as dignified as possible and don’t push your position too hard. Be prepared for the ‘price war’, but don’t give in easily as Koreans are persistent and admire this quality in others.
Links and resources
Government, business and trade
Australia Korea Business Council
Australian Chamber of Commerce in Korea
Korea Importers Association (KOIMA)
Korea Trade-Investment Promotion Agency (KOTRA)
Korean Institute for International Economic Policy (KIEP)
Seoul Global Centre for foreigners
News and media
The Chosun Ilbo
The JoongAng Daily
Please note: This list of websites and resources is not definitive. Inclusion in this list does not imply endorsement by Austrade. The information provided is a guide only. The content is for information and carries no warranty; as such, the addressee must exercise their own discretion in its use. Australia’s anti-bribery laws apply overseas and Austrade will not provide business related services to any party who breaches the law and will report credible evidence of any breach. For further information, please see foreign bribery information and awareness pack.