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 51 million and a gross domestic product (GDP) per capita of more than US$31,000, the ROK is the 11th largest economy in the world and the fourth largest in Asia (Source: DFAT South Korea Factsheet 2019, IMF).
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$49 billion in 2018 (Source: DFAT South Korea Factsheet 2019).
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, hydrogen and fintech.
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:
- medical and biotechnology
- immersive technologies including virtual reality and augmented reality
- R&D commercialisation in innovation and technology
- financial services including fintech
- premium food and beverages
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.
Australian companies are advised to spend time investigating the market, obtain professional advice where appropriate and thoroughly investigate the issues in entering the market and before establishing business relationships.
Australian firms wishing to operate in this country should commit to the highest level of corporate behaviour and familiarise themselves with Australia's laws and penalties pertaining to bribery of foreign officials.
Bribery of foreign public officials is a crime. Australian individuals and companies can be prosecuted in Australia for bribing foreign officials when overseas. Further information on the regulations governing bribery of foreign public officials is available.
For further information on frauds, scams, personal and asset security, intellectual property protection and other business risks please read more about legal issues.
On September 28, 2016, the Improper Solicitation and Graft Act was enacted in the ROK. The act, which is more commonly known as the ‘Kim Young-Ran Act’, prohibits improper solicitations of public officials and bans any offer to, or acceptance by, public officials of anything of value. It applies to officers and employees of the ROK public service organisations, including universities and schools, as well as at journalists.
Every civil servant who is subject to the act cannot receive meals worth more than ₩30,000 (A$36), gifts other than agricultural products over ₩50,000 (A$60), agricultural products over ₩100,000 (A$120) and congratulatory cash gifts above ₩100,000 (A$120) at private events, including wedding ceremonies and funerals.
Intellectual property protection
The ROK Intellectual Property Office (KIPO) is the government body responsible for the registration of trade marks, patents and designs, which can all be applied for online. The KIPO website also provides a searchable patent database.
Foreign businesses that do not have a place of business in the ROK are required to lodge patent, design and trade mark registrations through a ROK IP attorney.
For more information see the IP Australia South Korea page and the KIPO website.
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.