The South Korean success story is an unique case in the world.
Through decades, South Korea has developed from an underdevelopment country to the 11th world economy, 4th in Asia after the giant China, India, and Japan.
The 50 million Koreans have achieved per capita income of $ 31,750 and a purchasing power above the EU average. GDP growth remains solid despite the global economic crisis.
Korean industries were the first in the world in recovering their financial status to a pre-crisis situation; Besides, industrial productivity remains very high especially when compared to that of the Euro zone or of the countries with similar levels of socio-economic development. Korea has been the first country that escaped from a beneficiary status of international development aid and placed itself in the position of a donor.
With nearly 50 million inhabitants, Korea has become an attractive market for all those companies which are looking for new markets. The country’s economy is based on huge conglomerates such as Samsung, LG or HYUNDAI which produce alone nearly 50% of national GDP. This is very interesting for SMEs even if they can offer high value- added solutions in any subcontracting service.
Currently, there has been a rapid and consistent growth of Italian companies’ commercial opportunities in the Korean market. As viewed in relevant data during the first 10 months of 2013, extremely positive trade balance can be anticipated for Italy continuing and consolidating a growing tendency seen in 2011 and 2012. Coupled with 17% increase of Italian exports in 2011 (4.37 billion U.S dollars) and 10% in 2012 (4.83 billion U.S dollars), Italy ended with a trade surplus of 1.56 billion dollars for 2 years and the growth outlook has been further strengthened.
The overall figure of the year 2013 definitely illustrates a surplus record for Italy: Italian exports have been increased by 10.28% in the first 10 months (up to 4.413 billion U.S dollars), while imports from Korea were decreased by 7.5%. Among Italian exports to Korea during the first 10 months of 2013, there are a machinery which is increased by 6.4% occupying a quarter of the total amount (1,136 billion U.S dollars), the leather goods (+9.5%, the second item of export with 449 million U.S dollars), and the mineral oils and fuels (+110%, now the third item with 277 million U.S. dollars) which proved a real boom though its drastic increase.
The pharmaceuticals (+4.6%, for a total of 222 million U.S dollars) and the wine & beverages relatively showed lower volume order(+20.8%, Italy holds the third wine market share in Korea) and the both sectors showed good export performance. The import from Korea, motor vehicles (+4.5%, the first import products with 413 million U.S dollars), plastic products (+34.8%) and electrical equipment (+4.9%) have been increased in Italian market while the demand for iron, steel (-7.5%) and especially ship (-70%) drastically fell.
The Korean production structure is strongly oriented to the manufacturing sector, while its service counterpart still has considerable space for growth. This type of economic structure allows positive outlook to exports.
Among the economic measures announced for 2014 by Korean government, official support for domestic demand will be offered in order to stimulate private investment in five key sectors (medical, education, tourism, finance and software) through a simplification, deregulation and tax incentives especially for foreign companies.
For the moment, Korean government economic policy shows that there will be the creation of a favorable business environment for foreign companies as well, in order to attract more foreign direct investment, not limited to the 8 special economic zones developed in the last 10 years.
Among the measures already taken, there is a reform such as “foreign investment promotion act” to facilitate joint investment between foreign and Korean companies.
The vitality of the Korean economy lies in presenting the ability to project and build strong investment in the most advanced industrial sectors (electronics and communication technologies, semiconductor, nuclear, renewable energy, robotics, etc.) with support of export oriented large multinational companies (Samsung, Hyundai, LG, Daewoo, Kia, Posco, etc.).
A prepared and efficient management employs a workforce with excellent professional training and high level of education, more than 40% of the workforce has university diploma. And the education system is considered to be one of the best in the world when it comes to efficiency and quality.
The efficiency of Korea’s integrated infrastructure system with few comparison worldwide has enabled Korea to become the most important regional hub in the north-east Pacific region.
The Incheon International Airport (from 2005, selected as the best airport on the earth by Airports Council International), the Port of Busan (5th largest port in the world for container traffic), the high speed railway and the highway system are only the most evident infrastructural excellence of the country that has based its export performances on such fundamentals.
The aggressive strategy of free trade agreements (FTA) entered into force by Korean government from 2005 onwards (agreements with partners equal to 61% of GDP and 46% of world trade) is still instrumental for a new growth objectives through exports and easiness for importers.
With EU, Korea has signed the FTA in 2011 to allow a proper liberalization of outflows and inflows of goods in both economic zones. Even today our FTA is considered by market analysts the most advanced trade treaty ever concluded from Bruxelles with a third country.
In addition, Korea has always been considered a bridge country for China. For historical and cultural reasons Korea is considered a trend-market by Chinese consumers and this means that when a product make success in Korean market, it will be a huge hit in the Chinese market as well.
Therefore, collaborating opportunities with Korean partners must be seen and experienced as a testing ground for other Asian countries, as a sort of bridgehead to markets where are less flexible and more difficult to enter such as China and Japan.