The Republic of Korea (ROK, likewise referred to as South Korea) is a fully grown and industrialised economy that has actually grown to end up being the world’s 12 th biggest economy. It is house to a few of the world’s biggest and most varied business and is a vibrant and dynamic location to do service.
” The ROK is Australia’s 3rd biggest export market, mostly due to the county’s reliance on imported energy, resources and farming, and Australia’s 4th biggest two-way trading partner,” discusses Senior Trade Commissioner for South Korea, Julie Quinn.
” This year marks a considerable turning point in Australia’s bilateral relationship with Korea as the 2 nations commemorate the 60 th anniversary of diplomatic relations. “
The Australian Prime Minister and Korean President have actually accepted raise the bilateral relationship to a Comprehensive Strategic Partnership (CSP). Both nations are interacting to advance the financial collaboration in the post-COVID period through efforts like the Low and Zero Emissions Technology Partnership and vaccine cooperation, which will offer chances for companies in both nations.
The level of financial investment in between Australia and ROK has actually grown considerably over the previous years, from simply A$600 million in 2003 to A$49 billion in 2018 ( Source: DFAT South Korea Factsheet 2019).
Trade and Investment relationship with the Republic of Korea (South Korea)
Australia’s product trade with Republic of Korea in 2019-20:
- Exports– A$25,827 million Imports– A$10,650 million
- Total product trade (exports imports)– $A36,477 million
- Exports of services to South Korea– A$ 1,790 million
- Imports of Services A$601 million
More thorough trade information can be discovered here on the DFAT site.
Free Trade Agreements
The Korea-Australia Free Trade Agreement (KAFTA), which participated in force on 12 December 2014, is a first-rate and extensive bilateral arrangement that considerably liberalises Australia’s trade with its fourth-largest two-way trading partner.
” KAFTA enhances chances by enhancing market gain access to for Australian business, developing brand-new services chances, boosting security for Australian financiers in the ROK and securing Australia’s competitiveness in this big market,” states Ms Quinn.
” Despite currently being a significant market, there is untapped capacity for Australian organizations in the ROK throughout different sectors. ROK customers require top quality food, drink, durable goods and education that Australia can offer.
” Australian innovation and services can assist resolve intricate issues for its market as it deals with increasing competitors from numerous global markets and shifts from the sectors that have actually underpinned its development to brand-new locations such as medical innovations, hydrogen and fintech.”
KAFTA secures and boosts the competitive position of Australian organizations in Korea and will offer tariff decrease or removal on almost all Australia’s existing exports by worth when it is completely carried out.
Ms Quinn states that under KAFTA, more than 99 percent of Australia’s items exports to Korea are qualified to go into duty-free or with preferential gain access to. The Agreement has actually assisted remove 84 percent of the ROK’s imports (by worth) from Australia.
” For farming, Korea removed tariffs on entry into force for raw sugar, wheat, bottled red wine, and some cultivation. Australia’s competitive tariff and enhanced market gain access to for significant farming export products will enhance the food security and supply chain collaborations with ROK.
” While 88 percent of Australia’s produced, resources and energy exports went into Korea duty-free from entry-into-force, staying tariffs will be phased out by 1 January 2023.
” For Australian companies, KAFTA supplies the very best treatment Korea has actually concurred with any trade partner. The Agreement likewise assists enhance chances for Australian financiers and financial investments in Korea and promote financial investment in both instructions.”
The Korean New Deal
‘ The Korean New Deal’ revealed in 2020 was boosted as the ‘K-Deal’ in2021
It is an enthusiastic program of financial investment based upon 2 primary policies: the ‘Digital New Deal’ and ‘Green New Deal’, along with the fortifying of work and social safeguard.
Ms Quinn states these political and financial techniques will assist drive the South Korean service community.
” The Green New Deal is concentrated on decarbonization and broadening renewable resource production, with core jobs of ‘Green Remodelling’, ‘Green Energy Production’, ‘Eco-friendly automobiles’ and ‘Green and Smart Schools’.
” Funds will be assigned to structure and setting up photovoltaic panels and wind turbines, producing more than 42.7 gigawatts of electrical power by 2025, and setting up more than 220,000 photovoltaic panels on public structures throughout the nation.”
As one of the very first nations to present 5G connection innovation nationally, Korea is understood for having the fastest web connection on the planet.
Under the Digital New Deal, the Government intends to incorporate information, 5G network and expert system (AI) (so-called DNA) throughout all sectors and promote the ‘untact’ market.
Untact is a Korean buzzword integrating the English prefix ‘un’ with the word ‘contact’ to reference doing things without direct contact with others, such as self-service kiosks or online shopping. South Korea’s ‘Data Dam’ task likewise highly ties into its push towards “Smart Healthcare” and the essential job “Digital Twin”.
Opportunities are plentiful
Ms Quinn keeps in mind that a few of the most amazing chances for Australian exporters can be discovered in:
On 1 September 2021, the Korean National Assembly enacted laws an aggressive 35 percent emission cut by 2030 and net-zero by2050
More than 65 percent of Australia’s exports to Korea remain in coal, iron-ore and gas, so our financial collaboration is approaching a turning point. There are considerable chances for Australia to prioritise the Korean tidy energy shift, as it will produce substantial trade and inward financial investment chances. This will produce brand-new markets for bulk items such as vital minerals and hydrogen and open vertically incorporated supply chains.
Premium food and drinks
” Australia’s tidy, green, and safe foods have an outstanding credibility in Korea, with Australia now an essential partner for Korea in food security. There is a growing need for premium food and drinks through high-end retail outlets and e-commerce platforms,” Ms Quinn discusses.
COVID-19 has actually driven Korean customers online, which has actually taken place rather flawlessly– offered over 95 percent of the Korean population are smartphone users. COVID-19 has actually likewise driven numerous Korean customers to pay more attention to their health and what they consume.
Whole foods, much healthier options, natural and natural food items have actually gotten appeal and we are beginning to see more Korean importers aiming to source practical foodstuff.
There is likewise steady need for what Australia is popular for– our beef, lamb, seafood, seasonal fruits and nuts.
Korean food producers are seeking to source fresh and extremely healthy food components for home-meal replacement packages, which provides an exceptional chance for Australian exporters.
Korea’s need for confectionary and treats is another chance for Australia’s renowned brand names to think about.
” We have actually likewise seen substantial development in interest from red wine importers and purchasers in Australian red wine and see a lot of scope for Australian red wine exports to Korea. Typically, strong bodied reds have actually been favoured, however there is likewise growing interest in white varietals and natural red wines,” states Ms Quinn.
” The Australian Government’s Agribusiness Expansion Initiative supplies $727 million to enable a substantial rise in trade assistance services and assist Australian exporters diversify into brand-new markets. Austrade is prepared to assist Australian agri-food exporters broaden their company into Korea.”
Medical and biotechnology
Australia has a credibility as a ‘go to’ location for business wishing to carry out medical trials and being open for company when numerous other countries were not throughout the COVID-19 pandemic.
Important collaborations in biotech R&D and production have actually established over the previous 10 years, with Korean business really thinking about Australian competence in regenerative medication, digital health, cell-based treatments and RNA innovations.
” Both Australia and Korea have actually stated their intents to be significant vaccine powers, Ms Quinn continues. “These crucial collaborations have actually developed a strong structure for the more growth of our relationship.”
” We are well-placed to team up on RNA-based vaccines and rehabs in joint R&D, brand-new item advancement and scientific trials. Australian biotech business and research study institutes operating in these locations would be well recommended to think about the Korean market.”
AI and huge information advancement will provide chances for business operating in telemedicine, biotechnology and digital health.
In 2020-21, the video game market grew significantly provided the stay-at-home limitations enforced by federal governments throughout the COVID-19 pandemic. This has actually increased the variety of video game gamers and as a result, need from Korean video game business for brand-new material and video game innovations is high.
This has actually developed chances for Australian video game designers and tech and innovative video game material business to partner with Korean video game business to increase the quantity of Australian video game material in Korea’s video game platforms.
Challenges to be knowledgeable about
” South Korea was gotten ready for a quick reaction to the arrival of COVID-19 due to its experience handling Middle East Respiratory Syndrome (MERS) in 2015,” states Ms Quinn. “New determines presented because the MERS break out indicated that South Korea has actually been a design for handling the brand-new pandemic.”
South Korea’s economy is strong, as are exports, with the nation being the very first worldwide to raise rates of interest in2021 The Government is dedicated to the Korean New Deal efforts, which will drive corporations and the nation towards its enthusiastic objectives.
COVID-19 associated supply chain disturbances brought to the fore South Korea’s heavy dependence on imported farming and foodstuff and highlighted strong complementarities of Australia’s agrifood exports. This supplies Australian premium food and drink exporters with brand-new chances to diversify their markets by wanting to Korea.
Australian agrifood exporters deal with strong competitors from regional and global organizations. South Korean importers and significant sellers are rather dedicated to their existing provider relationships, and it takes a lot for them to alter these alliances.
South Korean purchasers might begin a brand-new supply relationship with smaller sized orders and agreements however if Australian organizations honour these dedications, there is capacity for these orders to grow significantly gradually. Some business might require to change their active ingredients, labelling and/or product packaging to make their items ideal for the South Korean market.
Ms Quinn provides some last suggestions to business considering this market: “To be effective in the Republic of Korea, exporters should devote Korea-focused marketing efforts and open, routine lines of interaction with regional purchasers and customers. Exporters likewise require to remain client and concentrate on establishing trust-based relationships with regional partners.”
Trade and Investment info
Austrade’s site has a Republic of Korea (ROK, likewise called South Korea) nation page that includes the following details to assist exporters:
- Market profile
- Doing Business
- Austrade support
Austrade contact info
Ms Julie Quinn
Senior Trade Commissioner– South Korea
Australian Trade and Investment Commission (Austrade)
Contact: 13 28 78
To find out more about how Austrade can assist your service, see austrade.gov.au
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