CONNECT South Korea a Smart Guide to Shipping

CONNECT South Korea A smart guide to shipping

This is your quick guide to help you connect with customers and businesses across South Korea. It’s here to help you understand the local culture, shipping requirements, regulations and key commercial opportunities to expand your business.

united problem solversTM Contents CONNECT South Korea Visit UPS.com

South Korea Overview 03 > Find out the most important facts about the markets to help you assess the potential for your business.

Economic Potential 04 > Learn about what sells where and the most popular exports and imports that may be relevant to your sector.

Business Culture 07 > Pointers on how to build successful relationships with local businesses and consumers.

Tips and Advice 08 > Useful information and directory to help you ship to and from South Korea.

Connecting with UPS 10 > A quick overview of UPS capabilities and experience and how we can help connect your business with customers across South Korea.

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Open your new trade South Korea has a mixed economic system which includes a variety of liberties, combined with centralized economic planning and government regulation. South Korea is a member of the Asia-Pacific Economic Cooperation (APEC) and the Asia-Pacific Trade route to South Korea. Agreement (APTA). South Korea has developed into one of Asia's most affluent countries since its partition in 1948. The country possesses enviable economic strengths as well as a strong cultural work ethic, a highly educated workforce and a history of technological innovation.

National facts and figures

South Korea Capital Seoul Population 50,924,172 (July 2016 est.) Land Area 99,720 sq. km Although it is only the 109th largest country in the world, it has the 28th highest population and is over 80% urbanized. Land Area Seoul (capital) 9.774 million; Busan (Pusan) 3.216 million; Incheon (Inch'on) 2.685 million; Daegu (Taegu) 2.244 million; Daejon (Taejon) 1.564 million; Gwangju (Kwangju) 1.536 million (2015) Languages Korean

Sustainable development Trade is important to South Korea’s The Korean economy grew 2.8% Ease of doing business South Korea is the 5th largest export economy in the economy in 2016 In recent years South Korea has become more world and the 10th largest importer (2016). The total value of exports and imports equals 85% According to the Bank of Korea, in 2016 business-friendly, according to the World Bank, South Korea Economic Freedom Index for 2016 is of GDP. South Korea has been a member of the exports grew 2.1%, imports grew 4.5% and the rising from 16th to 5th within 5 years. 74.3 (23rd in Index of Economic Freedom; Heritage World Trade Organization (WTO) since 1995. manufacturing sector grew 2.3%. Foundation).

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Unlocking your In over half a century, South Korea has managed to transform itself from a deeply impoverished nation to one of the world’s leading economies. South Korea achieved this with a government that dictated policy and goal-setting to local industry while potential. simultaneously restricting Foreign Direct Investment (FDI). Over the same period, South Korea moved from being a follower of product development to a global leader of innovation.

A system of close government and business ties, South Korea has been named by the Bloomberg Innovation Index as one of the top Most Innovative Economies for 2016 and 2017. including direct credit and import restrictions, The country ranks high in the areas of R&D (Research and have made Korea success possible. Development) spending, value added manufacturing, patent The government promotes the import of raw materials and activity and with top-five rankings in high-tech density, higher technology at the expense of consumer goods. It also encourages education and researcher concentration. savings and investments over consumption. Global Link to Success The government works to create the most optimum business The most efficient economic hub environment for companies located in South Korea and to promote Currency South Korean Won (KRW) South Korea is heavily integrated into international trade and foreign direct investment. The aim is for the market to become a key facilitator of business partnerships, growth and prosperity. finance. Korea’s proximity to the major Asian markets makes it the GDP (US$) 1,411,246 (2016) most efficient economic hub in Asia. Indeed, Korea’s Free Economic Today, a growing number of foreign companies are using South Zones (KFEZ) were developed to take full advantage of this great GDP Per Capita (US$) 27.663 (2016) Korea as a springboard to enter major markets in Asia and beyond, location. CPI inflation Rate: 0.74% (2016) thanks to the country’s extensive business network. Most notably, The “World’s Best Customs” strategy is an initiative launched by The 495.5 billion (2016). 62.9% of exports Korea’s ratified agreement with China is set to transform the Korea Customs Service and it aims at making South Korea a business by value were delivered to other Asian peninsula into an economic powerhouse. hub in Northeast Asia. The plan includes: Total Exports (US$) countries while 16.4% were sold to North The Korean government has already spent billions of dollars - improving import and export logistic system American importers on laying the infrastructure to facilitate the emerging high-tech, Semiconductors, petrochemicals, international business, leisure and tourism hubs there. This - simplifying cargo handling automobile/auto parts, ships, wireless includes setting up eight Free Economic Zones (FEZ) : (Incheon FEZ, Exports – - improvements for customer, through more effective, joined-up communication equipment, flat panel Busan-Jinhae FEZ, Gwangyang Bay Area FEZ, Yellow Sea FEZ, Daegu- commodities services displays, steel, electronics, plastics, Gyeongbuk FEZ, East Coast FEZ, Chungbuk FEZ and Saemangeum- computers Gunsan FEZ). - use of information across Internet-based eCustoms systems to help target compliance activities Total Imports (US$) 406.1 billion (2016) Environment to promote growth The South Korean economy's long-term challenges include a The acceleration and innovation of the FinTech sector (the new Crude oil / petroleum products, rapidly aging population, inflexible labor market, dominance of technology and innovation that aims to compete with traditional semiconductors, natural gas, coal, steel, Imports – large conglomerates and a heavy reliance on exports. In an effort to financial methods in the delivery of financial services) is prominent computers, wireless communication commodities address the long-term challenges and sustain economic growth, the in South Korea. Many start-ups entered this industry in 2016, while equipment, automobiles, chemical, current government has prioritized structural reforms, deregulation, major financial companies expanded their investments in IT. textiles promotion of entrepreneurship and creative industries and the China 25.1%, U.S. 13.5%, Hong Kong 6.6%, Top Trading Partners competitiveness of small and medium-sized enterprises. Vietnam 6.6%, Japan 4.9%

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Key Business Sectors in South Korea.

The South Korean economy has shifted from agricultural towards manufacturing, with service The South Korean government also focuses investments to develop the industries becoming increasingly important. Specialized Regional Programs – nurture specialized local industries to strengthen the local economies and create jobs Today, the agricultural sector in South Korea only makes a negligible contribution to the country's GDP (2.3%) and employs only 6% of the population. South Korea's mineral resources are limited to gold and silver. The main industries are: electronics, semiconductors, textile, steel, manufacturing equipment, car manufacturing and shipbuilding. South Korea's economy is strongly export-oriented and it will continue to be a two-speed economy, with dynamic industrial conglomerates but a lower productivity services sector.

Innovation and Growth Gangwon big data South Korea is a rich, technologically advanced, mature country with an impressive record of innovation and economic reform. Chungbuk Thanks to its ideal geographical location, outstanding human resources and top-notch infrastructure, bio-beauty some 16,000 foreign companies - from big corporations to burgeoning start-ups - are turning to Korea for business expansion. Jeonbuk South Korea also serves as a great ecosystem for companies involved in newly emerging industries such carbon as renewable energy and Information and Communication Technologies (ICT) convergence. Gwangju The major industries of the country which are expected to grow in 2017 thanks to an increase in export, automotive recovery of global trade and rise in oil prices: – Information and communication technology (ICT) – Automobile – Petrochemical – Oil refining – Semiconductor – Display and general machinery

Specifically, the increase in annual export from the oil refining industry is estimated at 10.7%, petrochemical 5.5%, information and communication equipment 4.5%, semiconductor at 4.3%, display at 2.5% and general machinery at 2.0%.

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Koreans are Consumers in South Korea are purchasing more from overseas as compared to purchasing them locally. shopping abroad.

The economic situation has led to growth in the premium outlet market and One of the biggest eCommerce markets weaker sales at traditional department stores. Korean consumers have shown Online shopping in South Korea is still enjoying double digit growth - in 2016, online shopping a willingness to make on-line purchases directly from foreign websites in order sales in South Korea grew 20.5% compared to the previous year. It is one of the biggest to save money. Many would prefer to wait two weeks for a product to arrive if it eCommerce markets worldwide. Retail eCommerce volume in the country will grow to means significant cost savings. US$ 32.56 billion by 2021, up from US$ 19.12 billion in 2016 (Statista).

High-end luxury shoppers are still spending at elevated rates. Many Korean households have eCommerce holds a strong position with an internet penetration rate of close to 90% among a large share of disposable income and consumers are willing to pay for big-name brands and the Korean population. The country boasts the highest eCommerce penetration rate in the quality products. Brands are considered representative of the consumer, often indicating the Asia Pacific region with 72% active online shopping (2016). social status of an individual. Trends are very important and taste-makers have a large influence over consumer preferences. – As Chinese cross-border online shopping has grown, Korean manufacturers and eCommerce platforms use this opportunity to expand into a broader market via Korean consumers tend to be concerned with the brand name and health attributes of a eCommerce exports. product, but also seek impeccable after sales service. Tech-savvy Korean consumers typically – “Korean Wave” is driving strong export of Fashion and beauty products via online platforms. research products online, especially through social media, before shopping and enjoy being – As of 2016, digital buyer penetration in South Korea surpassed 61.7% of internet users. well informed when purchasing a product. – As of the fourth quarter of 2016, 55% of the population in South Korea has made a purchase via mobile phone.

55%

Retail eCommerce volume in the country will grow to Population in South Korea who made Digital buyer penetration in South Korea US$ 32.56 billion by 2021, a purchase via mobile phone in 2016. surpassed 61.7% of internet users. up from US$ 19.12 billion in 2016. 06

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Understanding the local Korean culture is profoundly influenced by Confucian principles and this also pervades business. Confucianism supports group harmony, respect for elders and authority, the importance of family, friendship and ancestors and also, tradition. You must business culture is the appear trustworthy, honorable and respectable in a social and business setting. foundation of your success.

Meetings Business Culture Customer Service Holidays • Make an appointment and prepare in advance • Modesty and humility are important in • Strong belief in Confucianism guides quality Koreans officially follow the Gregorian calendar, of a business meeting. Korean culture. service and etiquette in South Korea. It is a even though there are a few holidays that are system of behaviours and ethics that stress based on the lunar calendar. During the official • Punctuality is important as it is a sign of • Koreans have three names. When addressing the obligations of people towards one holidays, offices and banks are closed but respect. a Korean, use his/her title along with his/her another – duty, loyalty, honor, sincerity and palaces, museums, most restaurants, department family name. If there is no title, use “Nim” • Give and receive business cards (one side respect for age and seniority. stores, and amusement facilities are open. after the family name or Mr/Mrs/Miss with printed in English and the other in Korean) the family name. • Korean service is based on the attention to st with both hands and the Korean side facing • New Year’s Day (1 January) detail and respect for the customer. the front. Examine the cards you are given. • The most senior Korean will enter and be • Lunar New Year's Day * (27th - 30th January) Never write on the cards you are given. seated first. • In South Korea, customer service is not only a promise but a tangible reality of Korean • Independence Movement Day (1st March) • Choose delegates who are at the same level • Ask open ended questions that do not culture. with their Korean counterparts – this shows require a "yes" or "no". • Buddha’s Birthday * (3rd May) respect and knowledge. • The Korean “service” refers to free gifts given • Expect Koreans to ask personal questions. th to the customer out of gratitude for their • Children’s Day (5 May) • Koreans are tough negotiators and admire a • Koreans are often wary of foreign businesses service. th persistent negotiator, but refrain from being • Memorial Day (6 June) who are out to make a quick profit. too aggressive. • Service is termed as a “return the favor” deal. Therefore, it is important to demonstrate • National Liberation Day (15th August) It’s common that places that do not offer • Company promotional gifts are given at that you have a long-term commitment to “service” may be viewed unfavorably. • National Foundation Day (3rd October) the first meeting and are intended to build the market and the relationship. relationships. Present your gift only after your • If you are not based in Korea, do make • Chuseok/Korean Thanksgiving * (3rd - 6th host has presented his and use both hands to a point of visiting your client/partner October) accept the gift. whenever it is possible. • Hangul Proclamation Day (9th October) • At the end of the meeting, bow down your • Koreans devote a great deal of time and head lightly or shake hands. • Christmas Day (25th December) energy in getting to know the people • The decision-making process in Korea is done with whom they are dealing and your collectively and up through the hierarchy participation is often interpreted as a which could take more time. Be patient. measure of your sincerity and commitment.

* Subject to change and may vary by year or based on lunar calendar * Where holidays fall on a Sunday, the following weekday will be a public holiday. 07

Contents South Korea Overview Economic Potential Business Culture Tips and Advice Connecting with UPS Tips and Advice CONNECT South Korea Visit UPS.com

Useful things to remember If you are thinking of shipping to or from South Korea, help is at hand. Wherever you are, visit UPS.com to get detailed help on everything you need to know about sending export and import shipments. You’ll find guidance on determining shipping costs; when shipping to and documentation requirements, how to prepare for a shipment, inbound or outbound shipment; how to book and track shipments from South Korea. and how to process payments and deal with returns. Below are some important rules, tools and support resources to get you started.

Ship to South Korea Ship from South Korea Online Tools

Documentation Documentation A range of tools is available from UPS that can help you with your shipping needs. Visit www.ups.com for these tools. An irremovable label (Engraved or Non-removable printing) that An export declaration can be filed through the Electronic Data shows the country of origin needs to be affixed to all goods. In Interchange (EDI) system or via the Internet. Accurate cost and delivery time cases where the goods are of a delicate nature (engraving or Calculate Time and Cost: Find delivery dates, time and shipping permanent printing is not applicable), the country of origin must be costs for UPS services. affixed on each package. Restrictions Days of Operation: Find UPS-observed holidays in South Korea. Most exports from Korea are not subject to any restrictions. Foods, drugs, medicines, medical instruments, automatic data processing machines and telecommunications devices require an Export permission and Export approval are necessary for goods Better knowledge of customs requirement import permit issued by the Korean Food and Drug Administration internationally recognised as being subject to such restrictions (e.g. Import/Export Country Regulations: Click here for country-specific or the Korean Medical Devices Institute, respectively. weapons). facts and requirements that may impact your international shipment. Imported and exported electric goods (cables, batteries, fuses etc.) Goods must be loaded within 30 days from the date of export required permits from the Korea Electric Testing Institute. Exporters declaration acceptance. Effective and efficient shipping process are advised to include the use, HTS code and voltage on the invoice. UPS Import Control®. Take control of your inbound international Special licenses are also required for cellular phones. Unique Customs Information shipments and minimize delays and errors. Restrictions All the goods intended for export must undergo the export UPS Paperless Invoice: Electronic commercial invoices speed data clearance procedures of the Customs, which include: declaring the to customs. Unusual restrictions for importing include contact lenses which goods intended for export, getting the export declaration accepted UPS TradeAbility®: A suite of Web-based tools to help manage and require a permit from KMDIA (Korea Medical Devices Industry to loading the goods in a means of transportation between Korea track international trade. Association). and the importing foreign country. Flex™ Global View : Supply-chain visibility for enterprises with a Import of goods designed for use by children under 14 require global reach. permission from the Korea Conformity Laboratory. Quantum View™ Manage: Get up-to-date information about shipments you send, or those you’re expecting, from one Web-based tool that is easily customizable.

For more information about shipping to For more information about shipping from South Korea visit here South Korea visit here

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Useful links and reference information.

Useful Links Sources & References

Korea Importers Association YCharts The HR Adventure

Korea Trade Investment Promotion Agency (KOTRA) Channel NewsAsia Korea Tourism Organization

Korea Chamber of Commerce and Industry (KCCI or KORCHAM) ForbesCustom-FEZ Commisceo Global

Korea International Trade Agency (KITA) KBS World Radio eDiplomat

Ministry of Foreign Affairs (MOFA) The Heritage Foundation World's Top Exports-TopTrading

Ministry of Land, Infrastructure and Transport (MOLIT) Angloinfo World's Top Exports-Top10Imports

Ministry of Strategy and Finance (MOSF) ForbesCustom-Success in Korea Santander-Customs

Ministry of Trade, Industry & Energy (MOTIE) The World Bank Group Coface

Statistics Korea (KOSTAT) Theodora Bloomberg

Korea Customs Service (KCS) Santander-Outline

Statista

Contents South Korea Overview Economic Potential Business Culture Tips and Advice Connecting with UPS Connecting with UPS CONNECT South Korea Visit UPS.com

Partnering for Whatever your needs are across South Korea and the globe, import or export, business or consumer – UPS has the expertise in global logistics to help you succeed. With access to our comprehensive service portfolio you can capitalize on international maximum potential. market potential. The UPS network will connect you with your customers in South Korea, Asia region and beyond, giving you the reassurance of our experience and the latest technology on your side to help you succeed.

Authorized Economic Operator Status UPS was awarded the Authorized Economic Operator (AEO) certification by the Korea Customs Service. The authorization reinforces the fact that UPS customers enjoy preferential levels of efficiency through customs procedures. This means high quality service guarantee to all UPS customers who connect with businesses in South Korea.

Early Delivery in South Korea UPS can delivery your packages to your customers in South Korea* as early as 9am. You can improve customer satisfaction and drive repeated business.

Speed and convenience across the whole island Together with Korea Post, UPS in South Korea offers self-drop-off service at over 3,500 post offices, including rural areas. Your suppliers in South Korea can take in and fulfil last minute orders from you by dropping your packages at any of the post offices and have them delivered to you as early as the next day.

*Selected areas

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Delivery commitment from South Korea

To Canada 1 day

To U.S.A. 1 day

To Russia 4 days To the UK 2 days To Belgium 2 days

To The Netherlands 2 days To Germany 2 days To France 2 days To Italy 2 days To Spain 2 days To Japan 1 day To the Rest of Europe 2 days To China 1 day To Taiwan 1 day To Africa Region 2 days To Hong Kong 1 day To Middle East Region 2 days To Vietnam 1 day To Thailand 1 day To the Philippines 1 day

Region To Malaysia 1 day To Singapore 1 day To Indonesia 1 day Asia Pacific To the Rest of Asia Pacific2 days

Europe To the Rest of Latin America 2 days

North America To Australia 2 days Middle East

Africa

Latin America

*Based on the earliest delivery times by UPS Worldwide Express service and may vary by origin and destination postal codes. Time-in-transit can be subject to change without prior notice. Please visit ups.com for guarantee details, service availability and commitments before shipping. Certain commodities and high-value shipments may require additional transit time for customs clearance. The above information is updated as of July 2017. 11

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Delivery commitment to South Korea

From Canada 3 days

From U.S.A. 3 days

From Russia 2 days From the UK 2 days From Belgium 2 days

From Germany 2 days From France 2 days From Italy 2 days From Spain 2 days From Japan 1 day From the Rest of Europe 2 days From China 1 day From Taiwan 1 day From Africa Region 2 days From Hong Kong 1 day From Middle East Region 3 days From Vietnam 1 day From Thailand 1 day From the Philippines 1 day

Region From Malaysia 1 day From Singapore 1 day From Indonesia 1 day Asia Pacific From the Rest of Asia Pacific2 days

Europe From the Rest of Latin America 3 days

North America From Australia 2 days Middle East

Africa

Latin America

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