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REPUBLIC of Korea COUNTRY STARTER PACK Country Starter Pack 2 Introduction to Korea Korea at a Glance

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REPUBLIC of Korea COUNTRY STARTER PACK Country Starter Pack 2 Introduction to Korea Korea at a Glance REPUBLIC OF Korea COUNTRY STARTER PACK Country starter pack 2 Introduction to Korea Korea at a glance POPULATION - 2014 GNI PER CAPITA (PPP) - 2014* US$34,620 50.4 INCOME LEVEL million High *Gross National Income (Purchasing Power Parity) World Bank GDP GROWTH 2014 CAPITAL CITY 3.3% GDP GROWTH FORECAST (IMF) 3.3% (2015), 3.5% (2016) and 3.7% (2017 - 2020) Seoul RELIGION CLIMATE CURRENCY FISCAL YEAR jan-dec Buddhist: 43%, Four seasons Korean Won calendar year Protestant: 34%, Catholic: 20% > TIME DIFFERENCE AUSTRALIAN IMPORTS AUSTRALIAN EXPORTS EXCHANGE RATE TO SEOUL (ICT) FROM KOREA (2014) TO KOREA (2014) (2014 AVERAGE) 1 hour A$11.7 A$20.43 (KRW/AUD) behind (AEST) billion billion A$1 = KRW 950.27 SURFACE AREA Contents 99,400 1. Introduction 4 1.1 Why Korea? 5 square kmS Opportunities for Australian businesses 1.2 Korea at a glance 9 1.3 Korea and Australia: the bilateral relationship 16 GDP 2014 2. Getting started in Korea 20 2.1 What you need to consider 22 2.2 Researching Korea 32 US$1.416 trillion 2.3 Possible business structures 35 2.4 Manufacturing in Korea 36 3. Sales & marketing in Korea 38 POLITICAL STRUCTURE 3.1 Direct selling 39 3.2 Franchising 40 Presidential 3.3 Online sales 40 representative 3.4 Agents and distributors 43 democratic republic 3.5 Marketing 44 3.6 Labelling requirements 45 GENERAL BUSINESS HOURS 4. Conducting business in Korea 46 4.1 Korean culture and business etiquette 47 Monday to Friday 4.2 Building relationships with Koreans 49 4.3 Negotiations and meetings 52 9.00 am to 6.00pm 4.4 Due diligence and avoiding scams 53 5. Business practicalities in Korea 54 INTERNATIONAL DIALLING CODE 5.1 Laws and regulations 55 5.2 Import duties, tariffs and regulations 59 5.3 Taxation 62 5.4 Audit and accountancy 69 5.5 Employing workers 71 5.6 Banking in Korea 77 +82 5.7 Repatriating profits and getting paid 79 STOCK EXCHANGE 6. Visiting Korea 82 Korea Exchange (KRX) 6.1 Visas 83 6.2 Currency 84 OFFICIAL LANGUAGE 6.3 Air travel and airports 84 6.4 Ground transport 85 6.5 Hotels and dining 87 Korean 한국어 6.6 Health and welfare 90 7. Engage with us 96 Country starter pack 4 Introduction to Korea 1. Introduction Country starter pack 5 Introduction to Korea 1.1 WHY KOREA? OPPORTUNITIES FOR AUSTRALIAN BUSINESSES The Republic of Korea (ROK), commonly known as Korea, is the fourth largest economy in Asia and the 13th largest in the world. Unlike its neighbour to the north, the Democratic People’s Republic of Korea (DPRK, otherwise referred to as North Korea), it is an innovative, free- market economy with a highly educated workforce and democratic government. Korea is an optimal location for doing business with the world’s second and third largest economies (China and Japan) and engaging the overall Asian market. Korea is located within an average travel time of three hours from over 81 cities with a population of one million or more. Coupled with its world-class infrastructure, Korea is an ideal location for Australian businesses looking for a North Asian hub for strategic expansion. Korea is Australia’s fourth largest trading partner, with two-way trade totalling over $34.5 billion in 2014. Australia and Korea enjoy a complementary trade relationship – Australia sending raw materials to Korea and Korea exporting manufactured goods to Australia. Services are also an increasingly important aspect of the trade relationship, and investment is growing from a relatively low base. Korea is a dynamic country with many opportunities for Australian businesses. It has an advanced manufacturing sector and is home to iconic and world leading brands such as Samsung, LG, Hyundai and Kia. The nation boasts an affluent, tech savvy population with a well-educated, highly skilled workforce enabling growth in technology specific industries. The Korea Australia Free Trade Agreement (KAFTA), which came into force in December 2014, promises to open up even more opportunities for Australian business. There are several industries that Australian businesses can target and take advantage of. Country starter pack 6 Introduction to Korea Food and agriculture: Australian businesses are in a strong exist in higher education, vocational education and position to supply various food and beverage products to training (VET), schooling, and intensive English courses. the Korean market. Korea is highly dependent on food In particular, the recently introduced post study work imports, with agricultural imports totalling $29.1 billion in arrangements (allowing international students studying 2013. Australian businesses are well regarded in Korea as in Australia to work here once graduated) in Australia will suppliers of high quality and safe food products providing be a significant incentive for students’ interest in higher Korea with $1.9 billion worth of agricultural imports in education. Australia is the number three destination for 2013. The Korean food market is also rapidly evolving, Korean students studying abroad (behind the USA and driven by changing consumer tastes and expanding Japan). A total of 28,016 Korean students were enrolled distribution channels, including new retail outlets and in Australia across all sectors (schools, higher education, online platforms. Opportunities exist for Australian TAFE/VET) in 2014, a positive increase of 2.1 per cent businesses in a range of food and agricultural items such from the previous year indicating the ongoing potential as wine, nuts, dairy, meat and fresh fruits. for growth. Financial services: Korea’s rapidly ageing population needs Professional services: The free trade agreement will increased financial security from personal investments. deliver new market opportunities for Australian service Consumer expectations are challenging the traditional suppliers, particularly in accounting, legal and audio visual investment mindset and are putting pressure on Korean services. For example, within two years of KAFTA coming banks and funds to deliver higher returns. This is driving into force, Australian law firms will be permitted to enter greater interest by institutions in higher yield “alternative” into cooperative agreements with Korean law firms, and products, such as offshore investment services, and within five years, establish joint ventures and hire local partnerships with foreign firms. Infrastructure and real lawyers. estate are now two areas of particular interest for many Korean firms. ICT digital contents and services: Koreans are among the world’s biggest users of fast broadband and mobile Education: Korea is a stable and well-established market phones. Korea was the first country to build a national, for Australian education providers. It is the fourth-largest high-speed fibre broadband network (more than ten source country for foreign students in Australia after years ago), and has a mobile penetration rate of 1.1 mobile China, India, and Vietnam. Australia is an attractive phones per person - which means there are more mobile destination for Korean university students trying to phone accounts than people. It comes as no surprise, improve their English language skills and to build work then, that Korea has strong ICT hardware manufacturing experience to be more competitive in Korea’s tough capabilities that complement Australia’s software job market. Opportunities for Australian institutions capabilities. Considering doing business in Korea? 1. Do your research • Be flexible and open to difference • Speak to industry experts • Understand the local culture and • Connect with Australian businesses prepare before meeting with local operating in Korea business partners • Go to industry events and information • Practise Korean business etiquette. seminars 3. Building relationships is crucial in • Seek professional advice. Korean culture, but it can take time 2. Become aware of cultural differences • Be patient with developing relationships and ways of doing business in Korea • Follow up and maintain contact with • Gain an understanding of your customer your networks. and local business partners Country starter pack 7 Introduction to Korea KAFTA – benefits for Australian services firms: Korea is Australia’s third largest overall export market and ninth largest services export market. With tourism and education dominating Australia’s services exports, there are plenty of opportunities with KAFTA for professional services firms. These include: • Legal firms for the first time will have access to Korea’s legal consulting market • Financial services providers will be able to supply on a “cross-border” basis Health, aged care and biotech: Korea’s population is • Accountants can now open offices ageing rapidly – faster than most other OECD countries. This is the result of increased life expectancy and one in Korea to provide accounting of the lowest fertility rates in the OECD. As a result, consultancy services there is an increased demand for aged care, the bio-tech industry, medical services and devices, over-the-counter • Telecommunications providers medications and rehabilitation services. Coupled with can be licensed to provide public a domestic trend of increased health consciousness, telecommunications services opportunities for Australia exist in areas including health and aged care services, pharmaceuticals, and advanced • Education services: Guaranteed medical equipment. market access for Australian education providers in Korea’s growing adult Innovative with a strong commitment to R&D: Korean investment in research and development was US$63 education sector billion ($70 billion), or 3.6 per cent of GDP in 2014 – • Film and television services: KAFTA one of the highest levels in the world. Koreans love new technology, and are often among the first in the world to contains an Audio-visual Co- embrace cutting edge products and services. This, along production Annex, opening new with Korea’s superb infrastructure, makes it an ideal test commercial opportunities for the bed for innovative foreign manufacturers and service Australian film and television industry providers. • Engineering services: Australian Safe, stable and developed: Korea is one of 34 OECD member states.
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