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04/05/2016

South Korea's awakening

  • The country's GDP is expected to grow by 3% this year
  • Experts maintain that there are opportunities in its food and beverage sector

Manel González. Journalist

South Korea's Minister of Strategy and Finance, Il-Ho Yoo, announced a few days ago that the country's GDP would expand by 3% this year. "South Korea is able to post 3% level growth as the government is rolling out measures to vitalize investment and exports, as well as structural innovations," he said.

This outlook is in line with, albeit more optimistic than, that of the International Monetary Fund, which expects growth of 2.7%, due mainly to China's economic slowdown. Minister Yoo said that the sluggish Chinese economy would have a limited impact on South Korea. "The transition of the Chinese economy into a sustainable one will eventually benefit the South Korean economy as well," he said. "China is changing its strategy to focus on domestic consumption. This can become an opportunity. In this aspect, the free trade agreement will also help." China is indubitably South Korea's biggest partner, with exports accounting for more than 25% of the total.

Consumers' growing purchasing power (and better taste)

South Korea's population of 50 million is seeing a rise in purchasing power. Per capita income has expanded notably in recent years, to $25,000 per year (according to data from the Economic and Commercial Office in Seoul).

When the EU-South Korea Free Trade Agreement entered into force in July 2011 (the only FTA in force between the EU and this part of Asia), new doors were opened up to European companies, making exports easier by eliminating many tariff barriers, and other barriers in general. This FTA is an excellent opportunity for all companies interested in doing business in Korea.

"It's also worth noting the changes occurring in terms of tastes and consumption habits, due to higher living standards and greater contact with the rest of the world (especially through tourism, which has expanded sharply in recent years); these changes are making Korean consumers more receptive to foreign products," according to ICEX.

Pork, olive oil and wine, the big opportunities

Spanish companies are currently a bit slow to focus on Korea, but experts agree on the country's potential for business.

In 2015, Spain exported 265.4 million euros worth of food and beverages to South Korea, up 10% compared with 2014, according to data from the Spanish Customs Agency. Half of that, 130.5 million euros, was attributable to meat and pork offal, once again Spain's star products. Olive oil ranked a distant second, accounting for 31.3 million euros. Sunflower oil and other vegetable oils, and also fish and shellfish accounted for 20.4 and 20.1 million euros, respectively. Fish saw a 150% increase in terms of value with respect to 2014.

Other products saw a notable rise in exports last year as well, including fruit juice (7.2 million euros, +57%), baby food (4.7 million euros, +570%), chocolate (4.5 million euros, +310%), citrus fruits (2 million euros, +80%) and pasta (1.4 million euros, +1,300%!).

According to ICEX, "Korea is not well-equipped for agriculture and cattle farming, as it has an inefficient production structure. In sectors with no tariff barriers or for which a bilateral export protocol has been established, Spanish exports are experiencing sustained growth".

Pork, olive oil and wine, the big opportunities

Spanish companies are currently a bit slow to focus on Korea, but experts agree on the country's potential for business.

In 2015, Spain exported 265.4 million euros worth of food and beverages to South Korea, up 10% compared with 2014, according to data from the Spanish Customs Agency. Half of that, 130.5 million euros, was attributable to meat and pork offal, once again Spain's star products. Olive oil ranked a distant second, accounting for 31.3 million euros. Sunflower oil and other vegetable oils, and also fish and shellfish accounted for 20.4 and 20.1 million euros, respectively. Fish saw a 150% increase in terms of value with respect to 2014.

Other products saw a notable rise in exports last year as well, including fruit juice (7.2 million euros, +57%), baby food (4.7 million euros, +570%), chocolate (4.5 million euros, +310%), citrus fruits (2 million euros, +80%) and pasta (1.4 million euros, +1,300%!).

According to ICEX, "Korea is not well-equipped for agriculture and cattle farming, as it has an inefficient production structure. In sectors with no tariff barriers or for which a bilateral export protocol has been established, Spanish exports are experiencing sustained growth".

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