South Korea Market Outlook - Western Australia

GOVERNMENT OFWESTERN AUSTRALIA

Department of Jobs, Tourism, Science and Innovation

South Korea Market Outlook2020-21

Trade and investment opportunities for Western Australian businesses

2 | South Korea Market Outlook 2020-21

South Korea market overview

Gross domestic product

US$1.6 trillion(IMF 2019)

27th most populous country in the world

52 million(2019)

12th largesteconomy in the world

South Korea has a large and developed economy and is among the world’s largest manufacturers and exporters of automobiles, electronics and ships. South Korea is seeking to strengthen its capabilities in advanced manufacturing and transition to a low-carbon economy with zero net emissions by 2050, through

boosting renewable energy capacity and expanding its green mobility fleet of electric and hydrogen-powered vehicles. With these economic development priorities, South Korea offers a broad range of opportunities for Western Australian businesses looking for an export market or long-term investment partnership.

Western Australia’s trade relationship with South Korea

2004Established the WA Investment and Trade Office in South Korea

$11.0 billion4th largest trading partner in 2019

$10.4 billion4th largest merchandise export market, with 41% of Australia’s merchandise exports to South Korea in 2019

WA merchandise exports to South Korea in 2019

58%Iron ore

29%Petroleum

4%Precious metal ore

17th largest market for international students

13,000 arrivals16th largest market for international visitors in 2019

The Western Australian Government supports local businesses pursuing opportunities with South Korea through the Department of Jobs, Tourism, Science and Innovation’s Invest and Trade WA team

and the state’s Investment and Trade Office in Seoul. This includes advice and assistance to Western Australian companies looking to export to South Korea or attract investment to grow their business.

3South Korea Market Outlook 2020-21 |

South Korea is a key market under Western Australia’s Asian Engagement Strategy 2019-2030 which supports:

» maximising trade and investment opportunities

» Asia literacy and capability

» people-to-people links

» business networks and communities.

The strategy provides direct support to Western Australian businesses through 2 programs:

» Access Asia Business Grants fund initiatives to increase trade and investment with Asia.

» Asia Business Capability workshops support people in gaining the Asia literacy skills required to develop sophisticated relationships and capture more trade opportunities.

Korea-Australia Free Trade Agreement (KAFTA)The KAFTA entered into force on 12 December 2014 and is providing Australian businesses with significantly improved access to South Korea. More than 99% of Australia’s goods exports to South Korea are eligible to enter duty-free or with preferential access, and a variety of services including legal, finance, accountancy and telecommunications have regulated access.

KAFTA improves opportunities for Australian investment in South Korea and will help promote direct investment from South Korea into Australia.

For further information on KAFTA visit:

ftaportal.dfat.gov.au/


Trade and investment opportunities with South Korea

An outline of trade and investment opportunities with South Korea is provided below, categorised under Western Australia’s key industry sectors.

Each section also describes the Western Australian Government’s actions to support businesses pursuing these opportunities in 2020-21. The actions are a combination of initiatives to assist Western Australian businesses to develop their export capability (sector-based) and activities that specifically support trade and investment opportunities with South Korea (market-based).

The COVID-19 pandemic has affected both the opportunities that can be pursued and the way the Western Australian Government can practically support Western Australian businesses. The Western Australian Government has adapted its approach to best support ongoing engagement with the South Korean market and will continue to adapt as the COVID-19 situation changes in both South Korea and Western Australia.

EnergySouth Korea and Western Australia have a long-standing energy relationship, brought about by South Korea’s high demand for energy imports and Western Australia’s large-scale energy supply capacity. This energy relationship has historically focused on LNG. Strong South Korean demand for LNG has supported Western Australia’s exports, and South Korean technology has been used in the development of the state’s LNG projects.

While LNG will continue to be an important part of South Korea’s energy mix, the country is likely to increase its demand for lower emissions energy. Under the draft plan for the nation’s ninth basic energy policy for the years 2020-

2034, South Korea plans to reach 40% renewable energy and shift away from thermal and nuclear power generation by 2034. Further, South Korea’s Hydrogen Economy roadmap includes 2022 targets of 81,000 hydrogen fuel cell vehicles (supported by 310 refuelling stations) and 1.5GW stationary fuel cell power plants.

South Korea’s vehicle manufacturers are increasing production of electric and hybrid vehicles, which creates opportunities for Western Australian businesses in the future battery industry to attract investment and establish long-term partnerships.

Western Australian Government actions » Attract investment from South Korea into Western Australia’s future battery industry through: › obtaining business intelligence on cathode active materials (CAM)manufacturers in South Korea

› exploring incentives to attract and enable investment in CAM manufacturing

› developing a process to certify production of Western Australia’s battery minerals

› developing investment attraction and trade promotion strategies for South Korea.

» Support the capability of Western Australian companies in the hydrogen sector through the implementation of the Renewable Hydrogen Strategy.

» Confirm Western Australia as a key partner in South Korean hydrogen development through: › collaborating with Western Australian hydrogen stakeholders to build relationships with South Korean stakeholders

› encouraging participation in the global expressions of interest process for the Oakajee Strategic Industrial Area Renewable Hydrogen initiative.


International educationSouth Korea is an important market for Western Australia’s vocational education and training (VET) and onshore English language courses.

There are opportunities for education providers in Western Australia’s VET sector to provide training solutions in areas of high demand in South Korea. This includes community services, aged care and health, as well as areas that align with South Korea’s development priorities, such as the hydrogen industry.

More generally, Western Australia can capitalise on its safe handling of the COVID-19 pandemic to market itself as an attractive destination for South Korean students.

Western Australian Government actions » Develop and implement an international education recovery and renewal plan.

» Undertake in-market activities to promote Western Australia as a high-quality and safe international education destination.

» Gather intelligence to provide regular updates on in-market activities and trends to inform Western Australia’s international education policy and ensure it is conducive for recovery.

» Promote Western Australia as a premier destination for international students and highlight the state’s credentials for providing an English language experience in a safe environment.

Mining and mining equipment, technology and services (METS) South Korea has a high demand for minerals to support its heavy manufacturing and construction industries. South Korea is a long-

standing customer of, and investor in, Western Australia’s mining industry, particularly for iron ore.

As part of South Korea’s push to increase advanced manufacturing capabilities, South Korean companies are looking for strategic investments in critical mineral projects, including rare earths. This creates potential for partnerships with Western Australian producers.

Western Australian Government actions » Maintain key stakeholder relationships and information exchange between Western Australia and South Korea in the mining industry through one-on-one virtual meetings.

» Accelerate action to streamline approvals processes and further regulatory reform to create a more attractive investment environment for the mining industry.

» Attract investment into critical mineral projects in Western Australia by:

› facilitating understanding of Western Australia’s potential as a secure and reliable supplier and processor of critical minerals (including rare earth elements)

› developing investment attraction and trade promotion strategies for South Korea.


Primary industriesSouth Korea’s agricultural imports play a vital role in supplementing domestic supplies of food, animal feed and raw materials for food processing purposes. In 2019, South Korea was Western Australia’s largest market for wheat.

Western Australia’s Investment and Trade Office in Seoul has identified the following potential growth areas for agrifood exports:

» Lamb, which is viewed as a nutritious meat and becoming popular with more recipes being developed by well-known chefs.

» Functional grains and crops, such as lupins, chia and oats, as these products are valued as functional grains to replace or mix with rice, wheat flour and soybean.

» Counter-seasonal and premium produce, such as truffles, brussel sprouts and table grapes.

» Health food products, such as jarrah honey-based food products, teas and vitamins.

Western Australia’s reputation as a reliable supplier of clean, safe and high-quality food, and its existing agricultural trade relationship, provides a platform to increase supply to South Korea.

Western Australian Government actions » Educate Western Australian agrifood producers and agents on South Korean market opportunities.

» Develop and reinforce relationships with potential and existing South Korean importers and retailers.

» Support Western Australian businesses at agrifood events in South Korea and with in-market visit programs.

» Collaborate with relevant government agencies and industry bodies to promote Western Australia’s agrifood industry.

Health and medical technologySouth Korea’s ageing population and growing interest in health and welfare continue to drive demand for medical treatments and quality healthcare services. South Korea has identified the bio-health industry as a growth engine to complement its capabilities in information and communications technology and biotechnology.

The Western Australian Government recently established the Future Health Research and Innovation Fund. The fund provides a secure source of funding to drive health and medical research, innovation and commercialisation. This will help position Western Australia as a leader in research and innovation, providing opportunities for collaboration with international partners.

There is potential for collaboration in the biotechnology cycle on commercialisation strategies for life sciences and databases for commercial exploration.

Western Australian Government actions » Promote the Future Health Research and Innovation Fund and develop and implement communications tools to enable engagement with current and potential fund stakeholders.

» Explore and introduce life science opportunities for Western Australian organisations in South Korea through:

› promoting Western Australia’s capabilities in biotechnology

› identifying sub-sectors of biotechnology for possible collaboration

› matching market-ready organisations.


Western Australian business success with South Korea

Pilbara MineralsWestern Australian lithium producer Pilbara Minerals is working with South Korea’s POSCO in relation to investment, the supply of raw materials and a proposed joint venture for a downstream lithium chemical conversion facility in South Korea. As an investment first for both POSCO and Pilbara Minerals, the relationship is considered strategically important for both companies.

The initial agreement between the 2 companies, signed in 2018, was for the supply of spodumene concentrate from Pilbara Minerals’ Pilgangoora Lithium-Tantalum Project.

Since then, the relationship has continued to grow and prosper. Following a $79 million investment in 2018, POSCO is now Pilbara Minerals’ fifth largest shareholder.

The capacity of the proposed South Korean downstream lithium chemical conversion facility has grown from

30,000 tpa LCE (lithium carbon equivalent) to 40,000 tpa LCE, and subsequently raw material supply from 240,000 tpa to 315,000 tpa spodumene concentrate to support the facility.

The companies continue to pursue the joint venture and are currently undertaking technical work to help inform decisions around investment.

Korea Research Centre of WAEstablished in 2020, with support from the Academy of Korean Studies, the Korea Research Centre at The University of Western Australia is a hub for Korean Studies teaching and research in Western Australia.

Its aim is to train future scholars in Korean studies through a strong focus on facilitating postgraduate and postdoctoral research opportunities, as well as research-led teaching.

In addition, the centre seeks to foster collaboration among researchers engaged in Korea-related research in Western Australia’s higher education

institutions, and connect them with key Australia-Korea stakeholders in the business community, state government and non-profit organisations.

The centre currently focuses on 3 core research themes, which examine Korean society and culture: Emotions, Bodies and Identity. Each theme makes up a strategic research cluster headed by a leading scholar, and includes postgraduates and postdoctoral fellows from The University of Western Australia and other universities to build on existing and established research in these areas. The centre will also support new and emerging areas of research to activate engagement with local industry on Korea-related research.


Western Australian Government supportWestern Australia’s Investment and Trade Office in Seoul has supported Western Australian businesses seeking to access trade and investment opportunities in South Korea for more than 25 years. The office has established a strong network of contacts to support Western Australian businesses in South Korea. This includes close working relationships with the Australian Embassy in Seoul, Austrade, Tourism Australia and the Australian Chamber of Commerce in South Korea.

In 2020-21, Western Australia’s International Investment and Trade Office Network will move to a regional hub model. The Seoul office will continue to operate as part of the North East Asia regional hub, providing the following services:

» advice on North East Asian markets and specific trade and investment opportunities

» advice on market entry strategies » supporting in-market promotion and visits

» facilitating introductions to potential customers and partners.

Invest and Trade WAThe Department of Jobs, Tourism, Science and Innovation’s Invest and Trade WA team promotes Western Australia as a destination for investment, provides a ‘one-stop-shop’ for incoming trade and investment enquiries, and assists WA businesses to develop and expand their exports.

Contact:[email protected]

Web:www.investandtrade.wa.gov.au

View Western Australia’s Asian Engagement Strategy 2019-2030

www.wa.gov.au/asian-engagement-strategy

GOVERNMENT OFWESTERN AUSTRALIA

Department of Jobs, Tourism, Science and Innovation

South Korea Market Outlook - Western Australia

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