MARKET RESEARCH COUNTRY REPORT

SOUTH KOREA

CONTENTS

Main Industry SectorsEconomic OverviewForeign Direct Investment [FDI]FDI Government MeasuresCountry Strong PointsCountry Weak PointsForeign Trade Overview

MAIN INDUSTRY SECTORS

The primary sector in South Korea is weak, counting only with a negligible contribution to

the country's GNP.

Rice is the main agricultural crop.

Barley, wheat, corn, soybeans, and sorghum are also extensively cultivated. Likewise, livestock

farming is done on a large scale.

South Korea's mineral resources are limited to gold and silver. 

South Korea's main sectors of activity are textile, the steel industry, car manufacturing,

shipbuilding and electronics.

South Korea is the largest producer of semiconductors in the world.

The manufacturing sector represents about 35% of the GNP, while the tertiary sector

accounts for more than 60%.

ECONOMIC OVERVIEW

Ranking fifteenth in the list of the world's largest economic powers, South Korea has

shown a spectacular growth over the past thirty years.

Due to its strong incorporation into international trade and finance, South Korea was

one of the most affected countries in Asia by the international financial crisis.

South Korea’s GDP growth fell from 5.1% obtained in 2007 to 0.2% in 2009.

South Korea was, nevertheless, one of the first economies to get out of the crisis, its

recovery was strengthened by the dynamic growth in exports and an important

budgetary and currency stimulus plan.

Displaying a remarkable force, the country's growth attained 6.1% in 2010, according to

the estimations, and it should remain at a high level.

Once the economy started to grow again, the government has started to withdraw

progressively all the exceptional measures adopted during the crisis.

In order to reinforce the activity, the country must succeed in controlling the increment

of  public expenditures to be able to balance the budget, following the fiscal reform

which intends to establish a system more favorable to the country's growth. 

ECONOMIC OVERVIEW

The authorities must also supervise that this negative impact of restructuring the

enterprises in the financial sector remains limited, continuing at the same time the

structural reform that aims to maintain the growth during an average period. 

The government's fixed objective is to bring the budget deficit to 0.5% in 2013. 

South Korea has to deal with the structural problems which are: an underdeveloped

financial market, the rising of household's debts and the ageing of the population.

The revenue per capita in South Korea increased from USD 100 in 1963 to almost USD

20,000 today.

The unemployment rate has noticeably increased during the crisis and the number of

irregular workers is very high.

FOREIGN DIRECT INVESTMENT [FDI]

Under the effect of the world's recession, the flows of foreign direct investment (FDI) have reduced in

2009; later on, they started  to slowly increase again with the recovery, a trend that should be confirmed

in 2011.

South Korea's appeal in terms of foreign direct investment (FDI) is the result of the country's fast

economic development and the specialization of its industry in new information and communication

technologies.

The lack of general transparency in regulations is a major concern to foreign investors.

FDI GOVERNMENT MEASURES

Korea has implemented measures in order to protect Foreign Investment:

External Remittance guarantees;

Identical treatment to domestic firms with regard to business operations;

Tax deductions provisions.

South Korean restrictions or prohibitions in terms of foreign investment in sectors of

public administration, educational organizations, national defense, etc.

COUNTRY STRONG POINTS

The Korean workforce is highly skilled. The R&D capabilities, as well as

the quality of the infrastructures are deciding strong points for

investors.

COUNTRY WEAK POINTS

The laws and national regulations are restrictive and the manpower cost is high.

Private real estate, as well as renting office or shop premises is expensive. Lastly, competitiveness is relatively restrained.

FOREIGN TRADE OVERVIEW

South Korea is the world's 15th trading nation, trade represents about 100% of the

country's GDP.

The trade balance of the country is on a high surplus and should remain so in the

coming years.

Despite the effects of the financial crisis, which have greatly reduced this surplus, the

weakness of the won (Korean currency) encourages exports. 

The main trade partners of the country are China, Japan, the European Union and the

United States.

RELATED SOUTHKOREAREPORTS

Market Opportunities of products and Services in South Korea.

Export and investment sector opportunities in South Korea.

Overview of Trade Regulations, Customs and Standards South Korea.

South Korea Investment guide for beginners.

Business and Project Financing in South Korea.

Business Travel Advisory in South Korea.

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