• Australia
• Chile
• China
• India
• Japan
• Mexico
• Russia
• South Africa
• South Korea
• Spain
• United Kingdom

International Resources: Global Market Profile: Republic of Korea (South)

As part of its commitment to providing its members with market analysis and insight, PMA has compiled the following information about the Republic of Korea, better known as South Korea, from Attaché Reports submitted by the U.S. Department of Agriculture’s Foreign Agricultural Service, as well as the CIA World Factbook, embassy sites, and business etiquette reference guides.

Entering the South Korean Market

The Korean market is unlike any other in the world. In South Korea, the term “seeing is believing” could be a motto. It is recommended that foreign businesses visit South Korea to conduct market research as well as conduct face-to-face meetings.

South Koreans prefer to do business with people with whom they have a personal connection; therefore you should try to be introduced by a third-party. Relationships are developed through informal social gatherings that often involve a considerable amount of drinking and eating. Individuals who have established mutual trust and respect will work hard to make all parties successful. Sensitive matters may often be raised indirectly through the intermediary that first made the introductions. Another valuable way of entering the South Korean market is by attending local food shows and conventions. Food shows help expose your company to a larger South Korea market.

Obtaining information on different importers is always valuable, and can be found through the U.S. Agricultural Trade Office. South Korean businesses appreciate when foreign companies send materials, such as price lists, product samples, and company information to office contacts so they can better understand your business and put your relationship into perspective. All material should be in both English and Korean.

Businesses in South Korea prefer face-to-face meetings rather than phone calls or e-mails. Meeting in person helps to build credibility and augments the relationship. Another plus to traveling to South Korea is you can see the market first hand. Multiple trips will be needed to conduct business and it is common to use initial visits to establish a good rapport. Keep in mind the initial meeting is often used to get to know one another and business is not normally discussed. After your initial meeting, make sure you keep in touch via emails or phone calls. This shows your continued interest in your business relationship and helps strengthen rapport.

Good conversation topics to initiate are South Korea’s cultural heritage, economic success, international accomplishments, and sports (especially soccer, the 2002 FIFA World Cup, and the Olympics). Personal hobbies, kites, and the well-being of everyone’s family are also good matters to discuss. Avoid controversial topics such as the Korean War, politics, socialism, communism, your counterpart’s wife, and personal family matters.

Business hours are normally between 9:00 a.m. to 5:00 p.m. Monday through Friday and  from 9:00 a.m. until 1:00 p.m. on some Saturdays. The best time to schedule meetings is from 10:00 a.m. to 11:00 a.m. and then again from 2:00 p.m. until 3:00 p.m. Remember that business dinners are very common in South Korea, and your counterpart might suggest having meetings at local coffee shops.

Avoid planning business from mid-July to mid-August, because this is when many Koreans take vacations. Christmas time and early October are also bad times for meetings, due to many holidays.

Women have not reached business freedom in South Korean. Status is important and businessmen have a higher status than businesswomen. It is not uncommon for a Korean businesswoman to hold the door for a businessman. Western businesswomen are not included in this practice. However, women will have the challenge of overcoming initial hesitancies. It is often advisable to inform your Korean contact that there will be women on your team. Your contact can relay the information and give your counterpart time to adjust.

Gift giving is practiced in business settings. Gifts express a great deal about a relationship and are always reciprocated. It is considered rude to give someone an expensive gift if you know that they cannot afford to reciprocate accordingly. Good gifts to bring to a first meeting include items with your company logo or gifts that symbolize your home. Also, remember that status is important so if giving multiple gifts to multiple people, give a higher quality gift to the most senior person.

If invited to a South Korean counterpart’s home, good gifts include fruit, good quality chocolates, or flowers. All gifts should be wrapped nicely. Wrapping gifts in red or yellow paper portrays royalty. Also, yellow and pink colors represent happiness, so these colors are good choices. Do not wrap gifts in green, white, or black paper. The number 4 is considered unlucky, so gifts should not be given in multiples of 4.Giving 7 of an item is considered lucky. Do not sign a card in red ink. When giving a gift to a South Korean, use both hands. Gifts are not opened when received.

Initial offerings of gifts should always be denied, so be persistent when presenting a gift.

South Korea imports around 70% of its agricultural product needs.

U.S. exports of fresh fruits, vegetables, and nuts to South Korea have grown strongly over the last 15 years, and exceeded $170 million in 2005. Oranges are the largest item in this trade. South Korea produces an abundance of vegetables and many fruits (apples, pears, persimmons, and peaches). Production is relatively profitable compared to other parts of South Korean agriculture. The fruit and vegetable share of total agricultural output value is almost one-third. The U.S. season for many fruits and vegetables is the same as South Korea's, which leads to some competition.

One of South Korea’s top three exports to the U.S is pears.

Almonds and oranges are two of South Korea’s main produce imports, which are mostly exported from the United States. The main source of fresh vegetable imports is China due to its geographical proximity. China supplies over two thirds of the total value of vegetable imports each year. Korea, however, is mainly self sufficient in production of fresh vegetables, except for onions, potatoes, ginger and garlic. Korea imports limited volume vegetables such as broccoli and asparagus. The demand for organic vegetables is also on the rise in South Korea. Growing concerns over food safety and greater awareness of ‘clean and green’ produce has led to the organic trends.

Korea’s main fruit imports are bananas, pineapples, kiwi fruit, grapes, grapefruit, lemons, and oranges. Bananas account for 50% of all imported fruit; however, oranges and grapes are starting to take significant portions of the South Korean market.

From July-October, South Korea and other countries in the northern hemisphere can no longer produce many commodities, so supply stops. During this time, imports from countries in the southern hemisphere take hold of South Korea’s fresh fruit market.

Currently agriculture counts for 3% of South Korea’s GDP and 6.4% of the country’s labor.

Doing Business in the South Korean Market

First impressions are very important. Some differences are simply due to the language barrier; while others are due to differences in deeply held traditions and practices. If you maintain a polite, patient and professional manner, the likelihood of committing a serious faux pas will be greatly diminished. To help bridge the gaps, we suggest that you:

• Dress professionally and conservatively. Avoid jewelry other than a watch or wedding band.
• Wear dark colors. Men should wear suits while women should wear business dresses or a skirt and blouse.
• Prior appointments for meetings are necessary and should be made far in advance.
• Meetings are normally one-on-one, and not in large groups. However, it is important to have a good rapport with the person you meet with, because it is up to them to sell your idea/product to their whole company.
• Age and rank are very important. It is often easier to establish a relationship with someone comparable to yourself.
• Punctuality is required at all meetings. It is common to arrive on time if not early for all functions (business and social) in South Korea.
• Provide written material of all presentations in both English and Korean.
• In South Korea, both a bow and handshake are used. The person with the lower status bows and the person with the higher status then will initiate the handshake. Normally the individual who bows will say “man-na-suh pan-gop-sumnida” which means “pleased to meet you.”
• You should greet the highest ranking person first, and use honorific titles where applicable.
• Business cards are exchanged at the very start of a meeting. Have one side translated into Korean. Keep cards in good condition – a tattered card will reflect badly on you.
• Be sure to include your title and make it prominent on the card. Status means a lot and displaying your title will not only unfold how much authority you have but will also help your counterpart match you with someone of similar status.
• Cards are presented with the text facing your counterpart and with both hands; they are also received with both hands. Never write on anyone’s business card.
• Look at all business cards when they are handed to you.
• Pay attention to body gestures, tone of voice and facial expressions because communication styles tend to be tuned to people’s s feelings.
• Confrontation is generally avoided in order not to jeopardize another’s honor or dignity (Kibun). It is necessary to read between the lines in order to fully understand what is really meant.
• Due to the theory of Kibun, little white lies are acceptable in South Korea, if told to keep peace and harmony.
• Since there is a tendency to say "yes" to questions, the way you phrase a question is crucial. It is better to ask, "When can we expect shipment?" than "Can we expect shipment in 3 weeks?", since the former requires a direct response.
• The decision making process is slow, so be patient. All decisions are made from the top down.
• It is a good idea to bring your own translator to meetings. Always brief your translator prior to meetings.
• During negotiations, it is advisable to bring a team that has the same rank or status as members of your counterpart’s team. Try to discover who will be included on their team prior to beginning negotiations. Matching rank and status will help eliminate embarrassment on both sides. 
• Under no circumstances insult or criticize your team in front of others.
• South Koreans are extremely direct communicators. They are not averse to asking questions if they do not understand what has been said or if they need additional clarification.
• Take into consideration the length of the meeting. If your counterparts return to small talk, it is a sign they are finished discussing business for the day.  
• This is a culture where "less is more" when communicating. Respond to questions directly and concisely.
• South Koreans treat legal documents as memorandums of understanding. They view contracts as loosely structured consensus statements that broadly define agreement and leave room for flexibility and adjustment as needed.
• While attending a business meal or a meal at your counterpart’s home, you should arrange to meet others traveling to the gathering and arrive together. It is customary to arrive up to 30 minutes late.
• When you arrive, remove your shoes before entering.
• Wait to begin to be shown where to sit. Also, drinks are poured by the host (never the hostess).
• It is customary and considered polite to taste all dishes offered to you. Also, you should finish everything on your plate. To indicate you are finished eating, lay your chopsticks on the table.
• If you do not want more to drink during any occasion, do not finish your glass. Once finished, it will be refilled.
• The eldest or most honorable person commences when everyone can eat.
• While using chopsticks, never stand them up in your food, cross them, place them parallel on your food bowl, or point them. Also, when speaking or taking a drink, return your chopsticks to the table.
•  After attending a meal at a counterpart’s home (normally the next day), you should send a thank you letter expressing your appreciation.
• Feet are considered unclean. You should never touch anyone with your feet or show your soles to anyone. This means do not sit with your legs crossed, especially during business meetings.
• Never blow your nose in public, and when you do blow your nose, use a disposable tissue. South Koreans find using handkerchiefs extremely repulsive.
• Use your whole hand with the palm facing down to beckon someone. Remember you can only beckon a person younger or with a lower status than you.

Consumer Preferences, Tastes, and Traditions

Changes in Korean lifestyle and dietary culture have resulted in an expanded demand for processed food and beverage products. Home preparation is becoming increasingly rare. It is not unusual for working members of the household to have business dinners five nights a week, which is one reason that restaurant consumption has continued to grow despite the economic situation. For home consumption, busy consumers can purchase ready-made local-style food items such as kimchi or bulgogi (barbecue) at local grocery or convenience stores. Increasing affluence, more women in the workforce, and a well-traveled younger generation looking for foods with an international flavor are causing the rise in popularity of convenience stores, bulk retail outlets, and western-style and family-style restaurants.

The demand for products, such as frozen vegetables, sauce preparations, and confectionery items are growing and the domestic processing industry lacks the capability to supply these items. Additionally, local agricultural output currently does not meet the demand of the local processing industry.

There is a general preference for national brands or long standing, recognizable products. However, due to the increased exposure to Western-style foods, especially American food, tastes are changing. Approximately 40,000 Korean elementary and middle school students study in the United States; therefore, they are somewhat accustomed to U.S. brands and the taste of American products.

Korean consumers also like natural, fresh products, such as health foods, functional foods and diet foods. As a result, the organic market is a segment that has been developing rapidly. Koreans have always wanted their food to provide a functional or health benefit and foods made without the use of pesticides or insecticides are very appealing.

Another important note is Korean consumers are very sensitive to food safety issues. They tend to get their information through the media and trust it in spite of misleading information. Once a “food scare” rumor gets publicity, the food involved is affected and its reputation is quickly damaged. Shifts toward quality, variety, convenience, safety and health can be seen throughout South Korea.

Export Business Reminders

Before coming to South Korea, use the many sources of information, for example, the Foreign Agricultural Service, state agricultural offices, and state/regional trade organizations.

• Build at least a minimum team within your company to help in the South Korean market.
• Use metric terms.
• Ensure that all sales documentation is correct.
• Be patient regarding requests for documentation, ingredients lists, production process, and quality assurance.
• Respond to such requests with diligence and in a timely fashion.
• Use letters of credit to reduce risk.
• Hedge export values with your U.S. bank if you are concerned about exchange rate risk.
• Set up wire transfers for payments.

Food Standards and Regulations

Food standards and regulations are subject to frequent changes in South Korea. U.S. exporters need to ensure that all necessary custom clearance requirements have been verified with local authorities through the Korean importer before the sale conditions are finalized. Final import approval of any product is always subject to the standards and regulations as interpreted by the Korean official at the time of product entry.

There are many food standards and regulations. This report describes only the basic guidelines of Korea’s import requirements. For details on Korean import regulation, see the Food and Agricultural Import Regulations and Standards (FAIRS) Reports – KS4039 dated July 30, 2004.

Fresh fruits, vegetables and nuts (except walnuts) must be accompanied by a Phytosanitary Certificate, PPQ Form 577, issued by USDA/APHIS (Animal & Plant Health Inspection Service). Also, some fresh products are prohibited and others require additional documentation besides Form 577. National Plant Quarantine Service (NPQS) should be consulted about specific documentation for each particular product. The issuance date of the phytosanitary certificate must be prior to the departure date listed on the Bill of Lading. In order to prevent unnecessary delays at the port of entry, it is further suggested that the certificate issuance date be prior to the departure date of shipments. In any case, the inspection date on a certificate must be prior to the departure date.

Documents Generally Required

1. Invoice

2. Bill of Lading, or Airway Bill

3. Packing List

4. Certificate of Origin (not required if there is "Made in USA" on the label.)

5. Ingredient List

6. Processing Method

7. Certificate of Production Date

8. Packing Material (not required for bottles, cans and paper packages)

9. Non-biotech (certification for corn, soybeans and potatoes)

10. Sanitary certificate (for meat, fruit, nuts, vegetables, plants, grains, etc.)

Advantages/Disadvantages to doing business in
South Korea

Information: Import/Export

Korea is the fifth largest market for U.S. agricultural products. Total imports of agricultural products globally, were $13.4 billion in 2003 and total imports of agricultural products from the U.S. were about $3.5 billion in 2003.

U.S. Exports to South Korea

*Calendar Year and Year-to-Date Comparison (In Thousands of Dollars)

U.S. Imports from South Korea

Trade Agreements

PMA Global Trade Insights: U.S.-Korea Free Trade Agreement

In May 2007, the United States and Korea simultaneously released the full draft text of the United States-Korea Free Trade Agreement. The Agreement contains 24 chapters, which provide for significant reductions in tariffs on industrial and agriculture products, and include state-of-the-art commitments in competition policy, e-commerce, transparency, pharmaceuticals/medical devices, intellectual property rights (IPR), investment, and services. 

The KORUS FTA was concluded on April 1, 2007, after eight formal rounds of negotiations that took place over ten months. It will build on an already robust bilateral trade and investment relationship between the United States and Korea. Korea is the world’s tenth largest economy, with a GDP of nearly $1 trillion. Korea is the United States’ seventh largest goods trading partner, with two-way goods trade in 2006 valued at approximately $78 billion. When implemented, the KORUS FTA will expand trade and investment flows between the two countries.

In agriculture, the KORUS FTA will create highly valuable new export opportunities for American farmers and ranchers by eliminating and phasing out tariffs and quotas on a broad range of products. Under the agreement, roughly $1.91 billion, or 64 percent, of Korea’s agriculture imports from the United States will be immediately duty-free. Most remaining tariffs and quotas will be phased out over the first ten years the agreement is in force.

Overview of the Agreement – Market Access

For oranges, the FTA establishes front-loaded seasonal tariff cuts that benefit 70% of exports through an immediate reduction from 50% down to 30% and a seven-year phase out. Access for shipments earlier in the year is provided by a tariff rate-quota. Korea is the 4th largest export market for U.S. oranges.

For table grapes, a five-year front-loaded tariff elimination schedule will benefit an estimated 70% of U.S. grape exports to Korea. Tariffs on the remaining 30% of exports will be eliminated over 17 years.

Tariffs on avocados and dried plums will be eliminated within two years. Tariffs on fresh strawberries will be eliminated in nine years. Korea’s tariffs on apples (other than Fuji) will be eliminated within 10 years, and tariffs on pears (other than Asian varieties) will be eliminated within 10 years. Tariffs on Fuji apples and Asian pears will be eliminated within 20 years.

For tree nuts, current duties on tree nuts range from 8% to 45%. Korea will immediately eliminate the tariffs on almonds and pistachios, and will eliminate the tariffs on shelled walnuts in six years.

For vegetables, fresh U.S. asparagus, eggplants, celery, cucumbers, and spinach will be duty-free immediately. Processed tomatoes and tomato paste will be duty-free immediately. Tariffs on fresh carrots, broccoli, cauliflower, and peas will be eliminated in five years.

For potatoes, Korea will grant immediate duty-free on chipping potatoes during our shipping season, immediate on french fries, and significant immediate duty-free access on dehydrated potatoes in a 5,000 MT tariff-rate quota. For processed products, tariffs on most of the processed food tariff lines will be eliminated in five years or less.

For more details, see http://www.fas.usda.gov/itp/us-koreafta.asp

Annual Exporter Guide for South Korea (2004)

http://www.fas.usda.gov/gainfiles/200409/146107592.pdf

Information Regarding:
a) local business customs and tips available on pages 5-6 of the guide
b) product flow chart is available on page 8 of the guide
c) food labeling requirements are available on pages 10-11 of the guide
d) market structure and trends can be found on pages 16-22 of the guide
e) key contacts are located on pages 22-23 of the guide

Lists of Korean importers, by product, can be obtained from the U.S. Agricultural Trade Office, or through the Foreign Agricultural Service in Washington, D.C.

South Korean Related Links and Resources

Currency - the currency of South Korea is the Won. Use the free currency converter to compare to dollars, GBP or Euro.

Weather - visit Yahoo!'s up to date Weather for South Korea.

News - check out all the latest Google news on South Korea.

Intercultural Know-how - use the Intercultural Business Communication tool for tips.

Dialing Code - the international dialing code is +82.

Time -South Korea is +9 hours GMT.

History - read about the long and rich history of South Korea.

Government Resources

• South Korean Ministry of Agriculture & Forestry: www.maf.go.kr
• US Embassy and Consulates in South Korea: http://seoul.usembassy.gov/contact.html
• Agricultural and Fishery Marketing Corporation – www.afmc.co.kr or in English 
• National Agricultural Cooperative Federation - www.nonghyup.com/eng/index.jsp
• Korean Food and Drug Administration
• All imports into Korea are controlled by the Ministry of Commerce, Industry and Energy
• National Plant Quarantine Service (NPQS)
• Background Notes  on South Korea