South Korea – Commerce Review

Amit Abekasis | Israel-Asia Ambassadors Program | 17 April 2018

South Korea Imports –In 2016, South Korea imported $389B, and it is the 11th largest import destination. The top Imports to South Korea are Curde Petroleum ($44.3B), Integrated Circuits ($19.8B), Petroleum Gas ($14.9B), Refined Petroleum ($11.7B) and Cars ($9.3B). The top Import origins are China ($93.7B), Japan ($46.2B), the United States ($42.3B), Germany ($19.3B) and Singapore ($14.5B).

South Korea Exports – As opposed to Importing, in 2016 South Korea Exported $483B in commodities and is the 7th largest export economy in the world and the 2nd most complex economy according to the Economic Complexity Index (ECI). The top exports of South Korea are Integrated Circuits ($49.3B), Cars ($37.4B), Passenger and Cargo Ships ($25.1B), Refined Petroleum ($24B), and Vehicle Parts ($21.7B). The top export destination of South Korea are China ($124B), the United States ($66.7B), Hong Kong ($32.8B), Vietnam ($32.6B) and Japan ($24.4B).

Until 1986 the value of imports was greater than exports. This situation changed in 1986 when South Korea registered a balance of trade of $4.2B. South Korea’s mixed economy ranks 11th nominal and 13th purchasing power parity GBP in the world, identifying it as one of the G-20 Major economies. Until the late 80’s South Korea’s economy Growth was 8.7%, and today it is 2.6%. South Korea’s economy continue to grow, and the current country’s GDP per capita is $39,690, what makes South Korea to the country with the 11th largest economy.

The Israeli opportunity is by connecting to Korean companies to complete their tech capabilities in specific areas in which Israel has many years of experience and knowledge. For instance, Korean companies is expressing interest in Israeli technology in the field of desalination and treatment of water and sewage for years, however, until now, no Israeli company has raised its hand. Israel has a lot to offer to the Koreans, especially in the fields of medical equipment, the advancing agriculture, robotics and military equipment. However, the success depends very much on the way we deal with the Koreans and with a little humility and professionalism.

The window of opportunity is short, the Koreans start to develop the necessary technologies and capabilities themselves or form cooperation with other bodies and companies. The potential Korean partner is constantly becoming a competitor with international bidding capabilities, and so Israeli companies are losing both the business and the unique ability to penetrate markets like the Gulf States.

The capital city in South Korea is Seoul. Today, Seoul considered to be a leading global city which growing fast. Seoul has the 4th largest economy in the world, and has the fastest economy growth. Seoul hosts large concentration of headquarters of international companies and banks, including 15 companies on fortune 500 list such as Samsung, LG and Hyundai.

The largest port in South Korea is the Busan Port, which is located in the city of Busan in the south east of South Korea. The city of Busan, among other cities in South Korea, enjoys a Free Economic Zone (FEZ) and thus attracts ships from all over the globe. The city of Busan is ranked the fourth best city after Singapore, Seoul and Tokyo among Asia’s top convention cities. Busan is also ranked the 27th among 83 cities and top 8 Asia\Pacific centers of the global financial center index (GFCI) published in March 2014.

 

Agreements and regulations

Israel and South Korea singed a few agreements to make the trades between the two countries much easier. In 1996, they signed an agreement for cooperation and mutual assistance on customs matters, in 1997 a memorandum of understanding for technical cooperation, and a convention to prevent a double taxation and tax evasion with regard to taxes on income and on capital. They also agreed to a cooperation in the fields of telecommunication and postal services, and in 2000 they agreed on a financial cooperation.

The latest agreement was signed on 2015, which is an international program to simplify trade processes. According to the agreement, import and export companies, from both South Korea and Israel, will facilitate the processes of entry and the release of goods.