Exporting guide to South Korea

South Korea is the 10th largest economy in the world with a GDP of $1,568,786 million (IMF, 2020). Total trade in goods and services between the UK and South Korea was £1.1 billion in the four quarters to the end of Q3 2020 (ONS, 2020). The UK has a Continuity Free Trade Agreement with South Korea which came into effect in January 2020.

Demand for UK goods

The South Korean public has a taste for British culture and a respect for UK goods. Many well-known UK brands like Standard Chartered, Jaguar Land Rover, British Airways, Lush, Boots and Burberry are already selling in South Korea.

Government policy

The Korean New Deal, announced in 2020, plans to invest approximately £100 billion to create 1.9 million jobs by 2025 based on two main policies, the Digital New Deal and Green New Deal. This presents opportunities in sectors of UK strength (Ministry of Economy and Finance)

Foreign direct investment (FDI)

In 2019, FDI from the UK to South Korea was £4.7 billion accounting for 0.3% of the total UK outward FDI stock. The South Korean government is keen to encourage foreign investors, making efforts to ease regulations and provide incentives for direct investment.

South Korea City

Ease of doing business

5th

out of 190 countries, (World Bank 2019)

Currency

South Korean won

Business languages

Korean

You may need a translator

GDP per capita

$31,846

UK is $42,416 (IMF 2019)

Economic growth

3.6%

(IMF, 2021)

Time zone

GMT +9

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Opportunities for exporters

There are export opportunities in a range of areas including technology, automotive, fintech, offshore wind and life sciences.

Doing business in South Korea

Preparing to export

VAT

South Korea has a VAT rate of 10%. Cultural items like newspapers, books and magazines may be exempt.

There are special tax exemptions under the FDI incentives scheme. For more information visit the Invest KOREA website.

Standards and regulations

The Korean Agency for Technology and Standards (KATS) administers and monitors Korea’s industrial standards.

Packaging and labelling

Country of origin labelling is needed for commercial shipments entering South Korea.

The Korean Customs Service publishes a list of the country of origin labelling requirements.

Intellectual property (IP)

As a first step, we advise you to speak to an intellectual property lawyer if you think you need patent protection when exporting.

You should register your patents and trademarks with the Korean Intellectual Property Office (KIPO) before you commit to deals with South Korean companies. Read guidance on protecting your intellectual property in South Korea.

Trade barriers

Check for any reported barriers to trading with South Korea.

Report any trade barriers that are affecting your business so we can help fix them.

Protecting your business

Routes to market

A long-term commitment to the market will pay dividends here. Successful market entry strategies include relationship building, adaptation of your offer to Korean tastes and commitment to visiting and exhibiting in the market.

Routes to market which may work well for you are:

  • e-commerce - South Korea is a technologically advanced consumer economy. It is the leading market in the world for e-commerce sales, so selling via an online marketplace or website could be an excellent way into the market. DIT can suggest online marketplaces to help you get started. DIT’s E-Exporting Programme can also help
  • using agents and distributors - appointing an agent or distributor can overcome language and cultural barriers. You should support your local representative with frequent visits and regular updates, particularly in the first 12 months.
  • establishing a local office – it’s recommended that you trial the agent or distributor route before establishing a local office. Once you’re operating successfully, a local office may be an effective way to gain greater control over your operations.

The website of Invest KOREA, the national investment promotion agency, is a good source of further information. It supports the establishment of foreign businesses in South Korea, and has a London office.

Business culture

South Korea is modern and business-friendly, but there are some cultural differences to be aware of:

  • The numerical system counts differently from the UK. Make sure all numbers are written down and fully understood in negotiations
  • South Korea has a culture of dynamic, rapid action. Be prepared for expectations of fast delivery and last-minute alterations
  • The preferred greeting style in business is a slight bow followed by a handshake

Next steps

DIT can advise you on doing business abroad, and help put you in touch with other people who can help such as lawyers and distributors.