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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 South Korea from the South Korean Ministry of Agriculture and Forestry and 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.
Table of Contents
Fresh Fruit, Vegetable, and Flower Market
Fruit and Vegetable Market
South Korea imports around 70% of its agricultural product needs. Almonds and oranges are two of South Korea’s main produce imports, which are mostly exported from the United States. 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, tangerines, 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.
China is the main supplier of fresh vegetable imports 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 volumes of vegetables such as broccoli and asparagus. The demand for organic vegetables is also on the rise in South Korea.
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. During these months, imports from countries in the southern hemisphere take hold of South Korea’s fresh fruit market. Besides China, other major exporters to South Korea are Australia and Indonesia.
Currently agriculture counts for 3% of South Korea’s GDP and 6.4% of the country’s labor.
Fresh Flower Market
The cactus flower is the main flower exported by South Korea; Korean cactus captures nearly 70% of the world market. Lilies also constitute a large portion of cut flower exports. Japan is South Korea’s main market for flower exports, followed by the Netherlands and the United States.
Flowers are particularly in demand in Korea in February (the graduation season in Korea). Major suppliers of fresh flowers to Korea are Taiwan followed by the Netherlands, Thailand, China, and Japan.
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Consumer Trends
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 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.
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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.
Obtaining information on different importers is always valuable. 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.
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.
Business hours are normally between 9:00 a.m. to 5:00 p.m. Monday through Friday and on from 9:00 a.m. until 1:00 p.m. on some Saturdays. The best time to schedule meetings are from 10:00 a.m. to 11:00 a.m. and then again from 2:00 p.m. until 3:00 p.m. 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.
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Trade Agreements
South Korea has trade agreements with the following blocs and countries:
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Food Standards and Regulations
Food standards and regulations are subject to frequent changes in South Korea. 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. Also some fresh products are prohibited and others require additional documentation. 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.)
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Business Protocol
- Businesses in South Korea prefer face-to-face meetings rather than phone calls or e-mails. Meeting in person helps 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 politics, socialism, communism, your counterpart’s wife, and personal family matters.
- Food shows help expose your company to a larger South Korea market.
- 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 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.
- 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 there will be women on your team. Your contact can relay the information and give your counterpart time to adjust.
- South Koreans are extremely direct communicators. They are not averse to asking questions if they do not understand what has been said or 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. 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.
- 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.
- Feet are considered unclean. You should never touch anyone with your feet or show your soles to anyone. This means do not site 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.
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Export Business Reminders
- 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 and respond to such requests with diligence and in a timely fashion.
- Use letters of credit to reduce risk.
- Hedge export values with your bank if you are concerned about exchange rate risk.
- Set up wire transfers for payments.
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Related Links and Government Resources
Government Resources
Background Notes on South Korea.
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