South Korea is officially the Republic of Korea
South Korea is officially the Republic of Korea (ROK), it is a sovereign state located in East Asia, constituting the southern part of the Korean Peninsula. The only country with a land border to South Korea is North Korea, which lies to the north with 148 miles of border that run along the Korean Demilitarized Zone. South Korea is mostly surrounded by water and has 1,4999 miles of coastline along three seas. To the west is the Yellow Sea, the East China Sea is to the south, and to the east is the Sea of Japan. Geographically, South Korea’s land mass is approximately 38,623 square miles which are occupied by water.
As of this year (2018), the population of South Korea is 51,164,435. This makes South Korea’s population equivalent to 0.67% of the total world population, ranking at number 27 on the list of countries by population. The population density is 1,363 people per mile, 81.6% of the population is urban (41,740,471 people in 2018). The median age in South Korea is 41.3 years.
Here are some Facts and Statistics regarding the country:
National anthem: Aegukga
Currency: South Korean ‘won’
Population growth rate: 0.53% (2016 Est.)
Climate: temperate, with rainfall heavier in summer than winter
Time Zone: Korea Standard Time UTC (UTC+09:00)
A vast majority of citizens in South Korea speak English, where it is widely taught in junior high and high school, especially in major cities such as Seoul. Other spoken languages included Standard Korean, Dialects of Korean, Chinese, and Japanese.
Although South Korea supports religious freedom, religion in the country is defined the fact that nearly 50% of the citizens have no formal affiliation with any religion. Among those citizens who identify as members of a religious organization are Buddhists (15.5%), Catholics (7.9%) and predominantly Protestants (19.7%). The remainder of citizens associated with a religion includes a very small percentage (0.8%) that identify as Won Buddhists, Cheondoism, Daesun Jinrihoe, Confucianism, Jeungsanism, and Daejongism.
Remarkably, South Korea is known as one of the most ethnically homogenous countries in the world. Virtually every citizen is ethnically Korean, aside from about 20,000 Chinese and a minuscule percentage of foreign immigrants. Immigrants mostly migrate from the United States of America, Vietnam, Thailand, the People’s Republic of China, and the Phillippines.
Here is a breakdown of ethnic minorities and immigrants in South Korea
People’s Republic of China 50%
The United States of America 7.6%
Other Countries 17.2%
South Koreans are generally very proud of their country, having a nationalistic personality, especially those involved in sports. Koreans attribute their athletic successes to their country. The citizens of South Korea are also heavily environmentally conscious; this became especially apparent during the 2018 Olympics they hosted. The PyeongChang Organizing Committee strived to make the games as environmentally friendly as possible during the games in order to reduce carbon emissions. The government has also taken major steps to change the country’s energy policy and invest in renewable energy.
One common personality trait amongst Koreans is their impatience, earning the famous saying “Ppalli Ppalli” which means “hurry up, hurry up” or “fast, fast” in English. It has been said that Korean’s cannot endure a slow laid-back lifestyle and prefer to be quick and efficient. A surprising fact about the people of South Korea is that they are addicted to technology. The South Korean government considers this addiction to be a public health crisis and has employed over 1,00 counselors who have been specially trained to treat internet addiction and help technology fanatics combat it.
Quality of Workforce
South Korea has one of the world’s highest-educated labor forces, making for a hyper-competitive labor market and being especially challenging for women and foreigners. South Korea’s gender inequality in the workplace continues to discourage women from working. The nation’s workforce has a significant gap regarding the participation rate. Women make up 53.1% while men make up 74.5% of the workforce, making for a weak point in the country’s economy.
Surprising, while looks based discrimination is illegal in the US, it is standard practice in many workplaces in South Korea to submit a photograph with your resume. Match this with a competitive job market, many applicants are left feeling pressured to change or enhance their appearance, causing them to resort to plastic surgery. To make matters worse, recently, the National Human Rights Commission of Korea studied 3,500 job postings, they found that on average each one contained at least four discriminatory questions including questions about age, appearance, marital status, religion, and pregnancy. It’s clear that South Korea’s job market breeds inequality.
The primary job market consists of large publicly owned manufacturers and firms that have government stakes. The secondary market is SMEs, which is made up of workers doing labor-intensive jobs, or working as subcontractors to the aforementioned primary market. A remainder of work goes to foreigners who are given what South Koreans refer to as “low-skilled work” which involves working in sectors such as farming, manufacturing, construction, and fishing.
South Korea is known for its obsession with education, earning it a spot as one of the top performing countries in reading literacy, science, and mathematics by the Organization for Economic Cooperation and Development. Higher education is considered to be a fundamental part of life in Korean society. This focus on educational achievement leaves many high school students enduring many grueling 14-hour days. These intensive school days are meant to prepare the hundreds of thousands of students in South Korea who take the Suneung every year. The Suneung is an exam that determines many factors of a students future aside from which university they will attend.
The Suneung is also known as the College Scholastic Ability Test (CSAT) which tests students on Korean, English, Social Studies, Math and Science. Unlike the SAT, the CSAT can have a serious impact on a student’s life, this includes marriage and employment prospects. Students aren’t the only ones invested in the exam, offices, and shops open late on the day of in order to keep the roads clear for students. Officials work tirelessly to ensure that the roads remain clear and redirect traffic, in the case of a traffic jam, students are given police escorts to exam centers. During the listening portion of the exam, all air traffic is halted. Student’s families also partake in exam day by offering special prayers at temples and churches on exam day.
Doing Business/Cultural Behavior
The South Korean market is a favorite amongst foreign investors. This is due to the country’s flourishing economy and the high percentage of English speakers. However, there are some important cultural differences to note. South Korea’s culture is heavily based on Confucian values. These values state that authority is to be respected, one is expected to conform to moral and ethical principles, work hard and take educational seriously, live reasonably and avoid taking part in extremes. Knowing these key values can help you understand your Korean business partners and their personality.
South Koreans strongly believe in establishing close personal relationships with their business partners, this is how they establish trust. Unlike Americans, South Koreans will delve into your personal life to try and gauge private information such as your age, relationship status, and family life. While these questions are probing, it’s important to answer them honestly without being boastful, remain humble when sharing personal information.
Despite that fact that speaking English is the norm in South Korea, you should not expect everyone you encounter to speak it or understand it clearly. To ensure full understanding when addressing your audience be sure to speak clearly and use basic English. Do not rely solely on verbal communication and clarify all agreements in writing, this can act as a safeguard when dealing with miscommunication on important projects. It’s also important to note that South Koreans are not confrontational, rather than dispute something they disagree with, they will remain silent which is often misunderstood as consent.
Many questions are understood differently especially ones with negative connotations. Yes or no questions may not correctly convey the message, or be relayed as such, always request clarification to avoid any mishaps. It’s also quite common for things to move quickly in South Korea, as the aforementioned “Ppalli, Ppalli” tells us. Response times are usually same day, and going a week without communicating is seen as lack of interest in a partnership which often leads to a termination. Ensuring that you keep a line of communication open is very beneficial to a business relationship.
All meetings need to be scheduled in advance, and punctuality is extremely important. During business meetings, it’s expected that you remain formal yet friendly, it’s also best to avoid making jokes as this can sometimes be seen as a sign of disrespect. In a business meeting, the most senior team member will enter the room first, and therefore should be the first one you greet. When communicating during a meeting, it’s important to use other’s titles correctly and introduce older people to younger people, and women to men. Initial meetings are focused on getting to know one another and put business negotiations on the back burner.
South Koreans have always dressed appropriately for their work environment. In a business setting, one would be expected to wear a neutral colored suit, nothing flashy. Women are expected to dress modestly and professional. Tight skirts, low necklines, shorts and sleeveless tops should be avoided at all costs.
Political and Legal
The current political stability index in South Korea stands at -2.5 weak, 2.5 strong. This rating of risk is based on the fact that China is one of South Korea’s biggest trading partners. There is also a steep decline in South Korean exports which indicates that there may be economic trouble.
Korean democracy has been far from effective. There are serious generational problems over various issues involving economic and social policies, national defense, and policies concerning North Korea and attitudes China and the United States. The post-democratic political system in South Korea has failed to deliver what the government has promised to the citizens, causing political distrust to be at an all-time high, and politics more unstable. Unfortunately, due to these challenges, it’s hard for any acting president to achieve important changes in Korean society.
Corruption is a serious problem in South Korea giving it an index rating of
Date: 2017 Corruption Ranking: 51 Corruption Index: 54
Despite the infamous corruption scandal that occurred in 2016 that led to the president’s impeachment, the rule of law in South Korea is fairly well institutionalized. The law supports economic freedom as far as regulatory efficiency and market openness are concerned.
Tax base of global income
0-10 million Won
10-40 million Won
0.8 million Won + 17% of the amount exceeding 10 million Won
40-80 million Won
5.9 million Won + 26% of the amount exceeding 40 million Won
over 80 million Won
16.3 million Won + 35% of the amount exceeding 80 million Won
South Korea is a democratic republic with three principal branches of government, legislative, judiciary, and executive. The country has a centralized government that essentially operates at a national level. The head of the government is the president Moon Jae-in, he is also the highest member of national assembly followed by the prime minister. The executive and judiciary branches operate at the national level, and the constitution determines the structure of the government.
The president is directly elected by the people and serves a term of five years, once his term ends, he is no longer eligible for a second term of service. The president is also the only elected member of the executive, he has the power to declare a state of emergency of war, as long as it is approved by the national assembly. Other roles of the president include being the head of the state, and also the Commander In Chief of the armed forces in South Korea.
The South Korean government recently relaxed foreign direct investment (FDI) regulations in 2014 in hopes that it would improve business conditions in the country. This ease of regulations reduces the number of steps that are required for foreign investors to invest and make deals in Korea as well as simplify the regulations in Free Trade Zones (FTZs) and Free Economic Zones (FEZs).
South Korea currently consists of a mixed economic system which includes private freedom and is combined with centralized planning and government regulation. South Korea is a member of the Asia Pacific Trade Agreement (APTA) and the Asia Pacific Economic Cooperation (APEC).
Legal Environment (Import Tariffs)
The U.S.-Korea FTA was implemented on March 15, 2012. Prior to this agreement, the average basic tariff on U.S. goods was approximately 7.9%, and duty rates were on the rise on a large number of agricultural and fish products. By March 15, 2017, the FTA caused 95% of tariffs on U.S. imports to be eliminated. South Korea also maintains a tariff quota system that is designed to maintain a stable domestic commodity market.
Korea has a flat 10% Value Added Tax on all imports and domestically manufactured goods. A special tax of 10-20% is also levied on the importation of certain “luxury” items and consumer goods. Tariffs and taxes must be paid within fifteen days after goods have been cleared by customs.
South Korea has the fourth largest economy in Asia and is the eleventh largest in the world. The country’s economy is a mixed one, which was once dominated by family-owned business, but due to the recent transformation of the Korean economy, it seems the future has little room for these businesses. South Korea is famous for its transition from one of the poorest countries to the world to a high-income country in just one generation. This economic miracle has brought South Korea to share the ranks with other elite countries, and still remains one of the fastest growing developed countries.
Economic/Monetary and Financial
2.8% 5-year compound annual growth
$37,740 per capita
Exports $495.43 billion
semiconductors, wireless telecommunications equipment, motor vehicles, computers, steel, ships, petrochemicals
Main export partners
The United States 12.3%
Hong Kong 4.8%
Imports $406.19 billion
machinery, electronics and electronic equipment, oil, steel, transport equipment, organic chemicals, plastics
Main import partners
The United States 8.7%
Saudi Arabia 7%
Gross external debt $430.9 billion
Human Development Index
Date 2015 HDI 0.901 HDI Ranking 18º
South Korea has decided to keep it’s interest rates low at 2.5% during the next six months. They feel this is a good idea due to low inflation, massive household debts, and falling corporate profits. A long slump in domestic consumption and investment had eased off somewhat while exports showed signs of improving slowly in step with the global economic recovery. This is an example of expansionary due to the slow global economy.
Trading with South Korea
South Korea is currently the world’s 7th largest exporter and 10th largest importer. Since 2003, the country has established itself as a network of free trade agreements (FTAs) in order to boost economic ties with other countries. At this time, South Korea has 5 FTAs in effect, 3 of which have concluded discussions, and 19 FTAs are currently under negotiation. The biggest FTA is the Korea-US Free Trade Agreement (KORUS FTA) which was signed in 2007.
KORUS FTA has liberated 95% of the trade tariffs between the two countries, it’s also the United States first free trade agreement with a major Asian economy, and biggest deal since the North American Free Trade Agreement (NAFTA). South Korea lacks natural resources so it is highly dependent on the import of capital goods, industrial supplies, and raw materials, the country is also the 5th largest importer of oil in the world.
List of South Korea’s FTA’s
Korea-India CEPA FTA
Korea-EFTA (European Free Trade Area)
South Korea’s Import and Export Indicators and Statistics
Total value of exports: US$466.3 billion
Primary export – commodities: semiconductors, wireless telecommunications equipment, motor vehicles, computers, steel ships, petrochemicals
Primary export partners: China (23.2 percent of total exports), US (10.1 percent), Japan (5.8 percent), Hong Kong (5.3 percent)
Total value of imports: US$ 417.9 billion
Primary imports – commodities: machinery, electronics and electronic equipment, oil, steel, transport equipment, organic chemicals, plastics
Primary import partners: China(16.8 percent of total imports), Japan (15.3 percent), US (9 percent), Saudi Arabia (6.1 percent), Australia (4.6 percent)
South Korea is largely driven by exports, with production mainly focused on automobiles, electronics, robotics, ships, machinery, and petrochemicals. The country also has a high demand for energy resources and infrastructure as they aim to reduce their carbon footprint. Some major opportunities in South Korea right now are financial and legal services, food and drink, pharmaceuticals, high-end fashion and textiles, construction (infrastructure) and green growth (renewable energy).
Due to South Korea’s major desire and investment in implementing a new energy policy, and developing renewable energy industries, I have decided to do a Foreign Direct Investment with Eco-Friendly Solar Powered Plants. This is the perfect business opportunity given the country’s plan to invest $36 Billion in renewable energy. “The government will lift unnecessary regulations and increase government support to foster the renewable energy sector,” Chae Hee-bong, the deputy trade minister for energy and resource policies in South Korea said recently in a press briefing about the major energy policy change. “It will also help those businesses explore overseas markets.” The government also aims to increase the country’s dependence on renewable energy sources for all their energy needs from 2.4% to a whopping 11% by 2030.
South Korea currently ranks 10th in the world for energy consumption but is seriously lacking natural resources, requiring 96% of the country’s energy consumption to be reliant on imports. The country’s import of coal and oil also add up to nearly 99% of energy imports. During the past few years, South Korea has encountered unexpected electricity shortages and power outages due to the rapidly increasing strain being put on their electricity grid. This strain comes as no surprise as the economic growth the country has experienced has caused the need for electricity consumption to soar. Due to the country’s environmental concerns, the construction of new power plants has been halted, and to make matters worse some older plants are no longer operational.
I believe that the renewable energy industry, particularly Eco-Friendly Power Plants is the perfect business opportunity that would be tremendously successful for the following reasons.
Easing the strain on the country’s electricity grid
Contributing to South Korea’s efforts of going green
Helping reduce South Korea’s reliance on imported natural resources
South Korea’s $36 Billion investment in renewable energy