Table of Contents
Introduction
Background About Country
South Korea was one of the poorest country at the time of independence and at the end of the Korean War. In the beginning country was poor and its per capita income was lower than most of the Latin American countries. But reforms in the industrial sector of the country apace the economic development as a result the manufacturing industry accounted for 30% of the gross domestic product in addition to producing 25% of the trained workforce and opened up new avenues for foreign investment in the country.
Reasons for Investing in South Korea
The economy of South Korea is however, an emerging investment economy. It is giving no doubt, predicting favorable indicators for the foreign investment like capturing 15th ranks on the scale of international best economies in the world regarding nominal GDP and 12th Best economy regarding purchasing power of the consumers. The economy of South Korea is a high income developed economy with developed markets and membership of the OECD. South Korea the Asian Tiger has been maintaining the fast pace of the economy since 1960’s in spite of having limited natural sources and sufferings of over- populations. However, the export oriented strategies of the economy and tenth largest importer in the world has made the economy an attractive piece of investment for foreign companies.
PESTEL Analysis
P- Political
The political system in South Korea has seen many transactions varying from dictatorship to pro-democratic forms of government. South Korea is an important member of global bodies such us UN, WTO, OECD and blocs such G-20, ASEAN. South Korea enjoys good diplomatic and trade relations with major countries, one of the reason being the export driven form of economy South Korea has. However relations with North Korea are almost always hostile, frequent disagreements also occur with Japan, mostly because of their pre-independence atrocities. The country is going through political rebuilding phase, a strong and transparent form of government is needed to regain the trust of international community on political front.
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E- Economical
South Korean economy is 4th largest economy in Asia, 11th largest in the world. Mixed economy dominated by family- owned conglomerates called chaebols. Currency is Korean Won. GDP by sector: agriculture 2.6%, industry 39.2%, services 58.2%. Main industries are Electronics, Telecommunication, Automobile, Chemicals, Ship building. Ease to doing business rank in 2019 is 5th among 190 countries. According to this report by the National Tax Service, the average annual income in Seoul in 2016 was 37,810,000won, which comes out to about 3,150,000won per month (about $2,942 USD). Compare to the national average income at the time, which was 33,600,000won, or 2,800,000won per month ($2,615 USD).
S- Social
One of the world’s most densely populated countries. Rapid urbanization from 35.8% in 1960 to 88.5% in 2002. According to Hofstede cultural dimensions South Korea is a hierarchical society and collectivistic society. Feminine society which focus on “working in order to live”, managers strive for consensus, people value equality. South Korea is one of the most uncertainty avoiding countries in the world and long- term oriented society.
T- Technological
Core strengths: robust telecom sector- world’s highest broadband internet subscription rate, introduced the world’s first commercial wireless broadband ( WiBro), satellite digital media broadcast (DMB), telephonic-DMB service.
World’s sixth largest automobile producer, and ranks first in DRAM semiconductor manufacturing and LCD production. Mobile phone producers Samsung Electronics, LG Electronics and Pantech are among the world’s largest mobile firms.
E- Environmental/ Ecological
Government policies and directives on environmental development have lead to the formulation of natural eco parks and environmentally-friendly technology. National park cover 6.6% of the country’s total area, and are typically located in mountainous or coastal regions. Most forms of development are prohibited on this protected area. Public transportation use is growing. A progressive use-more pay-more electricity fee system helps restrain household use, but does not apply to companies.
L- Legal
The South Korean judiciary is based on the US and German court Systems and juries are not present during trials. After becoming a member of the OECD, South Korea gained the status of developed country and it provides one of the most attractive regulatory incentives for industrial development among development among the OCED nations. The country earns a very large income from exports, which makes it an attractive destination for FDI. Favorable tax policies: at the end of 2005, some 264, or 53%, of the corporations listed in the Fortune Global 500 had invested in South Korea.
Main Exporting Products
The following export product groups represent the highest dollar value in South Korean global shipments during 2018. South Korea’s top 10 exports are relatively concentrated, accounting for 85.2% of the overall value of its shipments. Also shown is the percentage share each export category represents in terms of overall South Korean exports.
- Electrical machinery, equipment: US$184.6 billion (30.5% of total exports)
- Machinery including computers: $77.7 billion (12.8%)
- Vehicles: $61.2 billion (10.1%)
- Mineral fuels including oil: $48.2 billion (8%)
- Plastics, plastic articles: $34.9 billion (5.8%)
- Optical, technical, medical apparatus: $27.8 billion (4.6%)
- Organic chemicals: $25.4 billion (4.2%)
- Iron, steel: $24.8 billion (4.1%)
- Ships, boats: $20.3 billion (3.4%)
- Articles of iron or steel: $10.5 billion (1.7%)
South Korean shipments of electrical machinery and equipment were worth 13.2% more in 2018 compared to 2017. In third place for improving export sales was machinery including computers, increasing in value by 12% year over year.
Consumer Electronics Industry in South Korea
Market Overview
South Korea is a technology developed country and has huge technology penetration in the country. With the advancing technology, there is trend of smart offices and smart homes, and consumer electronics are vital part of it such as smart TV, smart refrigerator, smart air conditioners and more. LG Electronics had created Homechat, an app that assists users to monitor their appliances like refrigerators, cookers, washing machines and more, anywhere through their smartphones. This was introduced first in South Korea and then to other countries, making it a viable country for the test and launch of new products. Rising disposable income of the people of consumer electronics and their shift in preferences towards smart homes and smart offices environment, are thus majorly driving the growth of the industry. South Korea grown global companies such as Samsung Electronics and LG Electronics have largest market share, where it is giving tough competition to Chinese and Japanese grown global players. The trend of including virtual reality (VR) in manufacturing of consumer electronic products is an added advantage to South Korea by achieving manufacturing efficiency and low costs. Moreover, gaming and entertainment applications of the products have further boosted the growth of South Korea consumer electronic industry. Of the total electronic industry in South Korea, consumer electronics has around 67.3% market share, with major adoption among the middle and high income group population. Consumer electronics market in South Korea is mature and therefore has huge penetration in the households. Goldstein Research analyst forecast that the South Korea consumer electronics industry is set to reach USD 15.3 billion by 2024, growing at a CAGR of 7.6% over the forecast period (2017-2025).
Korea Electronics Association /KEA/
KES is striving to promote industry development and to build the infrastructure of Electronics & IT industry by reflecting the companies’ needs and interests. We serve as a bridge for the communications between industry and government.
Purpose
To implement efficiency the project to promote the electronics and IT industries and to revitalize policy recommendations aimed at establishing the right policies concerning the electronics and IT industries, thereby contributing to the healthy growth and development for the national economy.
- Activities:
- Research and analysis of the IT industry
- Support on Trade issues
- Widening standardization activities
- Satisfy the environmental demands
- Cultivate systems for workers’ competency
- Human Resources Development
- Overseas market development
- Create an Ecosystem of convergence technology between Automotive & IT
- Convergence support using IoT, AI and Big Data
- Seoul Startup Hub
Opened in 2018, the Seoul Startup Hub located in Mapo-gu is the largest startup support center in South Korea. The 10-story building serves as a control tower of 23 startup infrastructures scattered across the capital.
The first three floors of the building is open to all Seoul citizen while the fourth to eighth floors are used as offices and rest spaces. The ninth and tenth floors, meanwhile, are utilized as education spaces, where seminars and events related to entrepreneurship are held.
Exhibition spaces are also allotted on the first and third floors which show a startup gallery with the history of 3D printing, the “Startup of the month,” a consultation booth and a startup information drive.
The hub also offers free 212 seats of co-working space for startup activities. Seoul citizens who want to start their own business can use these spaces any time. It also provides professional consulting for those who would like to open their own start-ups.
Aside from aspiring entrepreneurs, the Seoul Startup Hub also houses investors and working mentors in various fields to assist those who want to pursue a startup.
Similar to Station F in Paris, the world’s largest startup facility, and Startup Delta in Amsterdam, Seoul Startup Hub strives to become a model ecosystem of start-ups across the world.
Conclusion
South Korea is a growing economy with a well-developed judiciary system with an ability to keep check and balance on government decisions and law making authorities but still a vulnerable place in terms of security measures. However, the country has a highly skilled workforce and huge opportunities for FDI and plenty of supporting measures for the international companies to earn higher net profits while failing the sources of the country.
References
- http://www.gokea.org/eng/sub/?idx=165&m=4
- https://www.academia.edu
- www.philstar.com
- https://pestleanalysis.com
