Key sectors on Korean market for Bangladeshi Business

The main objective of BangCham is to help Korean and Bangladeshi companies do business in both countries. There are some key sectors in Korea,where Bangladeshi companies can do business. The sectors are as follows :

• Automotive
• Beauty
• Design and branding
• Education
• Energy
• Fashion
• Food and Beverage
• Finance
• Health care
• Industrial solutions
• ICT
• Luxury
• Retail

These sectors are described in details below :

 

Automotive

South Korea is a major player in the global automotive industry and is the third largest automobile market in East Asia. The country’s total domestic auto production reached around 4.5m units in 2013, with passenger cars accounting for 91% of production. Imported cars make up 12% of the car market and are almost exclusively luxury passenger vehicles. South Korea is also the world’s fifth-largest auto parts manufacturer, following China, Japan, the US, and Germany. Major auto parts manufactured by Korean companies include brake and steering systems, air suspension systems and chassis modules.

 

Potential Opportunities

South Korea aims to operate one million electric cars by 2020 and plans to invest GBP 3.4bn in infrastructure, including recharging stations.

South Korea is at the cutting edge of 5G infrastructure and major South Korean car companies are looking for new IOT technologies to integrate into their cars.

South Korean tier 1 and tier 2 auto parts manufacturers require new technology in the fields of factory automation and assembly line quality control fields, as they expand overseas and compete with global manufacturers

 

Beauty

Korea is the 10th largest beauty market in the world, representing nearly 2.9% of the global market. In 2015, the size of the Korean beauty market was estimated to be approximately GBP 5.9bn; the total local production and total exports increased 11.3% and 61.7%, respectively, from the previous year. The market has had an annual growth rate of 6.7% for the last five years.

Meanwhile, total imports of beauty products in 2015 increased 3.8% from the previous year, to reach GBP 780m.

 

Potential Opportunities

The demand for natural and organic skin care products, in particular, is growing rapidly. It is a great business opportunity for foreign countries.

The demand for cushion foundation, which is a combination of sunscreen, make-up base, and foundation in the form of a sponge cushion, is expected to grow.

Korean beauty brands are leading the beauty industry in Asia. Millions of consumers, especially Chinese, visit Korea with the primary purpose of purchasing beauty products. Foreign brands that establish a presence in Korea can use the brand awareness in Korea to build the brand elsewhere in Asia.

 

Education

South Korea invests almost 7% of its GDP in education expenditure. This represents one of the largest allocations of government spending on education anywhere in the world. The value of this market, including after-school and e-learning classes, is approximately GBP 20.7bn. An estimated 80% of elementary, middle, and high school students use some form of e-learning.

 

Potential Opportunity

There is a large demand for English amongst young learners, career-based education and training, and teaching/learning materials (books and multimedia materials) as many Koreans are keen to improve their English language skills for future employment.

South Korea’s e-learning market is worth approximately GBP 2bn and is expected to grow considerably over the next several years.

 

Energy

South Korea is the world’s 11th largest energy consumer and fifth largest oil importer. In 2008, the government proclaimed ‘Low Carbon, Green Growth’ as a national vision to lead the country’s long-term development. South Korea plans to invest GBP 22.2bn over the next five years into green technology and clean energy technologies and infrastructure.

 

Potential Opportunity

The wind power sector in Korea is a large growth area and one of promise for international firms, with large and consistent investment in the Korean public sector.

Clean coal technology will make a significant contribution to South Korea’s energy needs in its low carbon future.

 

Industrial solution

South Korea is a major player in the global industrial solutions industry, largely due to its strength in a number associated sector such as oil and gas, mechanical engineering, metals and materials to construction, power and shipbuilding. Of these, it is in the shipbuilding and steel industry, which South Korea is one, the biggest global players. With an average Compensated Gross Tonnage of 13.1m from 2011 to 2015 from shipping, and 71.5m tons of steel produced and a global market share of 4.3% in 2014, South Korean companies and their respective value chains, are strong possible partners and customers for overseas exporters.

 

Potential Opportunities

Tapping into the value chain of major in-market players whose industries require high-tech, high-value technology which is not available domestically

Partnering with or licensing/selling to Korean companies that are heavily investing in R&D to broaden their expertise to apply to new sectors

 

Fashion

Korea’s fashion market in 2014 was estimated to be worth GBP 33.8bn and has been growing at a rate of 5.6%. E-commerce and m-commerce have been major drivers in the growth of the market in the scope of online shopping exceeded that of offline shopping for the first time in 2013. The country’s SPA fashion segment is experiencing strong growth and is expected to grow 30% over the next several years. With a wide range of foreign players in the fashion market, Korea’s fashion market is recognized as a test market for global brands that aim to enter other Asian markets, including China.

 

Potential Opportunities

The market for SPA brands is expected to grow 30% over the next several years, which means ample opportunities for Bangladeshi companies in this market segment.

The scope of fashion products has expanded to include accessories, lifestyle products, which mean more opportunities for Bangladeshi suppliers of these products.

Korea’s homegrown technologies and the country’s fashion industry are actively coalescing, which means growing opportunities exist for Bangladeshi companies involved in big data analysis and wearable fashion technologies.

 

Food and Beverage

South Korea’s F&B market is characterized by hypermarket domination and growing sales through e-commerce platforms. Grocery retail sales reached GBP 98bn 2013 and e-commerce sales are expected to reach GBP 28bn by 2018. Imported F&B products are growing in popularity and department stores are the main channel for high-end F&B imports. The country’s consumer Foodservice industry is the ninth-largest globally, valued at GBP 45bn at 2013 and is expected to grow at a CAGR of 5.4% through 2018.

 

Potential opportunity

Bangladeshi agricultural and processed food products have a good reputation with Korean consumers, and the biggest imports include pork, whiskey and dairy products.

South Korea’s F&B per capita consumption is forecast to grow by a CAGR of 5.1% through 2016. Consumption is expected to rise particularly for fruits, nuts and meat.

Korean consumers increasingly base their purchasing on how “green” F&B products are, which means Bangladeshi suppliers of these products are particularly well-placed to penetrate the market.

For packaged food, the highest sales are in meal replacement products for slimming and convalescence.

 

Finance

Korea has a highly developed and profitable financial services sector including the third largest insurance market and third largest banking market in Asia. The stability of the banking sector is underpinned by strong fundamentals and active regulation. At less than 1%, South Korea’s non-performing loan ratio is low by regional standards. Foreign investors own some 70% of the banking sector. The relaxation of controls on cross-ownership of financial services has further opened up opportunities for market entry, acquisition and business development. As international financial services groups look to develop their footprint in Asia, a presence in Korea is becoming increasingly attractive, and perhaps even essential.

 

Potential Opportunities

South Korea’s asset management market is expected to grow continuously due to capital shift from physical assets to financial assets; higher allocation to risky assets due to low interest rates; and the forming of a circle between the asset management market and institutional investors, including pension funds.

The popularity of bank assurance in distributing life insurance is expected to support segmental growth over the next five years.

South Korean banks are strongly protected by the government, but the country’s main financial regulatory body, the Financial Services Commission, aims to increase transparency in regulation and facilitate the introduction of new financial products

 

Health Care

With a population of 50m, South Korea boasts a major market for healthcare products, including medical devices. The country’s total healthcare expenditure has grown steadily from about 4.4% in 1990 to 7.1% of GDP in 2010, with an annual growth rate of 9%. South Korea is one of the world’s most rapidly aging populations. The percentage of South Korea’s population over 65 was 12.9% in 2015 and is forecasted to grow to around 20% by 2025.

Potential Opportunities

The South Korean government announced in 2015 that it will invest GBP 207m to foster biotechnology to produce five globally viable products by 2017

South Korea is currently the world’s 13th largest pharmaceutical market, and by 2020 the South Korean government aims to occupy 4.5% of the global pharmaceutical market

Bio similar development is a key focus of major biopharmaceutical companies.

South Korea contributed a share of 5% of all clinical trials registered globally in 2013, and the government aims to expand its current focus on early-stage trials to later-stage trials

The South Korean medical device market is the 13th largest in the world and most high-end medical devices

 

Design and Branding

South Korea’s major conglomerates are constantly looking to improve their competitive edge in the country’s small and saturated domestic market. Korean consumers demand new and innovative products, and particularly appreciate “foreign” designs. On a global scale, Korean exporters must provide high-quality goods and services to differentiate themselves in the marketplace. There is an increasing demand for creative designs in electronics, F&B, medical devices, and other consumer goods.

 

Potential Opportunities

Design firms have a high profile in South Korea and local companies appreciate the strong creativity they offer.

Companies which provide services like product packaging and brand identity to corporate visibility and design research to companies are diverse.

Public design, in particular, provides significant opportunities for international companies. The city of Seoul has shown a strong drive to redesign the city since it was designated as 2010 World Design Capital by the International Council of Societies of Industrial Design (ICSID)

 

ICT

South Korea has been at the forefront of Smartphone penetration (the world’s highest at more than 100%) and super-fast long-term evolution (LTE) infrastructure. This basis has enabled the country to rapidly build strong e-commerce and IOT-related industries that are increasingly competing in the global market. The country is also leading the way in developing 5G technology, which will be key to supporting higher network speeds and the growing number of devices required to fully realize the ‘era of IOT.

 

Potential Opportunities

South Korea’s super-fast network infrastructure and high Smartphone penetration offer opportunities for network infrastructure-related technology solution providers, Smartphone app developers, and IOT technology developers and service providers

South Korea has the seventh largest e-commerce market in the APAC region, worth some GBP 25bn in 2015

Mobile games represented more than 90% of app revenue in South Korea’s Google Play store in 2015

Sales of IOT-related products and services reached GBP 2.75bn in 2015, with smart home and healthcare service areas taking up a 31% share

 

Luxury

Korea’s luxury goods market is worth GBP 8.6bn – the fourth fastest growing luxury goods market in the world behind India, Malaysia, and Indonesia. Wealthy women in their 40s to 60s have been the traditional core market for luxury brands in Korea but, recently, both men and women in their 20s and 30s have emerged as a new demographic for luxury retailers.

 

Potential Opportunity

Wealthy consumers in Korea are looking for new, less-known luxury brands to distinguish themselves from others.

Chinese tourists visit Korea with the primary purpose of purchasing luxury beauty products. Thus, having a presence in Korea can also mean raising brand awareness among consumers across Asia.

Consumers are shifting slowly from bags and small leather goods to higher-end options like luxury jewelry. Fine jewelry and high-end timepieces, for example, are increasingly being purchased by Chinese visiting the country. This can be a great opportunity for business by international companies.

 

Retail

South Korea is APAC’s third largest retail market and will be worth an estimated GBP 364bn by 2018. Most of the country’s population of 50m is concentrated in the Seoul capital region. South Korea also has the seventh largest e-commerce market in the APAC region, worth some GBP 25bn in 2015. Rising disposable income, the entry of international retail chains, liberal retail policies, and a strong e-commerce infrastructure are contributing to the growth of the retail industry in South Korea.

 

Potential Opportunities

International fashion, accessory, confectionery, and beauty product brands are generally considered high-end and enjoy a strong reputation among Korean consumers

Major retailers are all expanding their organic and green goods selections as eco-friendly brands are attracting more attention from consumers

High-end brands in the living, sports, leisure, infant and Giftware markets are gaining popularity as discretionary consumer spending increases, resulting in greater individualism, self-expression and interest in international and luxury brands