The pandemic has severely curtailed international travel, but that doesn’t mean international trade needs to grind to a halt. In fact, companies that focus on growing their exports and developing relationships with overseas buyers and distributors now will be in a position to grow those relationships, and will have a competitive advantage, once the pandemic ends and international trade and travel return to a more normal rhythm. What’s more, the innovative products and services developed in Wisconsin are needed more than ever around the world, as coping with the pandemic creates shortages in certain sectors and creates a new need for forward-thinking solutions in others. To help Wisconsin companies make connections in South Korea, the Wisconsin Economic Development Corporation (WEDC) will be organizing a Global Trade Venture in virtual format, consisting of online meetings between Wisconsin companies and potential partners in South Korea, from Nov. 2-Dec. 4, 2020.
SOUTH KOREA OUTLOOK
Among world economies, South Korea is the 12th-largest overall, with a GDP of $1.7 trillion and a population of 52 million. South Korea ranked eighth among Wisconsin export destinations in 2019, receiving a total of $545 million in Wisconsin exports. Top categories of exports from Wisconsin to South Korea in 2019 were industrial machinery (19%), medical and scientific instruments (14%), meat products (11%), electrical machinery (6%) and pharmaceuticals (5%).
Wisconsin companies in many sectors can find opportunities in South Korea, but this Global Trade Venture is strongly recommended for companies in:
- Advanced manufacturing, including aerospace; machinery and tools; and energy, power and controls. The U.S. has been the dominant foreign supplier of aerospace products and services to South Korea, and this trend is expected to continue for the foreseeable future. As South Korea continues to cultivate expertise in advanced manufacturing technology, the demand for high value-added machinery and tools are expected to increase. In addition, South Korea is actively developing renewable energy. Wisconsin is a global center for energy, power and controls, and the manufacturing of electrical machinery and controls is one of Wisconsin’s fastest-growing and most competitive industrial sectors.
- Food and beverage, including food/agricultural products and food processing equipment. Continued economic growth allows consumers in South Korea to have higher expectations of quality, diversity and novelty in their diets. In particular, well-traveled young consumers, many of whom are educated abroad, are putting pressure on the markets to offer more international food products. The U.S. is the leading exporter of food/agricultural products to South Korea. Wisconsin leads the market in cheese exports to South Korea, and is also the leading world producer of cranberries and ginseng—both well-liked by South Korean consumers.
- Biohealth, including bioscience, medical devices, pharmaceuticals and biotechnology. South Korea imports most of their high-end biohealth products from overseas. An important factor contributing to the demand for advanced medical products and services is the rapidly growing elderly population who expect high-quality products and services. Another contributing factor is that many local doctors are educated in the U.S. and Europe and are accustomed to using advanced medical products from overseas. The U.S. is the major supplier of these products to South Korean markets. Wisconsin is a global leader in the biohealth sector, providing market-leading products and services across the full biohealth spectrum.
South Korea is a sophisticated market with a taste for high-quality, differentiated products and commodities. As a mature economy that has a robust trade relationship with the U.S., South Korea views U.S.-made products as being of good quality and high value. Products seen as representing an “American lifestyle”—from luxury consumer goods to health care products—are highly sought by affluent consumers in South Korea. Currently more than 90% of U.S. products enter South Korea duty-free.
Wisconsin companies seeking to export to South Korea should already have a good understanding of the export process. When considering how to adapt their offerings for the South Korean market, they should keep in mind demographic trends including urbanization (more than half the national population lives in Seoul or the vicinity), digital literacy and wide adoption of technology, a well-traveled and highly educated younger generation, more women in the labor market, decreasing household size, and retirement of Baby Boomers.
In South Korean business culture, face-to-face meetings are important in establishing a relationship. Right now while in-person meetings are not possible, companies can set themselves apart in the market by taking part in a virtual Global Trade Venture with WEDC, demonstrating they are still interested in establishing new partner relationships and growing their exports.
CONNECTING WITH CUSTOMERS VIRTUALLY
As with all WEDC global trade ventures, our in-market trade representative will conduct a market assessment for your specific sector and search for the distributors, end users and customers who best fit your profile of the ideal business partner. In lieu of the office visits and plant tours that would normally be part of a global trade venture, we will arrange online meetings with senior decision-makers, with WEDC handling technology and scheduling so you can focus on your customers’ needs and interests. We will arrange for interpreters with knowledge of your industry if they are needed, and will help you prepare for your meetings with tips on how best to appeal to South Korean customers and convey your value proposition.
While South Korea is not a large country by area, travel time between meeting locations can eat up plenty of time on a traditional trade venture. By conducting the meetings virtually, you eliminate travel time and can schedule meetings back-to-back without worrying about transportation delays. In addition, the cost for the virtual global trade venture is significantly less, since it does not require airfare or lodging.
The virtual format offers one more benefit: you won’t be required to be away from the office for a full work week. Because of the time zone difference, most meetings with your South Korean counterparts will be scheduled in the evening, leaving the rest of the day free. Instead of the typical duration of a trade venture (10-14 days), meetings with pre-screened and well-qualified potential partners in the market will be spread across five weeks to enable easier scheduling given the limited time window for meetings each day, making the meeting schedule lighter on any given day.
GLOBAL TRADE VENTURE: SOUTH KOREA