South Korea is officially the Republic of Korea
South Korea is officially the Republic of Korea (ROK), it is a sovereign state 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 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. South Korea ranks 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)
Many citizens of 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 include Standard Korean, Dialects of Korean, Chinese, and Japanese.
Although South Korea supports religious freedom, religion in the country is defined by the fact that nearly half of the citizens have no formal affiliation with any religion. Among those citizens who are 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 one of the most ethnically homogenous countries in the world, virtually every citizen is ethnically Korean. Aside from about 20,000 Chinese and a negligible percentage of foreign immigrants. Immigrants mostly migrate from the United States of America, Vietnam, Thailand, the People’s Republic of China, and the Philippines.
Here is a breakdown of ethnic minorities and immigrants in South Korea
People’s Republic of China 50%
United States of America 7.6%
Other Countries 17.2%
South Koreans are generally very proud of their country and have a nationalistic personality, especially those involved in sports. Koreans attribute their athletic successes to their country. The citizens of South Korea are also environmentally conscious; this became especially apparent during the 2018 Olympics they hosted. The PyeongChang Organizing Committee aimed to make the games as environmentally friendly as possible during all stages, before, during, and after the events in order to reduce carbon emissions.
A surprising fact about the people of South Korea is that they are technology addicts. In fact, the South Korean government considers it to be a public health crisis and has employed over 1,000 counselors who have been specifically trained to treat internet addiction to combat it. A 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.
Quality of Workforce
South Korea has one of the world’s highest-educated labor forces, but finding work in South Korea is no easy task as the labor market is hypercompetitive, this is especially true for women and foreigners. South Korea’s gender inequality continues to discourage women from working. The nation’s workforce has a significant gap regarding the participation rate. Women are at 53.1 % while men make up 74.5% of the workforce, making for a weak point in the country’s economy.
While looks based discrimination is illegal, or at the very least discouraged in many countries, it is the standard practice in many workplaces in South Korea to submit a photograph with your application. Match this with the competitive job market leaves many applicants feeling pressured to change or enhance their appearance, causing some to resort to plastic surgery. Recently, the National Human Rights Commission of Korea studied 3,500 job postings and 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 workers doing labor-intensive jobs or working as subcontractors to the aforementioned chaebols. A remainder of work goes to foreigners who are given “low-skilled work” to work 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, sciences, 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 education achievement leaves many high school students enduring grueling 14-hour days at times. Every year, hundreds of thousands of students in South Korea take the Suneung, an exam that determines which university they will get into. This exam, also known as the College Scholastic Ability Test (CSAT) 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.
Students are not 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 hard to ensure that the roads stay clear and redirect traffic. In the case of a traffic jam, students are given police escorts to exam centers, and air traffic is halted during the listening portion of the exam. Student’s families also partake in exam day by offering special prayers at temples and churches on exam day.
Doing Business/Cultural Behavior
The market in South Korea is a favorite amongst foreign investors due to the country’s flourishing economy and the vast majority of citizens are English speakers, however, there are important cultural differences to note. South Korea’s culture is heavily based on Confucian values. These values state that authority should be respected, you should conform to moral and ethical principles, work and learn hard, live reasonably and avoid extremes. Knowing these key values can help your business relationships in South Korea thrive.
South Koreans believe strongly in establishing close personal relationships with business partners in order to build trust. Unlike Americans, South Koreans will delve into your personal life to try and gauge your age and relationship status. While the questions may seem probing, it’s important to answer them honestly, without bragging.
While speaking English is the norm in South Korea, you should not expect everyone you encounter to speak it or speak/understand it clearly. To ensure full understanding when addressing your audience speak clearly and use basic English. Be sure to not rely solely on verbal communication and clarify in writing, this can act as a safeguard when dealing with miscommunication. It’s important to note that South Koreans are not confrontational and rather than dispute something, they will remain silent which can be misunderstood as consent.
Negative questions are understood quite differently and yes or no questions may not correctly convey the message. Always request clarification to avoid any mishaps. It’s also quite common for things to move quickly in South Korea, response times are usually same day and going a week without communicating is seen as a lack of interest and often leads to a termination. Always keep a line of communication open to keep your business relationships strong and not give off the wrong impression.
All meetings need to be scheduled in advance and punctuality is extremely important. During business meetings it’s expected that you remain formal but friendly, and avoid making jokes as this is a sign of disrespect. In a business meeting, the most senior team member enters the room first and therefore should be the first one you greet. When communicating 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 always dress appropriately for their work environment. In a business setting, one would be expected to wear a suit. While 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 is (-2.5 weak; 2.5 strong). The rating of this risk is based on the fact that China is one of South Korea’s biggest trading partners. There is a steep decline in South Korean exports which indicates economic trouble.
Korean democracy is 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 towards China and the United States. The post-democratic political system in South Korea has failed to deliver what the government has promised the citizens, making political distrust higher and the politics more unstable. Unfortunately, due to these challenges, it’s hard for any acting president to achieve important changes in 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 corruption scandal that occurred in 2016 that led to president’s impeachment, the rule of law in South Korea is fairly well institutionalized. The law supports economic freedom as regulatory efficiency and market openness.
Tax base of global income
0-10 millions 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. South Korea has a centralized government that essentially operates at a national level. The head of the government is the president, who is also the highest member of the national assembly, the prime minister and then the ministers follow. The executive and judiciary branches operate at the national level and the constitution determines the structure of the government.
The president is the head of the executive branch of the national assembly. 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 in service. The president is also the only elected member of the executive, he has the power to declare a state of emergency or war as long as it is approved by the national assembly. Other roles of the president include being head of the state, the national assembly and also Commander In Chief of the armed forces in South Korea.
South Korea consists of a mixed economic system which includes private freedom and is combined with centralized economic planning and government regulation. South Korea is a member of the Asia Pacific Trade Agreement (APTA) and the Asia Pacific Economic Cooperation (APEC).
The South Korean government 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 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).
Legal Environment (Import Tariffs)
The U.S. – Korea FTA was implemented on March 15, 2012. Prior to this change, 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 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’s economy is the fourth largest in Asia and the eleventh largest in the world. The economy is a mixed one, dominated by family-owned businesses, however, in the future, it seems unlikely that these family businesses will dominate the economy due to the transformation of the Korean economy. South Korea is famous due to its previous position as one of the poorest countries in the world to a high-income country in just one generation. This economic miracle has brought South Korea to the ranks of 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
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
United States 8.7%
Saudi Arabia 7%
Gross external debt $430.9 billion
Human Development Index
Date 2015 HDI 0.901 HDI Ranking 18º
During the next 6 months, South Korea has set interest rates to a low 2.5%. This drop in interest rates is an improvement when looking at the low inflation, falling corporate profits and major household debts in South Korea. Domestic Consumption and investment have eased off while exports have shown signs of improving slowly alongside global economic recovery.
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 the world’s 7th largest exporter, and 10th largest importer. Since 2003, the country has established itself a network of free trade agreements in order to boost economic ties and trade 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 plans to liberate 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 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. 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 desire to turn around its energy policy and developing renewable energy industries, I decided to do a Foreign Direct Investment with an Eco-Friendly Solar Power Plant. This is the perfect business opportunity given the country’s plan to invest $36 Billion in renewable energy by 2020.
“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 imports 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 due to the rapidly increasing strain on the 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 new construction of new power plants has been halted and to make matters worse some older plants are no longer operational.
To me, easing the strain on the country’s electricity grid and contributing to South Korea’s efforts of going green, coupled with reducing their reliance on imported natural resources I believe entering the renewable energy industry would be very successful in South Korea.