Korea’s steady trade partner

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Korea’s steady trade partner


Siemens’ SGT5-8000H gas turbine, in Bavaria, Germany, is the largest gas turbine in the world, according to the company.Provided by the company

As Korea’s largest trading partner among all European Union countries, Germany has been a consistent trading partner for Korea, with economic ties between the two countries dating back to more than a century ago.

While German automobiles, machinery and appliances are recognized in Korea - as well as globally - as some of the best in the world, the products from Korea that have made the biggest impact in Germany are IT products, with mobile phones, semiconductors and computers produced by leading Korean conglomerates among the best sellers there.

Trade relations between the two countries started with a bilateral trade treaty signed in November 1883. And although bilateral trade has stayed strong throughout the decades, the recent global financial crisis has dented the economies of both countries. From January to March last year, Germany’s exports to other countries decreased 21 percent year-on-year, while the country’s imports fell 14.4 percent as well, according to figures from the Korea Trade-Investment Promotion Agency, or Kotra.

In 2008, Korea exported $10.5 billion worth of goods to Germany while importing $14.8 billion worth of German products. This gave Korea a trade deficit of $4.3 billion with Germany. According to the latest data from Kotra, Korea’s exports to Germany totaled $5.4 billion from January to August last year, while its imports from Germany totaled $7.5 billion in the same period.


BMW’s new 7-series luxury sedan [JoongAng Ilbo]

“Due to the global economic meltdown, Germany, which is an export-oriented country, experienced a big blow,” the agency said. “Germany used to invest aggressively in facilities and construction but in 2008 with the economic crisis, many of the country’s manufacturers were at the brink of bankruptcy. In particular, some auto manufacturers stopped production temporarily and reduced their workforce.”

Even so, Germany has maintained its place as one of Korea’s biggest trade partners. As of last year, Germany was Korea’s seventh largest trading partner, after countries including China, the U.S. and Singapore.

Korean electronics companies, automakers and chemical firms have made the biggest mark in Germany. Kia Motors, which opened a German branch in 1999, was the No.1 Korean investor in Germany as of 2008, with a total investment of $533.2 million, according to the Korea Eximbank. In second place was Samsung Electronics, which set up a branch in the European country back in 1982. The company has seen continuous success there as of late with the popularity of their smartphones, including the Samsung Jet and Omnia, as well as LED (light-emitting diode) TVs. Other notable Korean companies in Germany including Hyosung, Hynix and LG Electronics, among others.

For local consumers, automobiles are the first things that come to mind when German companies are mentioned. According to data from the Korea International Trade Association, cars are the No.1 export item from Germany to Korea. In 2008, Germany shipped $1.63 billion worth of cars here.

Volkswagen, Daimler, Audi, Porsche and Mercedes-Benz are just some of the country’s leading vehicle makers with offices in Korea. Meanwhile, BMW Korea, as one of the first foreign carmakers to set up a branch in Korea, has been leading the imported car market here. As of last year, BMW Korea was the No.1 foreign carmaker in Korea (by the number of cars sold here), according to the company. “From the end of 2008 to around March last year, our sales saw a bit of a fall due to the global economic crisis, but since then we have been on a recovery streak. At present, we are selling more cars than before the economic crisis,” said an official at the company who declined to be named.

Mercedes-Benz Korea, established in 2003, has been seeing growth in recent years as well, with its premium diesel engine cars acting as a new driving force in their operations here. From January 2009 to January this year, 2,473 units of their No.1-selling car in Korea, the new E 300, were sold.

The German company Siemens, Europe’s largest engineering conglomerate, also has a profound history in Korea. It participated in reconstruction projects here during the 1960s, after the 1950-53 Korean War. It launched a Korean branch in 1967 and invested in infrastructure projects such as the construction of power plants, chemical factories and cable installations.

“Around 20 percent of all Siemens’ sales come from Asia. Among Asian countries, Korea is a very important market for us as it is an adequate place to use our high-tech solutions,” said Josef Meilinger, president and chief executive officer of Siemens Ltd. Seoul. “Korea, at present, is showing a strong will to become a powerhouse for ‘green’ technology, including its use of smart grids.”

Although the company saw its sales fall to 1.6 trillion won ($1.38 billion) in 2008, from 1.8 trillion won the previous year, due to the effects of the global economic crisis, it is recovering fast, and saw around 2.1 trillion won in sales last year.

By Cho Jae-eun [jainnie@joongang.co.kr]

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